ABSTRACT
This chapter analyses the reasons behind the decline of Iraq’s economy over the last decades, identifies bottlenecks and constraints that have hampered recovery, and offers remedies going forward. We focus on institutions and the capabilities of the government after the prolonged conflict that afflicted Iraq in the 1990s and early 2000s. We analyse the upheaval caused by the Allied forces’ occupation. We contend that economies emerging from conflict are unlikely to respond as they did when at peace, because pre-conflict institutions may no longer function properly or may have been dismantled. Reconstruction, would therefore, have to account for existing and imperfect institutions rather than work against them. We posit that discontinuous institutional changes implemented by Iraqi governments under the auspices of foreign powers, causing the loss of human and physical capabilities, proved harmful to development and economic growth and primarily account for Iraq’s economic decline.
