Libya Essay

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After two decades of isolation, Libya has reemerged as an extremely  fertile investment  opportunity for several  reasons.  First,  Libya has  historically  been Europe’s gateway to  Africa and  an ideal steppingstone to enter emerging markets on the African continent. Second, after years of isolation, Libya is making investments  in  its  infrastructure an  attractive scheme for foreign investors. Third, Libya has great potential  to  become  a leading  tourist  destination, with the longest coast on the Mediterranean (1,700 km), a great historical heritage, and a very attractive climate. Finally, Libya holds the largest oil reserves in Africa and  the  ninth-largest oil reserves  in the world. This is essential in the context  of geopolitical and economic discussions occurring  around  the world since the demand for oil is high.

Libya is  officially known  as  the  Great  Socialist People’s Libyan Arab  Jamahiriya and  is situated  in north  Africa. It lies south of the Mediterranean Sea, between  Egypt to the east, Sudan to the southeast, Chad and Niger to the south, and Algeria and Tunisia to the west. The capital city of Libya is Tripoli on the coast of the Mediterranean Sea. Other major cities are Banghazi, Surt, Zawarah,  Ghadamis,  Sabha, Tobruk, and Al Jawf.

Libya is the  fourth-largest  country  in Africa with almost 700,000 sq. mi. (1.8 million sq. km). Ninety percent of Libyan territory is desert with a dry and hot climate. Climate along the Mediterranean coast is warm during the summers and rainy during the winters.

Libya is one of the least densely populated  countries of the world, where 90 percent  of the population lives in less than  10 percent  of the area. Most inhabited  areas are along the coast and urban  centers, with more  than  50 percent  of the  population residing in Tripoli  and Benghazi. Approximately  6 million  people—indigenous   Berbers  and  Arabs— live in Libya. The population in Libya is young with a median age of 23 years and more than 50 percent of population younger than 15. Population growth rate is 2.2 percent.

Independence

Until fairly recently the peoples of Libya have been subjected  to  the  control  of foreign  powers.  Phoenicians, Greeks, Romans, and Ottomans  left their imprint  on the history and landscape of Libya. During the first half of the 20th century (1911–43) Libya was controlled  by Italy. After Italy was defeated  in World War II, Libya was put under the protectorate of the United Nations. Libya declared independence on December 24, 1951.

In 1969 a small group  of military officers led by Muammar   Al-Qaddafi  overthrew  King Idris,  abolished the monarchy, and proclaimed the new Libyan Arab Republic. Al-Qaddafi emerged  as the  chief of state, a political role he still occupies today. Libya’s confrontational foreign policies and support  of terrorism  in  the  1980s led to  increased  tensions  and consequent  sanctions by the West. In 1999 Libya surrendered two suspects in the 1988 Pan Am 103 bombing and in 2003 publicly announced  its wish to stop producing  and storing weapons of mass destruction. These two events contributed to lifting the sanctions against Libya, with the West once again seeing it as a potential  political partner  and a recipient of future foreign investments.

Economy and Liberalization

The discovery of large oil reserves in 1959 enabled Libya to  transition  from  one  of the  world’s  poorest countries  to one of the wealthiest in Africa (per capita  gross  domestic   product   [GDP]  is  $13,100 [PPP]). Today the  Libyan economy  depends  almost exclusively on revenue  from the oil sector.  Oil sector revenues contribute around  95 percent  of export earnings, 60 percent  of public sector wages, and 25 percent of GDP.

Libya is on a path to liberalize its command  economy and transition  to a market  economy  by applying for World Trade Organization  (WTO)  membership, reducing subsidies, and starting a privatization process.  However,  the  liberalization  process  is not without  obstacles. Despite efforts to encourage  private sector participation, extensive controls of prices, credit,  and trade  constrain  growth  in Libya. Access to  food  and  water  are  additional  problems.  Currently Libya imports  75 percent  of all food and only around  30 percent  of the population  have access to safe drinking  water. Despite these obstacles, Libya’s potential  is immense. It is home to a welcoming and well-educated population, valuable natural resources, and natural beauty that could assure growth in years to come.

Bibliography:   

  1. CIA, “Libya,” World Factbook, www.cia.gov (cited March 2009);
  2. International Monetary Fund, Socialist People’s Libyan Arab Jamahiriya: 2008 Article IV Consultation: Staff Report, Public Information Notice on the Executive Board Discussion, and Statement  by the Executive Director for the Socialist People’s Libyan Arab Jamahiriya. IMF Country Report (n.8/302, 2008);
  3. Lorenzetti and J. M. Stell, “Libya Says It Is ‘Open for Business’ to US Firms,” Oil and Gas Journal (v.102/19, 2004);
  4. S. Department  of State, “Background Note: Libya,” www.state.gov (cited March 2009);
  5. Dirk J. Vandewalle, Libya Since 1969: Qadhafi’s Revolution Revisited (Palgrave Macmillan, 2008);
  6. Jonathan Wallace and Bill Wilkinson, Doing Business With Libya (Kogan Page, 2004).

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