Until the late 1950s, Libya was one of the poorest countries in the world. In 1950, per capita annual income was about $40, while Libya's most valuable source of foreign earnings was the revenue received for leasing bases to the UK and United States (the bases were vacated in 1970). But with the discovery of the Zaltan oil field in 1959, the economic horizons of the country were dramatically enlarged. The first oil pipeline, from B'ir Zaltan to the coast, was opened in 1961. More oil fields were subsequently discovered, until in 1970 a peak oil output of 159.9 million tons was achieved. Production has fallen since then, but its value has increased, and Libya remains one of the world's leading oil producers. Petroleum, petroleum products, and natural gas accounted for almost all the value of exports and for one-quarter of GDP in 2002. As of 2002, Libya had 12 oil fields with reserves of 1 billion barrels or more each, and two others with reserves of 500 million–1 billion barrels.
Until the late 1950s, about 80% of the population was engaged in agriculture and animal husbandry; in 1999, however, only 18% of the labor force was engaged in agricultural pursuits. Agriculture, forestry, and fishing represented only 5% of GDP in 1999. A massive water pipeline project, called the Great Manmade River (GMR) project was initiated in 1984, and was expected to take 25 years to complete. The GMR is built to carry water in a 267-mile-long pipeline from 225 underground wells to an 880,000 gallon reservoir. This scheme envisaged providing irrigation large areas devoted to cereal cultivation. The government believed that this project would help Libya achieve self-sufficiency in grain (the country has to import at least 75% of its food needs). Total costs of the GMR were likely to exceed $25 billion.
The GDP was believed to have fallen 20% during 1984–86 due to low oil prices. After 1985, growth rates fluctuated sharply, reflecting changes in the oil market. Growth in GDP fell by 3% in 1998 due, once again, to falling oil prices, but prices rose in 1999–2000, leading to an increase in export revenues and a rise in GDP growth to 3% in 2001. In 2002, Libya devalued the official exchange rate of the dinar by 51% to increase the competitiveness of its firms and to attract foreign investment. At the same time it cut its customs duty rate by 50% on most imports to offset the effects of the currency devaluation.
Between 1992 and 1999, during the UN-imposed air embargo, many large projects were postponed because of budget restrictions. Libya's isolation slowed the pace of oil exploration through the absence of major foreign oil companies. Lack of outlets limited the development of refineries, petrochemicals, and gas facilities. In 1999, economic sanctions were lifted because of the extradition of two suspects in the bombing of the Pan Am flight over Lockerbie. Oil companies are eager to exploit Libya's resources, and Libya as of 2003 was actively courting foreign companies to help develop its production capacity from 1.5 million barrels per day to 2 million barrels per day over a five-year period. Libya is looking to cast itself as a key economic intermediary between Europe and Africa.