|The government dominates Libya's socialist-oriented economy through
complete control of the country's oil resources, which account for
approximately 95% of export earnings, 75% of government receipts, and 30%
of the gross domestic product. Oil revenues constitute the principal
source of foreign exchange. Much of the country's income has been lost to
waste, corruption, conventional armaments purchases, and attempts to
develop weapons of mass destruction, as well as to large donations made to
developing countries in attempts to increase Qadhafi's influence in Africa
and elsewhere. Although oil revenues and a small population give Libya one
of the highest per capita GDPs in Africa, the government's mismanagement
of the economy has led to high inflation and increased import prices,
resulting in a decline in the standard of living.
Libya's gross domestic product grew in 2001 due to high oil prices, the end of a long cyclical drought, and increased foreign investment following the suspension of UN sanctions in 1999. Despite efforts to diversify the economy and encourage private sector participation, extensive controls of prices, credit, trade, and foreign exchange constrain growth. Import restrictions and inefficient resource allocations have caused periodic shortages of basic goods and foodstuffs.
Although agriculture is the second-largest sector in the economy, Libya depends on imports in most foods. Climatic conditions and poor soils severely limit output, while higher incomes and a growing population have caused food consumption to rise. Domestic food production meets about 25% of demand.
Although UN sanctions were suspended in 1999, foreign investment in the Libyan gas and oil sectors has been severely curtailed due to the United States' Iran and Libya Sanctions Act (ILSA), which caps the amount any foreign company can invest in Libya yearly at $20 million (lowered from $40 million in 2001).
purchasing power parity - $45.4 billion (2000 est.)
SOURCES: The World Factbook, U.S. Department of State
Mother Earth Travel > Country Index > Libya > Map Economy History