Economic aspects of peacekeeping in Iraq: What went wrong?

Bassam Yousif


Prospects for Iraq's economy are bleak: unemployment remains high and the post-war rebuilding effort has slowed to a trickle, weighed down by chronic instability. Rising oil prices increased GDP in 2004 and 2005. But an oil-induced rise in GDP will not necessarily bring about a general rise in incomes, as the oil sector employs only 1 percent of the labor force. To raise general living standards, oil income needs to be converted into increased employment and output in sectors with high social rates of return. This article reviews key Coalition Provisional Authority post-war policies and their effects, and proposes and discusses a set of alternative policies that would be better suited to improve Iraqi living standards and help secure peace.

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