2013 Index of Economic Freedom

Algeria

overall score49.6
world rank145
Rule of Law

Property Rights30.0

Freedom From Corruption29.0

Limited Government

Government Spending44.1

Fiscal Freedom80.4

Regulatory Efficiency

Business Freedom65.2

Labor Freedom52.6

Monetary Freedom76.6

Open Markets

Trade Freedom67.8

Investment Freedom20.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 36.0 million
  • GDP (PPP):
    • $263.7 billion
    • 2.5% growth
    • 2.7% 5-year compound annual growth
    • $7,333 per capita
  • Unemployment:
    • 10.0%
  • Inflation (CPI):
    • 4.5%
  • FDI Inflow:
    • $2.6 billion
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Algeria’s economic freedom score is 49.6, making its economy the 145th freest in the 2013 Index. Its overall score is 1.4 points lower than last year, due in part to worsened government spending and business freedom scores and a reduction in trade freedom. Algeria is ranked 14th among the 15 countries in the Middle East and North Africa region, and its score remains lower than the regional and world averages.

Institutional weaknesses continue to undermine prospects for sustained long-term economic development in Algeria. The foundations of economic freedom remain fragile due to corruption and an inefficient judicial system that is vulnerable to political interference. Lingering political uncertainty and a negative attitude toward foreign investment hamper fuller integration into the world economy, and policies to promote or sustain reform measures have been neglected or even reversed.

The government has made little progress in improving fiscal governance. In light of social unrest in early 2011, several emergency fiscal measures, including temporary suspension of some taxes, were introduced. Policies to enhance regulatory efficiency and maintain open markets for the development of a more dynamic private sector have not advanced.

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Background

President Abdelaziz Bouteflika, who came to power in 1999 with military backing, was elected to a third term in 2009 in an election criticized for irregularities and boycotted by some parties. After the “Arab Spring” protests swept neighboring Tunisia and Libya, the government introduced some political reforms, among them an end to the state-of-emergency restrictions that had lasted almost two decades. Nevertheless, much necessary political reform remains undone. The socialist model adopted after Algeria gained its independence from France in 1962 has hampered development. Algeria is the world’s fourth-largest exporter of natural gas and has the world’s eighth-largest natural gas reserves and 16th-largest oil reserves. In 2010, the government began a five-year, $286 billion program to modernize infrastructure. It has tried to attract foreign and domestic private investment in non-energy sectors. Unemployment is persistently high.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 29.0 Create a Graph using this measurement

The judiciary is constitutionally independent in theory but not in practice. The courts are slow, and procedures are largely opaque. Implementation and enforcement of legislation protecting copyright and related rights, trademarks, patents, and integrated circuits are inconsistent. Many citizens view corruption within the upper reaches of government as a problem. Efforts are underway to root out corruption in the customs services.

Limited GovernmentView Methodology

The top income tax rate is 35 percent. The top corporate tax rate is 25 percent for the services

Regulatory EfficiencyView Methodology

sector, and production and tourism are taxed at 19 percent. Other major taxes include a value-added tax (VAT). The overall tax burden is equal to 10.4 percent of total domestic income. Public debt is equivalent to about 10 percent of the size of the economy, and government spending amounts to 43.1 percent of GDP.

Open MarketsView Methodology

Despite some progress in enhancing the business environment, significant bureaucratic impediments to entrepreneurial activity and economic development persist. The labor market remains rigid, contributing to high youth unemployment. The government uses price ceilings, tariffs, and redistribution schemes to control prices, but inflationary pressures have increased due to the rising cost of grain and other agricultural commodities.

Country's Score Over Time

Bar Graph of Algeria Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Algeria to other economic country groups

Regional Ranking

rank country overall change
1Bahrain75.50.3
2Qatar71.30.0
3United Arab Emirates71.11.8
4Jordan70.40.5
5Oman68.10.2
6Israel66.9-0.9
7Kuwait63.10.6
8Saudi Arabia60.6-1.9
9Morocco59.6-0.6
10Lebanon59.5-0.6
11Tunisia57-1.6
12Yemen55.90.6
13Egypt54.8-3.1
14Algeria49.6-1.4
15Iran43.20.9


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