A CDGE, Great Decisions and IT Collaboration

Although the Algerian government was not overthrown in the Arab Spring, and remains in place today, the country was greatly impacted by this time of demonstrations and revolutions.  There were protests in Algeria, against the high prices of food, and the high rate of unemployment. The Algerian government saw what happened in other countries, and worried that it might happen to them as well, so began to take steps to limit the discontent of the population. As this discontent as due in a large part high food prices and a high unemployment rate, the government took steps to help improve the economy.  Thus, the Arab Spring had an important impact on Algeria.

In early January 2011, riots broke out in Algeria over the increase in the cost of food, which had greatly increased, and become difficult to afford. [1] To counter these protests, and placate the population, the government instituted some protectionist policies, subsidizing important food staples such as milk, sugar, oil and flour. [2] Subsidies are a complicated part of a policy maker’s toolbox. On one hand, they protect and nurture domestic business, preventing them from being dominated by competitors on the international market.  From an economic realist’s perspective, this is very good, because then in a time of crisis, the security of your state won’t be dependent on others, and what they chose to import to your country. However, they are not popular in the eyes of other countries, who may want more free and open trade, so their industries can dominate where they have a comparative advantage. Because of these twofold implications, this is a tool that must be used carefully.

As well as instituting subsidies, the government also greatly increased general public spending in 2011. [3]  That year, government spending went up by around 27%.[4]  Government spending is one way the economy can be stimulated, as it is one of the components that comprise GDP. An increase in government spending can also go towards providing important services to those in the populace who need them.

In 2012, the government is concentrating on improving public services, as well as trying to increase wages.[5]   For civil servants in the public sector, wages went up by 34%.[6]  This could greatly help the economy by creating more consumption. When people have more income, they are more likely to spend it. This could help stimulate the economy and lead to an increase in the demand for workers, to help cope with the new, increased demand for more goods.

In the aftermath of the protests of the Arab Spring, the government is greatly focusing on one of the large problems facing Algeria today, unemployment. This was an issue at the heart of many of the riots and demonstrations that shook the country. According to the official government figures, the unemployment rate is around 10%, although some international estimates double this figure.[7] The youth unemployment rate is also incredibly high, at with nearly a quarter of all young people between the ages of 15 and 24 unemployed.[8]  The Algerian government is spending 178 billion dinars on supporting employment in Algeria.[9]  Many international observers believe that to effectively grow the economy, the government needs to diversify, as the oil and gas sectors that form a huge part of the Algerian economy provide too few jobs.[10]

The Algerian government broke up protests with force, and then tried to break the will of the protestors with some economic concessions.[11] They put subsidies into place, and increased spending with a $268 billion dollar five year economic plan.[12] They also increased wages in the public sector, and poured billions of dinar into job creation. While the foundations for some of these actions may have been laid in the past, these policies were all implemented as a direct result of the Arab Spring, and the government’s need to placate its population to keep them from rebellion.