Côte d'Ivoire has benefited since independence in 1960 from considerable political stability, and to no small measure this has been due to the close relationship with the former colonial power, France, and the presence of French troops in the country. These provided a secure platform for economic development and an encouraging environment for foreign investment. This state of affairs was disturbed by a military coup (a domestic overthrow of a government) in 1999, but international pressure led to a return to constitutional civilian government in 2000.
Most people in the economy (more than half) depend on agriculture for their livelihoods, and they are the poorest section of the community. Farming is undertaken on small family plots, and much of the output is consumed by the producing family. The economy depends heavily on exports of tropical agricultural products to generate the foreign exchange that Côte d'Ivoire requires to purchase the manufactured goods it does not have the capacity to produce itself. The main exports are cocoa and cocoa products, coffee, and fish. Exports generate 40 percent of the GDP. However, the heavy reliance on tropical agricultural exports makes the economy very vulnerable to changes in international commodity prices and the weather. In 1994, the currency was devalued by 50 percent which resulted in higher prices to producers of export crops who have responded with higher output, but much of the benefit has been eroded by declining world prices, particularly for coffee. Sparked by the devaluation , in the 1994-98 period the real gross domestic product (GDP) growth averaged 5.5 percent providing the first sustained improvement in per capita GDP since the late 1970s. During this period, the external current account deficit (including grants) was lowered from 11 percent of the GDP in 1993 to 4 percent in 1998, and the external debt burden was reduced.
Despite the positive economic results of devaluation, the government is aware of its economy's vulnerability due to its heavy reliance on cocoa and coffee. To safeguard the economy, the government is doing its best to encourage other agricultural exports, such as pineapples and rubber, and exploring for offshore deposits of oil and gas. Since 1986, Côte d'Ivoire has been undertaking a program of economic liberalization , which has involved ending state monopolies , particularly in agricultural marketing, and privatizing state-owned enterprises in an effort to make these sectors more efficient.
The economic situation was further boosted by an increase in grants and low interest rate loans, mainly from France, between 1994 and 1998. Significant progress was made in consolidating public finances during this period with the overall budget deficit declining from about 12 percent of the GDP in 1993 to 2.5 percent in 1998. The 50 percent devaluation of CFA franc in January 1994 caused a single jump in the inflation rate to 26 percent in 1994, but the rate fell sharply to 9.4 percent in 1996 and 1.3 percent in 1999.
The sharp downturn in the terms of trade, with cocoa prices falling by 40 percent below their end-of-1998 level as well as a significant slowdown in disbursement of external assistance have given rise to problems. Economic growth has slowed, and investment has slipped with the private sector 's adoption of a more cautious stance in the uncertain political environment following the 1999 coup.