Following its independence in 1962, Algeria embarked upon a pattern of planned development based on import substitution and the principle of growth through the establishment of a leading sector consisting of state-owned heavy industries. Broad principles of the economic development path chosen by the government during this period were enunciated in the National Charters of Algeria; the Tripoli Charter of 1961, the Charter of Algiers of 1964 and the National Charter of 1976. The chosen growth strategy was based on theories of linkages, and ‘industrializing industries’, popular among development economists in the 19605.1 The private sector at this point was tolerated rather than encouraged and private investment was severely constrained by ceilings on investment size and credit as well as by complex approval procedures. Major existing private industries were gradually nationalized from the period of the first development Plan (1966- 1969). Further nationalizations of remaining private heavy industry, particularly foreign oil companies, continued under the next Plan (1970- 74). With the oil price hike of 1973 government revenues were greatly increased, and much of this was reinvested in the setting up of new industries. Forty five per cent of investment in this Plan was initially allocated to industry, and eventual utilization by the industrial sector was even higher, at 57 per cent. High rates of public investment, especially in industry, continued throughout the following decade.2 As a consequence of these factors, the role of the public sector in industry grew rapidly. Between 1974 and 1983, the private sector’s share in industrial value added fell from 44 to 27 per cent and further to 19 per cent in 1988.


Central Bank Balance Sheet Commercial Bank Public Enterprise Share Trade 
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Copyright information

© The World Bank 1993

Authors and Affiliations

  • Anjali Kumar
    • 1
  1. 1.World BankUSA

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