Proceedings of the 25th International Academic Conference, OECD Headquarters, Paris

ECONOMIC TRANSITION IN ALGERIA: A REVIEW IN WAKE OF THE RECENT OIL CRISIS

ABDELKADER NOUIBAT

Abstract:

The sudden and sharp fall in oil prices, in the summer of 2014, triggered a new debate about the ‘bleak future’ that awaits Algeria. Many asked whether the country would experience another economic and political crisis similar to that of the 1980s. In the ongoing debate, some blame the failure of the state for not having a clear and conscience economic policy to deal with this multidimensional crisis, while others refer to the inadequacies of the reforms put in place for the country’s transition from socialism to a market economy as the cause of the crisis. Proponents of the economic argument, see the recent crisis in Algeria as a manifestation of the contradiction between the accumulated wealth and the dire economic situation that the country periodically finds itself in because of the instability of oil prices. Political views, on the other hand, differ according to political affiliations, however most political parties call for a “smooth transition” in order to enhance the existing democratic practices and put the country’s economy on the “right truck.” This paper will not try to foresee Algeria’s near future, but rather to look back at the experience of the country in terms of (1) the economic and political conditions under which the country made its transition from ‘socialism’ to ‘market socialism’, then its struggle to make the transition from ‘market socialism’ to a ‘market economy’, (2) the reform programs that were deemed necessary to make these transitions, and (3) the economic and political dynamics behind the failure of these reforms that many hoped they would help Algeria to become industrialized nation in the 1980s and an emergent country in the first decade of this century.

Keywords: Algeria, Dutch Disease, Economic Reforms, Economic Transition, Market Socialism, Market Economy,

DOI: 10.20472/IAC.2016.025.046

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