How did Yemen get so poor?

Answers to your questions about the news.
Jan. 4 2010 6:26 PM

Why Is Yemen So Poor?

Conflict, corruption, and qat.

Street in Yemen. Click image to expand.
Yemenis gather outside shops at Souk al-Melh

The United States will more than double the $70 million in security aid it sent to Yemen last year, according to an announcement made Friday by Gen. David Petraeus. But counterterrorism analysts doubt this infusion of cash will be enough to eliminate al-Qaida from the area. The average Yemeni makes just $950 per year (PDF), in part because of the country's declining oil reserves. Still, some of Yemen's neighbors in the Middle East bring in more money with less oil. Lebanon, for example, generates six times as much wealth with no oil at all. How did Yemen get so poor?

Civil war, corruption, and economic mismanagement. Yemen's oil output has shrunk from 450,000 barrels per day to just 180,000 barrels per day in the past six years—a trend that, until recently, had been masked by elevated oil prices—yet it continues to account for 80 percent of government income. As that pool of money shrinks, a greater proportion of it is being consumed by a prolonged battle with Shiite insurgents in the northern part of the country. The Yemenis spend more than 6 percent of their GDP on the military, the seventh-highest rate in the world. Like declining oil revenues, however, war is just one small piece of the privation puzzle. The six countries that spend a greater percentage of their GDP on defense—Oman, Qatar, Saudi Arabia, Iraq, Jordan, and Israel—are all in the Middle East, and are all more prosperous than Yemen.

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Few countries can match Yemen for the scale and creativity of corruption (PDF). While Yemeni generals boast of leading nearly 100,000 fighters, about one-third of those are "ghost soldiers" who either don't exist or who never show up for duty. The ghosts' commanding officers keep their salaries and sell their weapons, blankets, and fuel allocations on the black market. Nonmilitary funds are commonly purloined as well, with private businessmen raking in huge profits from no-bid contracts. And the government makes regular direct payments, called mezaniyya, to help preserve traditional tribal structures. In fact, most are just payoffs to tribal leaders.

More problematic for Yemen's long-term prosperity is the mismatch between the country's needs and means. Agriculture is a good example. While 43 percent of its employed adult men are farmers, the nation imports more than 75 percent of its food. A few decades ago, Yemenis were able to feed themselves; now many farmers have switched over to growing qat, a leaf containing an amphetamine-like drug that is illegal in most Western countries. Farming qat is quite easy—it's an evergreen , so it doesn't require annual sowing, and there is no post-harvest processing. Farmers just pick the leaves and haul them off to market. (As a result, it's six times more profitable to grow qat than any food crop.) Yemenis are also big-time consumers of qat: Even when food prices spiked in the last few years, many fathers continued to spend about one-quarter of their income on the drug, leaving their families with less to eat.

The future is no brighter. Oil wells are projected to run completely dry within 10 years, and Yemen will have to convert to a labor economy. But it won't be able to undercut South Asia and the Philippines—the major exporters of cheap workers to the Gulf—on labor costs without further degrading citizens' standard of living. While vocational schools are beginning to open to train semi-skilled workers, they won't come close to providing for a population that's projected to nearly triple in the next three decades.

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Explainer thanks Christopher Boucek of the Carnegie Endowment for International Peace.

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