Page 8 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.81, # 1, 2024, pp. 4-21

In the period from 1990 to 1994, the flow was almost nonexistent due to the political
tensions experienced by the country at that time, which were accompanied by poor
economic performance and deterioration of the security situation despite the economic
reforms undertaken by the Algerian state. With Algeria's structural adjustment
agreement with the International Monetary Fund in 1995, FDI rose to 270 million
USD in 1996. The flows recorded fluctuating values until the year 2001, which
exceeded the billion-dollar mark due to the improvement in the country's political
situation and the amendments to the investment law to provide a suitable climate to
encourage investors through Order 01-03, accompanied by an increase in hydrocarbon
revenues and accumulation of foreign exchange reserves. This, in turn, had a positive
impact on FDI flows, reaching 2.75 billion USD in 2009.

Table (01): Evolution of GDP Development Rates in Algeria during 1990-2022 (%)

Years GDP Development Rate Years GDP Development Rate
1990 0.800001 2007 3.4
1991 -1.2 2008 2.4
1992 1.800002 2009 1.6
1993 -2.1 2010 3.6
1994 -0.9 2011 2.9
1995 3.799995 2012 3.4
1996 4.099998 2013 2.8
1997 1.1 2014 3.8
1998 5.100004 2015 3.7
1999 3.200002 2016 3.2
2000 3.8 2017 1.3
1200 3 2018 1.2
2002 5.6 2019 1
2003 7.2 2020 -5.1
2004 4.3 2021 3.4
2005 5.9 2022 3.1
2006 1.7

Source: Source: Compiled by the researcher depending on: the World Bank
database https://data.worldbank.org.

However, with the issuance of the supplementary finance law in the same year, the
activity of investors was affected as this law restricted the freedom of foreign
investment. In the following years, FDI flows declined until 2015, due to the drop in
oil prices in 2014, which caused a significant shock to the Algerian economy, which
relies heavily on oil revenues, not to mention the depreciation of the dinar and the
increase in the budget deficit.

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