Iraq's Economy: Past, Present, Future

For most of its history, the government of Iraq has played an active role stimulating and directing the Iraqi economy. This pattern was most pronounced during the recent regime of Saddam Hussein, which was at root a centrally-directed command economy with some trappings of market economics and crony capitalism. Iraqs industrial sector was created, in large part, as a result of government efforts to diversify the economy through economic development projects using the proceeds from Iraqs oil wealth and borrowed funds. Many of these initiatives were not viable without government subsidies. Much of the industrial base has now been destroyed, either by direct attack in the Iran-Iraq or the two Gulf wars or through atrophy caused by neglect. Iraq has suffered absolute declines in gross domestic product GDP, chronic inflation, wholesale depreciation of its currency, virtually non-existent foreign investment and the accumulation of a crushing debt burden.