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Volume :6 Issue : 22 1980      Add To Cart                                                                    Download

ECONOMIC AND SOCIAL DEVELOPMENT AND THE FIRST FIVE-YEAR PLANIN THE YEMEN ARAB REPUBLIC

Auther : By: Abdul Karim El-Eryani

 
 

Prior to the Revolution of 26 September, 1962, the Yemen Arab Republic, known by then as the Mutawakelite Kingdom of Yemen, was virtually unknown to the outside world and was practically living in the Dark Ages.  Since the withdrawal of Turkish forces at the end of World War I the country was under the rule of an absolute Monarchy which was abolished by the revolution.

The wind of changes, in the Arab World brought about by the Egyptian revolution of 1952 had its impact on the ruler of Yemen, Imam Ahmed, who began to accept some foreign economic assistance namely from USSR which built the Port of Hodeidah on the Red Sea, and the People’s Republic of China for constructing an asphalted road between Hodeidah and the traditional capital of Yemen Sana’a, and also from U.S. Agency for International Development for the construction of an all-weather road between the ancient port Mocha and Sana’a.  Other than that, it could be said that modern education, health services and public administration were completely lacking.

The 1962 revolution brought Yemen into the cross-fire of power-politics in the region and a civil war between the Republicans supported by Egypt (U.A.R) and the Royalists supported by the Kingdom of Saudi Arabia ensued.  Reconciliation between Egypt and Saudi Arabia after the Arab-Israeli war of 1967 led to the complete withdrawal of Egyptian forces from Yemen and the Royalists made a last attempt to over-run the Republican capital Sana’a but were driven off after 70 days of fierce fighting.  Sporadic fighting continued in the Northern part of Yemen until final reconciliation between Saudi Arabia and the Republican regime was accomplished in Mid 1970.

Between 1970 – 1972 there were several cabinet changes but successive government had in general led the country towards free market economy and political moderation and diplomatic relations were resumed with the Federal Republic of Germany, U.S.A., and several West European countries.  Yemen also joined the International Bank for Reconstruction and Development and the International Monetary Fund in 1970.  These events brought increased financial resources for economic and social development.

A National Planning Council, with its arm the Technical Office, was established in 1968 which became in 1972 the Central Planning Organization.  This new institution received a significant technical assistance financed by Kuwait Fund for Arab Economic Development and World Bank. Since then CPO has played a pivotal role in planning and development in the country.  Similarly the International Monetary Fund supported and financed the establishment of the Central Bureau of the Budget which later on replaced the old Ministry of the Treasury.  Respectively, these two institutions produced in 1973 the first Three Year’s Development Programme for financial years 1973 / 1974 – 1975 / 1976 and the country’s Annual Budget for 1973 / 1974. 

The Three-Year’s-Development-Programme was essentially a proposal for public investment which included certain economic parameters such as estimating total investment for that period at about Yemeni Riyals 1725 million of which Y.R. 936 million was allocated to the public sector.  The rate of growth for GDP as well as GNP was estimated at about 6% p.a.

The highly ambitious Five Year’s Plan covering the period 1976/1977 to 1980/1981 envisaged a total investment of about Yemeni Riyals 16 billion or an equivalent of U.S. $ 3.5 billion.  It should be noted that approximately 60% of this total will have to come from foreign sources.  Fixed capital formation will increase from Y.R. 773 million in 1975/76 to about Y.R. 5500 million at the end of the planning period.  The rate of growth for both GDP and GNP was estimated at 8.2% and 6.8% p.a., respectively.

Looking into the future an alternative scenario was proposed in which satisfying basic needs of the population with education given the highest priority should constitute the main components of future plans.  It was also argued that fast and unregulated development may lead to social pressures and conflict unless prudent and effective policies were initiated to achieve better income distribution and to establish socio-political institutions which allow at least a minimum degree of self-expression and fulfillment.

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