Before The Crisis: Lessons From Iraq’s Pre-ISIS Economy[1]

Eduardo Amaral Haddad, Inácio F. Araújo and Geoffrey J.D. Hewings

No 2609, Policy briefs on Economic Trends and Policies from Policy Center for the New South

Abstract: Iraq is dependent on oil, but this dependence is felt unevenly. In 2013, oil accounted for nearly half of GDP, over 90% of exports, and almost all fiscal revenues, but less than 2% of jobs; benefits from oil were concentrated in Basra and Baghdad, and among wealthier households. Regional disparities are deep-rooted. The MRSAM shows that most governorates rely heavily on spillovers from Baghdad and Basra, with weak local absorptive capacity to translate income into growth. Distributional effects are regressive. Oil revenues primarily benefit capital owners and high-income households, leaving poorer households and labor with marginal gains, unless supported by redistributive policies. Policy action is critical. Iraq must use oil wealth to diversify its economy, build local capacity, strengthen social protection, and manage spatial inequalities. These challenges are technical but also deeply political.

Date: 2026-03
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