Libya

IV

Economy

Libya was traditionally an agricultural country, although farming was restricted primarily to the coastal regions. Livestock raising was also important. During the Italian colonial period in the first half of the 20th century and during the North African campaigns of World War II (1939-1945), almost all local industry and trade was destroyed. At independence in 1951, Libya was one of the poorest countries in the world. No more than 10 percent of its people could read or write, and there were only a handful of college graduates. The per capita annual income was about $30 a year and the country’s principal export was scrap metal collected from World War II battlefields.

The discovery of petroleum in the late 1950s effected a profound change in the economy: The gross domestic product (GDP), a measure of the value of all goods and services produced by a country, increased from $1.5 billion in 1965 to $25.4 billion in 1985. Per capita income skyrocketed to among the highest in the world. But petroleum revenues began a decline in the 1980s, forcing cutbacks in development programs. Per capita income declined by at least 25 percent. The economy rebounded in the 1990s, and in 2000 Libya showed its first budget surplus in a decade.

A

Government Role in the Economy

Since 1969 the domestic economy of Libya has reflected the economic philosophy of the country’s leader, Muammar al-Qaddafi. In 1978 the second volume of Qaddafi’s guiding treatise, The Green Book, was published. In it he declared opposition to private retail trade, wages, and rent—all of which he deemed forms of exploitation. Workers were required to participate in self-management committees, and companies were forced to distribute a set percentage of profits to their workers. Several years later, all individual bank accounts were seized in an effort to ensure equal assets for all Libyans.

The government nationalized most economic activities and discouraged foreign investment in all fields except the hydrocarbon (petroleum and natural gas) sector. These economic upheavals disrupted the development of domestic trade and industry. During the 1990s the government began to allow privately owned retail shops, and it authorized the privatization of some state-owned industries. It also allowed foreign investment. The government has been generous and egalitarian in the distribution of its oil revenues, however, resulting in dramatic improvements in the education, health, and housing of virtually all Libyans.

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In 1992 the United Nations (UN) imposed economic sanctions on Libya in response to its support of international terrorism. Those sanctions were lifted in 1999, opening the way for foreign investment. In 2004 the United States lifted its economic sanctions, and U.S. companies began seeking investment opportunities in Libya.

B

Labor

Like many oil-producing countries with small populations, Libya has relied heavily on workers from other countries. However, Libya’s worsening relations with many countries in Africa as well as government expulsions on political grounds reduced the number of foreign workers in the country. Foreign workers who sent their earnings home also constituted a drain on Libya’s foreign exchange reserves, and as oil prices began to drop in the 1980s, so did the number of foreign workers. In 1990, 11 percent of the working population was engaged in agriculture, forestry, and fishing; 23 percent in industry; and 66 percent in services.

C

Agriculture

Desert covers about 95 percent of Libya’s land, and much of the remainder is used for grazing. Most of the arable land and pastureland of Libya is in Tripolitania. Grains are grown and livestock grazed to a lesser extent in Cyrenaica. Cultivation in the eastern and southern regions is sporadic and dependent on rainfall. Although agricultural production has increased as a result of irrigation projects and the use of fertilizer, Libya still must import the majority of its food. Principal crops include tomatoes, wheat, potatoes, watermelons, citrus fruits, dates, and olives; principal livestock include sheep, goats, cattle, camels, and poultry.

D

Fishing

Fish are plentiful in Mediterranean waters off Libya’s coast, especially tuna and sardines. However, Italians, Greeks, and other Europeans do most of the fishing in these waters. Libya’s government has sought to expand the fishing industry and opened a fishing port with refrigeration facilities at Zliten. In 2004 the catch of marine fish totaled 46,339 metric tons. Sponges are also collected near the shore.