Corruption's Reflection: Iraq's Shadow Economy

摘要

Accurate economic intelligence is critical in designing policies, strategies and investments for Iraq's economic recovery. Unfortunately, very little is known about the country's economic progress over the last several decades, (2) let alone the current situation. There are huge gaps in even the most routine data compiled by nearly every country. The International Monetary Fund, for instance, does not have any data on even the balance sheets of the central bank or the financial system since 1977, let alone national income accounts (missing since 1993), prices, interest rates, or the balance of payments; (3) Today, the insurgency and persistent insecurity has made even the simplest data-gathering exercises almost impossible to conduct. The picture we have and are likely to have for some time will, by necessity, be derived from indirect indicators and inference; (4) The picture we have is an economy stagnating during the period from 1989 to 2003 with short periods of improvement coinciding with favorable developments in oil markets. It is safe to day that three successive wars and twelve years of economic sanctions resulted in a chronic long run deterioration of the economy, both in terms of its actual performance, and perhaps more importantly its ability to resume growth in the post-Saddam era. In addition, we also know that during the period of sanctions in the 1990s both industrial and agricultural production faltered for lack of inputs. Constraints on oil revenues caused even the government sector to contract during this period. As the government sector contracted in size and influence, large segments of the population were left to survive on their own wit and skill.