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Libya
| Beyond oil score(out of 100 points) |
32.0 |
| Index ranking(out of 26 countries ranked) |
23 |
| Overall status* |
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| General Economic Framework |
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| Political Framework |
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| Society and Future Skills |
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| (Beyond) oil related factors |
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According to the Oil and Gas Journal, “Libya had total proven oil reserves of 39 billion barrels at the end of 2005”. Oil provides 25% of Libya’s GDP, and almost all of Libya’s export earnings.
Beyond-oil investments to drive future growth
Libya’s economy over the last number of years have suffered from severe structural problems. The US imposed embargo against Libya after the Panam 103 bombing reduced investment in the country. It also reduced Libya’s export markets. Libya’s oil sector suffered too as purchase of important exploration and maintenance equipment was prohibited under the sanctions. Meanwhile Colonel Ghaddafi’s socialist economic system reduced Libya’s private sector to a very small portion of the economy, whilst he increased the size of the state sector. This reduced the growth of new industries. The September 23, 2004, issue of The Economist notes that Libya's "bumbling, grasping, and erratic bureaucracy" is an impediment to investment. The problem of corruption is partially due to the growth of the state sector by the government, which led to an increase in red tape and corruption, and ultimately lack of investment.
Corruption and bureaucracy remain major problems to this day. Libya’s economy is ranked as “oppressed” by the 2006 Index of economic freedom. Libya’s 122nd position in the Transparency corruption level places it close to some of the world’s most corrupt countries. It is worth noting that Libya’s bloated state sector drains more than 60% of government spending.
Meanwhile according to the Economist Intelligence Unit, "Foreign direct investment (FDI) in Libya has been almost exclusively in the hydrocarbons sector. The past sanctions regime, combined with the country's erratic economic policy, have, in the past, provided little incentive for investors in other sectors." The Libyan government has tried to address this issue by encouraging growth and investment in Beyond Oil industries such as Tourism, natural gas, mining, fisheries and agriculture. The recent improvement in relations with the US and EU have lead to improvement in trade with the west. Furthermore the recent rise in oil prices have led to an increase in Libya’s foreign exchange reserves, which in 2006 totalled $30 billion.
Beyond Oil Summary
Libya’s low score is mainly due to the important fact that investment in the non oil industries has been low. Furthermore, Libya’s non oil sector remains small, and low value. Natural gas, tourism and mining have the potential to spearhead Libya’s Beyond Oil program, however due to excessive levels of government control and participation, it will be many years before such industries have developed. This delay will deprive Libya of much needed income and experience in industries which are likely to become its lifeline after oil runs out. Furthermore, Libya’s small Beyond Oil program is very likely to lead to future social problems such as poverty and unemployment, as absence of alternative to oil will deprive the country from the funds which assist the finance of its social cohesion.
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Indicates high preparedness
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Indicates deficits but potential for development
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Indicates unfavourable preconditions.
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