Yemen: A Collapsed Economy

This article explores the economic development of Yemen after the 1970s in order to identify and analyze the variables that have contributed to its near collapse. It will be argued that the structural changes that took place in the Yemeni economy, particularly over the twenty-year period between 1970–1990, created a unique development experience that, once it collapsed due to the Gulf Crisis of 1990, left the majority of Yemenis with little means of survival. Moreover, it is argued that the structure of the Yemeni economy (which had been based on sustaining labor migration) could not and would not adapt to the changing circumstances. Furthermore, Yemen continues to survive on the substitution of revenue from oil rents for the revenue from labor migration. These rents from oil have not trickled down to the vast majority of Yemenis that had come to rely on labor migration rents either directly or indirectly for over two decades. These revenues significantly shifted the economic base away from the general population and narrowed it to a few individuals associated with the government. Although there have been attempts to restructure the economy with the assistance of international agencies, Yemen’s economy remains underdeveloped and appears ready to collapse under the burden of unemployment, poverty, and rapid population growth.