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Algeria
The Economy
![[GIF]](http://lcweb2.loc.gov/frd/cs/algeria/dz03_00a.gif)
Lighthouse along the Mediterranean coast with fishing boat
in the foreground
ALGERIA IN 1993 was in transition, moving from a centralized
system toward an open market economy. In this connection, its
physical resources of arable land and hydrocarbons played major
roles. Algeria's close to 2.4 million square kilometers make it
the second largest country in Africa, after Sudan, and one-third
the size of the United States. More than 2 million square kilometers
are desert or semiarid steppes extending into the southern Sahara
region, but the country also contains a fertile strip of cultivable
land concentrated along the coast of the Mediterranean Sea. Algeria's
main physical resources are hydrocarbons: 3.2 trillion cubic meters
of proven natural gas reserves and 9.2 billion barrels in recoverable
reserves of crude oil. Algeria, with 4 percent of proven world
reserves of natural gas, ranks fifth in the world; moreover, only
17 percent of the reserves have been exploited. Other resources
include iron, zinc, phosphates, uranium, and mercury. In 1993
the country's population, predominantly Arabs and Berbers traditionally
dependent on agriculture, was estimated by the United States government
at 27.4 million, and the work force was thought to exceed 5.5
million.
A bloody eight-year revolution brought independence to Algeria's
population, at that time numbering about 10 million, in 1962.
The departure of the French colons and other foreigners, who had
held a tight stranglehold on the country's administration, nearly
brought the economy to a halt. The formerly productive agricultural
sector was especially hard-hit, mainly because most Algerians
were untrained and hence excluded from managing any aspect of
agriculture or industry. The total commitment of the first independent
government, headed by Ahmed Ben Bella, to a socialist system of
centralized administrative management and economic self-sufficiency
(because of its perceived positive correlation to political independence)
also took a severe toll on the economy. Furthermore, Ben Bella's
preoccupation with playing a major role in political relations
with developing countries did not help matters.
Not until the late 1970s, when more pragmatic and less ideological
leaders took over the reins of government under President Chadli
Benjedid, did Algeria recognize the urgent need for social and
economic reform. Government development plans until then had been
driven by rigid central control and state ownership of most of
the means of production and agriculture. The resulting inefficiencies
and shortages spurred the government to devise an economic program
aimed at increasing productivity and growth. But it was the widespread
bread riots of "Black October" 1988 that compelled the government
to institute a more serious and accelerated economic reform program.
What is also referred to as the "Couscous Revolt" was attributed
to an unacceptably slow pace of political and economic reform,
as well as critical food shortages caused by the 1986 oil price
drop and ensuing decrease in hydrocarbon export earnings.
The main goals of the accelerated reform program were to transform
the national economy from a tightly controlled centralized system
to a market-oriented one, create a climate more conducive to foreign
investment and increased trade, and encourage domestic savings
and investment. To achieve these objectives, the government gave
management autonomy to two-thirds of the 450 state-owned enterprises,
including banks, while instituting a profit accountability system
for their managers. The government also eliminated state-controlled
monopolies for import and distribution and allowed both Algerian
and foreign companies to engage in these activities. Finally,
the authorities encouraged continuation of the de facto privatization
of the agricultural sector.
Algeria's development plans reflected the progress made toward
achieving the goals of economic growth, infrastructure building,
and movement from a government-dominated economy to decentralized
reliance on market forces. These plans were influenced by the
various leaders' personal vision and sociopolitical approach to
the economic issues facing their country.
Data as of December 1993
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