Algeria 's Institutional Framework And The Country 's Challenging Business Environment

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Introduction With 39.21 million inhabitants and a Gross Domestic Product of $210.2 billion in 2013, Algeria is the 8th most populous country and has the 4th largest economy within the African Continent. Classified by the World Bank as an upper middle income country, Algeria’s economy is primarily dominated by state-entities although the country began opening up the economy to both foreign and private domestic participation in the mid-1990s.After posting low growth during the civil wars in the 1990s, the Algerian economy grew at an average of 2.72% over the past two decades, mainly attributed to hydrocarbon exports on which the economy is heavily reliant upon. As per the Economist Intelligence Unit,(EIU) country report, rising gas…show more content…
Economic Overview Algeria 's economy remains dominated by the state, a legacy of the country 's socialist post-independence development model. In recent years the Algerian Government has halted the privatization of state-owned industries and imposed restrictions on imports and foreign involvement in its economy. Hydrocarbons have long been the backbone of the economy, accounting for roughly 60% of budget revenues, 30% of GDP, and over 95% of export earnings. Strong revenues from hydrocarbon exports have brought Algeria relative macroeconomic stability, with foreign currency reserves approaching $200 billion and a large budget stabilization fund available for tapping. In addition, Algeria 's external debt is extremely low at about 2% of GDP. However, the government has struggled to develop non-hydrocarbon industries because of heavy regulation and an emphasis on state-driven growth, and as a result of which , the fiscal deficit is expected to widen to over 6 percent due to lower hydrocarbon revenue, a sharp increase in capital expenditure, and continued high current spending. Algeria’s external position remained solid in 2013, despite signs of weakening. The current account surplus shrank from 5.9% to 1.2% of GDP as domestic oil-and-gas consumption grew, reducing exports and increasing imports. As mentioned in the
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