Market overview

With a population of approximately 44 million and a territory roughly 3.5 times the size of Texas, Algeria is a Southern Mediterranean market between the European Union and developing African countries.  In addition to its impressive size, Algeria has the fourth-largest economy in Africa and is one of the continent’s most competitive (following South Africa, Morocco, and Tunisia) [1].  Algeria’s current level of development and relative economic growth is due to its significant hydrocarbon resources, with oil and natural gas historically accounting for 95 percent of export revenues and 60 percent of total government revenues.

Despite the size of Algeria’s total available market, it remains underexplored by American companies except for large multinational corporations and companies working in the energy sector.  The reasons for this include decades of a state-controlled economy, a strict and unwieldy bureaucracy that hampers efficient business decision-making, and a lack of economic diversification.  As a result, American companies often find the market inaccessible.  The U.S. is Algeria’s seventh-largest trading partner, with export volumes equal to only 20 percent of Chinese exports to Algeria and 40 percent of French exports to Algeria.

[1] According to the World Economic Forum’s Global Economic Competitiveness Index

Source

ITA. Algeria Country Commercial Guide. International trade administration. 01-31-2023.

https://www.trade.gov/country-commercial-guides/algeria-market-overview

 

Glossary

unwieldy: (of a system) difficult to manage, usually because it is too big or badly organized.

bureaucracy: government characterized by specialization of functions, adherence to fixed rules, and a hierarchy of authority

hamper: to prevent someone doing something easily.

 

Reading Comprehension

1.  What factors contribute to Algeria being one of the continent’s most competitive economies, and how do its hydrocarbon resources play a role in this?

2.  Analyze the challenges that American companies face when attempting to enter the Algerian market. What specific aspects of Algeria's economy and bureaucracy hinder their efforts?

3.  Compare Algeria’s trade relationships with the U.S. to those with China and France. What do the export volumes suggest about Algeria's economic connections with these countries?

Answers:                                                                                   

1.  Algeria's competitiveness is attributed to its significant hydrocarbon resources, which provide a substantial portion of export revenues (95%) and government revenues (60%).

2.  American companies face challenges such as a state-controlled economy, a strict and unwieldy bureaucracy that complicates decision-making, and a lack of economic diversification, making the market seem inaccessible.

3.  The export volumes indicate that the U.S. is Algeria’s seventh-largest trading partner, with exports being only 20% of those from China and 40% of those from France, suggesting a weaker economic connection compared to these other countries.