Stagnation or growth? Algeria’s development pathway to 2040

The report analyzes Algeria's development pathway to 2040, highlighting a reliance on hydrocarbons, poor governance, and an unsustainable subsidy system. It projects a modest GDP growth rate of 1.8% under current policies but proposes an 'Algerian Dream' scenario involving democratic reform, economic diversification, and investment in the knowledge economy to achieve higher growth and inclusivity.

• Algeria is projected to experience a modest average GDP growth rate of 1.8% between 2020 and 2040 under its current path, which is considered insufficient to improve the livelihoods of most citizens.
• The country's economy is heavily dependent on hydrocarbons, with oil and gas accounting for approximately 30% of GDP, 65% of budget revenues, and over 85% of exports.
• Algeria's extensive subsidy system, which covered €62.8 billion in 2018, is described as unsustainable and a driver of economic inefficiency, waste, and cross-border smuggling.
• Governance is a primary obstacle to progress, characterized by a 'democratic deficit' and high levels of corruption; in 2019, the country ranked 106th out of 180 in Transparency International's corruption index.
• There is a significant mismatch between the skills provided by the education system and the needs of the labor market, contributing to high unemployment rates, particularly among youth (29%) and university graduates (18.5%).
• Algeria faces severe water stress and high food import dependence, with foodstuffs worth about €6.7 billion imported in 2017, leaving the country vulnerable to international supply chain disruptions.
• Climate change poses a significant threat to the region, with northern Algeria already recording a temperature rise of 0.5 °C and projections of a 2 °C rise by 2050, which will further strain water supplies and agricultural yields.
• The informal economy is substantial, estimated to involve approximately 57% of Algerians in 2017 and contribute about 40% to the GDP.
• Regional trade integration in the Maghreb is extremely low, with only about 4% of Algeria's trade occurring within the region, largely due to political tensions and closed borders, such as the one with Morocco closed since 1994.
• The report proposes an 'Algerian Dream' scenario where combined reforms in governance, economic transformation, knowledge investment, and sustainable resource management could make the economy €103.2 billion larger by 2040 compared to the current path.

APA

Kwasi, S., & Cilliers, J. (2020). Stagnation or growth? Algeria’s development pathway to 2040. Institute for Security Studies. https://issafrica.s3.amazonaws.com/site/uploads/nar-5.pdf

Chicago

Kwasi, Stellah, and Jakkie Cilliers. Stagnation or growth? Algeria’s development pathway to 2040. Institute for Security Studies, 2020. https://issafrica.s3.amazonaws.com/site/uploads/nar-5.pdf.

Wikipedia

{{cite report |last1=Kwasi |first1=Stellah |last2=Cilliers |first2=Jakkie |title=Stagnation or growth? Algeria’s development pathway to 2040 |publisher=Institute for Security Studies |date=November 2020 |url=https://issafrica.s3.amazonaws.com/site/uploads/nar-5.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kwasi2020stagnation, author = {Kwasi, Stellah and Cilliers, Jakkie}, title = {{Stagnation or growth? Algeria’s development pathway to 2040}}, institution = {Institute for Security Studies}, year = {2020}, month = nov, url = {https://issafrica.s3.amazonaws.com/site/uploads/nar-5.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }