IV.

Economy

Algeria’s economy is based mainly on mineral production. Agriculture plays a declining but still important role. Algeria has rich mineral resources, especially petroleum and natural gas. The economy is mixed, with some public and some private ownership. Algeria’s economic growth slowed after independence in 1962, because of the disruption of the war for independence. Before independence, Algeria had an underdeveloped economy geared toward supplying raw materials to France and buying French manufactured goods. After independence, the government instituted industrialization programs. During the late 1960s and 1970s Algeria increased its output of petroleum and natural gas. Rising world oil prices after 1973 stimulated economic growth.

A drop in oil in prices starting in 1986 provoked an economic crisis that revealed the weakness of Algeria’s centrally planned economy and the failure of its efforts to introduce heavy industries. In 1989 the government launched a comprehensive program, supported by the International Monetary Fund, to achieve economic stability and introduce free-market reforms. However, the civil war, which embroiled the country in the 1990s, stalled reform efforts. Expansion of the oil and gas industries, increased economic diversification, and tight control of government spending have helped the economy recover since the mid-1990s. Unemployment remains a major problem.

Mineral, especially hydrocarbon, production accounts for the largest part of the gross domestic product (GDP), a measure of the total value of goods and services produced. While Algeria remains one of the wealthier nations of Africa, its economic growth is highly influenced by oil and natural gas prices.

A.

Labor

Unemployment is an acute problem in Algeria. In 2001, 27 percent of the workers were unemployed, and it is estimated that unemployment among workers under the age of 30 is as high as 50 percent. Of the economically active population, 55 percent was employed in government or other service industries, 24 percent worked in industry, and 21 percent engaged in agriculture, forestry, and fishing.

B.

Agriculture

After independence in 1962, most farmland in Algeria came under state control. In the early 1970s the state farming sector was dissolved and state-owned farmland was distributed to socialist cooperatives. Unsatisfactory crop production led to privatization in the late 1970s, and today most farms are privately owned. Farming accounts for a small share of Algeria’s GDP. Productivity is low and Algeria must import a large amount of its food needs. The principal food crops include cereals such as wheat and barley; vegetables and melons; fruits such as grapes, dates, and olives; and roots and tubers such as potatoes. Tobacco is also an important crop. Sheep, goats, and cattle are among the livestock raised. In the 1990s the government replanted many old vineyards in order to encourage the resurrection of winemaking, a traditional Algerian industry.

C.

Forestry and Fishing

Forests, which contain much brushwood, cover an extremely small part of Algeria’s land. Lumber is used principally for heating and industrial needs. Bark is cut for tanning and cork for commercial purposes. Charcoal, made from charred wood, is also used for fuel.

Despite Algeria’s Mediterranean coast, fishing remains a relatively minor industry. Sardines account for about half the catch. Other fish include anchovies, sprats, tuna, and shellfish.

D.

Mining and Manufacturing

The chief mineral products are hydrocarbons—crude petroleum and natural gas—from the Sahara. Algeria possesses some of the largest oil and natural gas reserves in the world, and is one of the world’s top natural gas exporters. Pipelines transport natural gas from Algeria to Spain and Italy. Hydrocarbons account for a substantial share of Algeria’s GDP. Almost all of Algeria’s export revenues are derived from hydrocarbon sales.

Other major mineral products are iron ore and pyrites, zinc, lead, mercury, gypsum, and barite. Large deposits of phosphates are thought to exist in hilly regions of Djebel Onk in the north. Nearly all mining and industrial activity is state-controlled. In the late 1990s, however, the government privatized some industries and began to allow foreign investment in the hydrocarbon sector.

Among Algeria’s major manufactures are food products, beverages, and tobacco, including olive oil, soft drinks, and wine; iron and steel; transportation and farm equipment, including trucks and tractors; plastics; wood and paper products; and carpets and textiles. Much of Algeria’s manufacturing industry is located in or near the cities of Algiers, Annaba, and Oran.

E.

Currency and Banking

The monetary unit of Algeria is the dinar. In the mid-1960s the government nationalized all foreign and private banks. In 1986 the state-run Bank of Algeria began to liberalize the banking sector and allow the establishment of private banks. Aided by agreements with the International Monetary Fund (IMF) and lenders from abroad, Algerian foreign debt has fallen in recent years. An association agreement with the European Union (EU), Algeria’s principal trading partner, was expected to make overseas investment in Algeria easier.

F.

Commerce and Trade

The principal Algerian exports are natural gas and petroleum. In addition to hydrocarbons the country exports phosphates, iron ore, hides, cork, wine, tobacco, and fruits and vegetables. Major imports are foods, consumer goods, and machinery. Algeria’s major trading partners are the European Union and the United States. Algeria’s trade volume and balance depend heavily on petroleum prices.

G.

Transportation

Algeria’s rail and road systems mainly serve the northern third of the country. Railroad lines run to the northern edge of the Sahara, and roads link the Sahara oil fields to the coast. Algeria’s segment of a trans-Saharan highway, extending from the Mediterranean coast past Tamanrasset, an oasis in the Sahara, to the Niger border, was completed in 1985. The state-owned Air Algérie and the privately owned Khalifa Airways provide domestic and international air service. The country’s principal ports are Algiers, Oran, and Annaba.

H.

Communications

Numerous daily and weekly newspapers are published in French, Arabic, or both languages. Algeria’s press is relatively free, but the government does practice censorship and occasionally seizes newspapers outright. Despite government monitoring and interference, the print and broadcast media in general is freer than it was during the authoritarian decades immediately after independence. The state operated the nation’s telecommunications system and national television station until the year 2000, when legislation gave the government only a supervisory role. With the state monopoly removed, the way was opened for competition in telecommunications. Radio stations broadcast in Arabic, French, and Kabyle.