Yemens Economy

Introduction
For centuries, Yemen's economy was based on subsistence agriculture and was largely self-sufficient. However, with the import of cheap goods from abroad, North Yemen moved quickly from self-sufficiency to dependence after 1960, as the south had done decades earlier. During the 1970s and 1980s North Yemen came to rely heavily on Saudi Arabia, the Arab Gulf states, and to a lesser extent, the western industrial countries for financial and other assistance, while South Yemen became equally dependent on the Union of Soviet Socialist Republics (USSR) and other Communist countries. Unification in 1990 and the negative effects of the Persian Gulf War the following year caused economic hardship but also spurred a new commitment to economic planning and development in Yemen. Efforts to improve the economy focused on Yemen's petroleum industry, its considerable agricultural and fishing potential, job training, and infrastructure. In 1994, however, Yemen's economy suffered another blow with the onset of civil war. The conflict, which lasted for more than two months, produced major infrastructural damage throughout the country, though particularly in and surrounding the port city of Aden; it also resulted in rampant inflation and a major devaluation of the Yemeni currency.

Agriculture
Yemen's economy is primarily agricultural, and farming and livestock raising remain the chief livelihood for most of the population. The extremes of topography and climate, especially in the north, permit a wide variety of crops, including grain (particularly sorghum, but also wheat, millet, and barley), a growing number of fruits and vegetables (most notably grapes, tomatoes, papayas, bananas, limes, and dates), coffee, and the domestically valuable Qat. In most areas of the highlands, crops are grown in terraced fields cut into the hills. Since the 1980s Yemeni farmers have developed various irrigation projects in an effort to turn some of the country's plentiful desert into workable farmland and to further increase the variety of crops that can be planted. Sheep and goats are widely raised in Yemen, as are some cattle.

Fishing
Fishing is also important to Yemen's economy. Tuna, mackerel, cod, and lobster are caught by commercial as well as independent boats; the catch is sold fresh and dried, and canning factories are in operation in some of the country's coastal areas.

Manufacturing
Many products in Yemen continue to be made by hand and sold locally. Woven fabrics, glass and leatherwork, pottery, and jewelry are made by craftspeople who sell their work in the suqs (bazaars) held in many of Yemen's cities, towns, and villages. Modern industry remains mostly small in scale. The petroleum refinery at Aden accounts for a large share of the country's industrial output; other manufactures include foodstuffs, cement, tile, bricks, textiles, soft-drink bottles, and aluminum and plastic products. Oil-fueled electrical power plants produce all of Yemen's electricity. Although many of the country's large industrial facilities are antiquated and uneconomical, the public and private sectors are creating new industries and building factories in the urban centers; construction projects currently employ a significant number of Yemeni workers.

Mining
Although abundant mineral resources were suspected, most of Yemen remained geologically unexplored until the mid-1980s. In 1984 and 1986, commercial amounts of oil were discovered in the north and south respectively, and the first oil was exported from the north in late 1987. Major oil fields were discovered in two other locations in the early 1990s. As a result, oil production reached 350,000 barrels per day, or about 79 million barrels per year, in the mid-1990s, with significant increases expected by the end of the decade. Yemen also has natural gas fields with an estimated 480 million cu m (17 billion cu ft) of gas. In 1995 Yemen contracted with a French oil company to produce up to 5 million metric tons of liquefied natural gas (LNG) per year for 25 years. The project, including a pipeline and liquefaction plant, is estimated to cost $3 billion and is scheduled to begin producing LNG in 2001. Many analysts believe that if used wisely, known oil and gas reserves could fuel Yemen's development well into the 21st century. Other mines and quarries in Yemen produce rock salt, limestone, marble, and alabaster.

Currency and Foreign Trade
Yemen's unit of currency is the riyal, which consists of 100 fils (159.6 riyals equal U.S.$1, 1999, official rate; 159.6 riyals equal U.S.$1, 1995 free-market rate). In March 1994 approximately 18 riyals equaled U.S.$1 officially; however, the currency declined sharply later that year, due largely to the country's civil war and its lingering effects. In the early 1990s Yemen's budget expenditures exceeded revenues by approximately 14 percent. Yemen imports considerably more than it exports, and has relied quite heavily on foreign assistance to offset its trade deficit. Principal exports include crude oil, some refined petroleum products, textiles, hides and skins, coffee, vegetables, and dried fish; among Yemen's many imported products are manufactured consumer goods, textiles, foodstuffs, machinery, transportation equipment, and chemicals. Yemen's major trading partners include Saudi Arabia, the United States, Japan, China, and countries of the European Union. Throughout the 20th century and probably earlier, the major export of both Yemen's was Yemeni workers. This increased dramatically after the 1960s, and the two Yemenis became largely remittance economies, increasingly dependent on hard currency earned by workers abroad, mainly in Saudi Arabia and other countries of the Arabian Peninsula. This changed in 1990, when Saudi Arabia withdrew the privileges of Yemenis working there and halted foreign aid to its southern neighbor; the move was made in retaliation for Yemen's support for an Arab diplomatic and political solution to Iraq's seizure of Kuwait and its resistance to the deployment of foreign troops to Saudi Arabia to counter the Iraqi military threat. As a result, 850,000 Yemeni workers returned home, producing a major reduction in national income, large-scale unemployment, and general economic upheaval. To compensate for the loss in remittances and economic assistance, the government of Yemen began to focus on creating a more viable and stable domestic economy.

Transportation and Communications
Yemen has international airports in Sana'a, Aden, Taiz, and Al Hudaydah, and a good domestic air system. The ports at Aden and Al Hudaydah provide access to major sea routes. There is no railroad, but an extensive network of paved roads is rapidly replacing dirt tracks, a process that began in the 1960s. Trucks and cars are now widely available for land transportation, though many Yemenis still use donkeys and camels. Much attention has also been given to providing Yemenis with utilities, including electricity, water, and sewage disposal, and making telephone service, radio, and television more widely available. In the early 1990s Yemen had about five radio stations and ten television stations. Broadcasting is controlled by the government. Yemen's largest daily newspapers are Al-Thawra, in Sana'a, and 14 October, in Aden.