Unrealized potential of the Libyan economy.

The North African state of Libya, one of the largest producers of oil, the liquid gold, had burst on the international scene in the early 60’s after the discovery of oil, as a nation with great potential for economic development, not only of itself, but also for other countries in the region.

With a low population count, and high income from oil, it was expected to move rapidly up the economic ladder. Even though sincere efforts were made at the top level, the bureaucracy driven economy does not appear to have made much headway in the last thirty years.

Oil has been the mainstay of Libya’s economy, even though attempts at diversification of investment and production have not succeeded as per plans. The major reason given for this failure is the supposedly corrupt and inefficient bureaucracy. Of course, the drop in oil prices has badly hit Libya’s revenues. And coupled with the global recession, it has had a doubly severe effect.

The Libyan Government has been engaged, rather vainly, in the last few decades, to push the economy into the top bracket, but its confrontation with the West resulting in United Nations sanctions, had an adverse effect on Libya, in many ways, contributing to economic stagnation. With little agricultural activity, and mostly imported food and equipment, the foreign exchange kitty of the country is also under stress.

Libya had allocated about USD 75.00 billion for various infrastructure projects under its strategic plan for the period 2008-2012, but it is not sure how much of this allocated fund would be actually spent, in view of the fall in oil revenues, and the increasing import bill of the country.

The Libyan leader Muammar Gadhafi may have to really start a “revolution against corruption” to get things going in Libya towards economic prosperity.