In 2000, Algeria is emerging from two decades characterized by economic recession and political violence. The crisis had its genesis in 1962, when the country‘s independence confronted it with an enormous development challenge. After ruling Algeria for 130 years – and effectively excluding Algerians from public administration and from management or ownership in the economy – France departed, leaving Algeria with an economy that had few links to the outside world and a population that lacked management expertise and technological know-how. Algeria‘s new political leaders chose to tackle this vast development deficit via massive central planning, nationalization, and state-funded economic expansion. 
Given the difficult conditions, the initial results of this strategy were remarkably successful. Up until the early 1980s, Algeria was investing approximately 45% of its national income on the back of strong GDP growth and high international oil prices. The government used its hydrocarbons export revenue to finance the development of a relatively broad industrial base, complete a program of huge infrastructure works, and invest in social development, which reduced illiteracy, increased life-expectancy, and succeeded giving a high percentage of the population access to secondary and tertiary education. 

Algerians experienced a dramatic drop in living standards while the state-owned economy – protected from competition and increasingly inefficient – fell prey to the repercussions of increasing indebtedness. Economic growth never recovered. According to statistics from the World Bank, real GDP growth averaged less than 1% per year between 1986 and 1998, compared to 5.4% per year between 1978 and 1985, while current income per capita is half that of its peak in 1986.
For ordinary Algerians, the 1980s and 1990s were characterized by deteriorating living standards, increasing unemployment (now exceeding 30%), and poverty. The government‘s implementation of austerity measures – in the face of already difficult conditions – alienated much of the population. An attempt to diffuse the social tension by introducing multiparty elections in the early 1990s backfired when the strong showing of the popular Islamic Salvation Front incited the military to stage a coup d‘état, canceling the elections and appointing a military-led interim government. This decision was the spark of Algeria‘s bloody civil war, in which government security forces and Islamist rebels ruthlessly vied for state control, resulting in the deaths of over 100,000 Algerians, and completely undermining the country‘s attempt to attract foreign direct investment in order to rehabilitate the country‘s ailing economy.
Although the scars of Algeria‘s economic and civil strife will remain long into the future, the country seems to have begun the process of reconciliation. And if Algeria‘s economic and political crisis has had any positive outcome at all, it is that the authorities gradually recognized that the country‘s economy has to be fundamentally reorganized if it is to achieve sustained levels of positive growth, and that policies of political inclusion, not those of marginalization, should be adopted.