Algeria’s manufacturing sector: few avenues to diversification

Abstract

This policy report on Algeria’s industrial sector is the eighth in a series of reports aimed at identifying strategic options Arab countries have in undertaking structural transformation. Using the product space methodology, this report analyzes existing capabilities of selected economies by identifying products they currently export and determining which path they should follow to produce more sophisticated and strategic products. Algeria’s position in the product space suggests that the country’s future path for development should focus on new opportunities in the chemical and food clusters. Redeploying productive knowledge that already exists within the country into other more complex products would prove difficult but the current position implies that, unaided, the economy is unlikely to diversify. This suggests the need to adopt proactive industrial policies entailing a number of new industries or products at which to target public inputs.