Libya’s Post War Challenges: A New AfDB Economic Brief

07/10/2011
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The impact of the conflict on Libya’s economy will have significant ramifications on the country’s political and economic reconstruction, according to a new economic brief from the African Development Bank (AfDB).

With the state’s institutions weakened by the conflict and a legacy of patronage and nepotism under the former regime, Libya will need to create the types of institutions capable of mitigating conflicting interests between tribes and regions.

Libya’s Post War Challenges evaluates the potential reconstruction trajectory Libya could undertake to undo the damage the war and the legacy of patronage did to the country. Beyond improved governance, the reconstruction of Libya will have to address economic reform efforts which had been previously undermined by the former regime.  

The country will need to move away from excessive reliance on the state and on hydrocarbon revenues, while becoming more subject to regulation efficiency concerns and the diversification required to cut its high level of unemployment.

Prior to the conflict, Libya’s triangle of extraction, institutional underdevelopment and limited representation stood in the way of the country’s capacity to reform and create institutional diversity.

Now that the conflict has brought the possibility of a break with the past, Libya has an opportunity to pursue a more efficient means of managing its economy, and as a result, improving the overall level of governance in the country.

Certainly, the impact of the conflict on Libya’s economy will be great. Nevertheless, the country’s new leaders have the capacity to pursue a number of strategic decisions which will allow them to create the foundations of good governance and economic reform.