Drop in Oil Prices and Attempts of Reform in Rentier States: The Case of Algeria

Like many other oil producing countries, Algeria has been affected by the current drop in oil prices and its effect on public finances and balance of payments, even though it had, until now, a limited effect on the level of economic growth. Each time income tax decreases, the government accelerates the launching of economic reforms packages. It is well known that rent as a system often contributes to restraining economic development based on diversification, and the creation of a truly competitive economy. The economic reforms launched in Algeria between 1988 and 1991 could not drive the Algerian economy out of the rentier system. The current shock represents a real opportunity to launch deep economic reforms.

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Like many other oil producing countries, Algeria has been affected by the current drop in oil prices and its effect on public finances and balance of payments, even though it had, until now, a limited effect on the level of economic growth. Each time income tax decreases, the government accelerates the launching of economic reforms packages. It is well known that rent as a system often contributes to restraining economic development based on diversification, and the creation of a truly competitive economy. The economic reforms launched in Algeria between 1988 and 1991 could not drive the Algerian economy out of the rentier system. The current shock represents a real opportunity to launch deep economic reforms.

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