Algeria: State and Private Sector in Algeria: The Politics of Rent-Seeking and Failed Development

By Djerbal, Daho | The Middle East Journal, Winter 2001 | Go to article overview

Algeria: State and Private Sector in Algeria: The Politics of Rent-Seeking and Failed Development


Djerbal, Daho, The Middle East Journal


ALGERIA

State and Private Sector in Algeria: The Politics of Rent-Seeking and Failed Development, by Bradford L. Dillman. Boulder, CO: Westview Press, 2000. xii + 136 pages. Notes to p. 137. Refs. to p. 155. Index to p. 167. Tables. Abbrevs. $55.

Reviewed by Daho Djerbal

Bradford L. Dillman's book is to be read at two levels. It is primarily a history of Algerian development policy between the 1970s and the 1990s, which consisted of a series of reforms aimed at finding an answer to the structural crisis which had stricken an economy essentially based on state monopoly and public companies. It is also an analysis of the process of conversion and transfer of a large portion of the country's economic activity towards the private sector. In addition to showing the imbrication and the clash of the interests at stake, the book is an attempt to explain what led economic development to fail.

Relying on a copious bibliography, the book recalls the process which first allowed Algeria under Houari Boumedienne to promote, between 1965 and 1978, an industrialization supported by a large class coalition and financed with the resources derived from the nationalized hydrocarbons sector. As Dillman points out in chapter two and in the opening paragraphs of subsequent chapters, this policy of industrialization should have led the country, within one generation, to attain a level of development comparable to that of some European countries.

Yet, during Chadly Benjedid's presidency, the strategy of development introduced by Boumedienne was put to the challenge of allowing what the author calls-in passages interspersed in chapters three, four, five, and seven-a peaceful transition towards a consumer oriented reform policy. If, between 1979 and 1989, this reform policy was strongly backed by the population, between 1985 and 1995 it was marked by a series of dramatic events which ultimately produced a general economic decline. This decline was marked by a drop in real gross national product (GNP) and gross domestic product (GDP), accelerated deindustrialization, increased unemployment, and the emergence of pockets of poverty. Together, these factors gave rise to a host of internal and external pressures on the new coalition in power. This coalition, in turn, was compelled to accept a structural adjustment program dictated by economic institutions and international financiers.

In fact, the successive stabilization programs, counter-reforms, and orthodox structural adjustment merely exacerbated the crisis, running the country into deeper debt and dependency. As Dillman argues in chapters four through seven, the transfer and conversion of state capital into private capital gained momentum in the late 1990s, fueled by the development of new oligopolistic bodies more or less dependent on the state (see chapters four, five, six, and the last paragraphs of chapter seven). Having established these facts, the author then explains what really happened in Algeria.

The book's central focus is the interconnections between a render state and a tributary private sector. …

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