Eritrea is a small nation located in the Horn of Africa, bordered by Sudan, Ethiopia, Djibouti, and the Red Sea. It is one of the world’s youngest countries, having only gained its independence in 1993. Despite its small size, Eritrea has a diverse and resilient economy. This article will explore the current state of the Eritrean economy, its economic history, and the main factors that have shaped its development.
Economic History
Eritrea’s economic history is closely intertwined with its political history. Before its independence in 1993, Eritrea was part of Ethiopia. During this period, the economy was heavily centralized and state-controlled. This led to a lack of economic growth and development, and the country’s infrastructure suffered as a result.
After gaining independence, Eritrea’s economy began to improve. The government began to implement a number of reforms, including the privatization of state-owned enterprises and the liberalization of trade. These reforms helped to attract foreign investment, which further boosted economic growth.
In addition to these reforms, the government has also implemented a number of programs to promote economic development. These include the establishment of free trade zones, the expansion of the country’s transportation and communication infrastructure, and the creation of a national development bank.
Current Economic Situation
Despite the progress made in recent years, the Eritrean economy remains relatively underdeveloped. The country’s GDP per capita is one of the lowest in the world, and it is highly dependent on foreign aid. The country’s economy is also heavily reliant on the agricultural sector, which accounts for roughly 40% of GDP.
The Eritrean economy is also heavily reliant on remittances from Eritreans living abroad. These remittances account for roughly 10% of GDP and provide a vital source of income for many families.
The country’s economy is also heavily reliant on foreign investment. The government has implemented a number of incentives to attract foreign investment, including tax breaks and other incentives.
Conclusion
The Eritrean economy is still in its early stages of development. The country’s economy is heavily reliant on the agricultural sector, remittances from abroad, and foreign investment. The government has implemented a number of reforms to attract foreign investment and promote economic growth, but more needs to be done to ensure sustainable economic development.