Modern domed houses at El Oued in eastern Algeria

ALGERIAN SOCIETY has undergone major changes since the mid-1980s. Urbanization has increased steadily, and in 1990 more than 50 percent of the population lived in urban areas, found primarily near the coast. Furthermore, dislocation caused by the steep fall of oil prices in 1986 and inefficiencies in the public sector caused the government to initiate extensive reforms encompassing the economic, social, and political sectors. The government shifted from its rigid centralized system of decision making to a greater emphasis on market forces. With the help of international organizations such as the World Bank (see Glossary), major transformations began taking place in agriculture, banking, and in price controls, thereby changing Algeria's socioeconomic structure. The government also increased public expenditures in the early 1990s to upgrade education and health care.

Despite those positive changes, the early 1990s have seen a rise in unemployment, a drop in per capita income, critical housing shortages, and other problems. In part, these problems resulted from the policies of previous governments, but they were exacerbated by the sharp downturn in oil prices in the mid-1980s. Further affecting Algeria's progress on the socioeconomic front has been the political turmoil resulting from the confrontation between government forces and Islamists (sometimes seen as fundamentalists). Islamists have sought to redefine Algerian identity to be more Arab and more Muslim and have questioned the legitimacy of the existing political system, which they perceive as too secular and too Western.

Data as of December 1993