An Analysis of Algeria's Economic System

What is the economic system of Algeria? The economy of Algeria is based on a mixed economy. The country’s economic system combines elements of a market economy and a planned economy.

In Algeria, the economy is composed of a private sector, consisting of individuals and businesses that make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of certain goods and services. No country is purely capitalist or purely communist.

Table of Contents

What do the freedom indexes tell about the economic system of Algeria?

Now, to determine if a country is mostly a market economy or a planned economy, it is useful to examine some economic indexes. For instance, according to the 2022 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Algeria is ranked 167th globally and 13th in the Middle East and North Africa indicating that the country has a repressed economy.

In a similar way, the 2022 Freedom House Index evaluates the state of political rights and civil liberties globally. Generally, market economies tend to align more with democracy and freedom, while command economies tend to be characterized by greater state control and fewer democratic and civil liberty protections. Algeria gets a score of 32/100, which qualifies it as not free. Algeria is a country where the government controls what people do for political reasons, and people have limited freedom to choose (what, how much, and how to produce, whether to buy or not, selling price, etc.)

What does the biggest company in Algeria say about the country’s economic system

The biggest company in Algeria should also be looked at, as well as whether it is a state-owned or private company. In this case, Biopharm from Algeria is a mixed private-public company. It is owned by both private and public entities, with the public sector having a majority stake. The company operates in the healthcare sector, providing pharmaceutical products and services.

The historical factors that have influenced the economic system of Algeria

The current mixed economy system of Algeria in the last century is a result of a combination of factors, including the country’s colonial history, its post-independence economic policies, and its current economic reforms. Colonial rule left Algeria with a legacy of state-controlled industries, while post-independence policies focused on centralizing economic decision-making and creating a large public sector. Recent reforms have sought to liberalize the economy and attract foreign investment.