Yemen entered the 20th century under a cloud of economic decline. For much of the century, the rivalry between northern Yemen and the Marxist-led government of the south sapped the country's resources. The legacy of socialism left the southern economy in ruins. The reunification of the countries in 1990 and the subsequent civil war in 1994 further contributed to Yemen's economic decline. Government policies to stabilize the economy enacted in the mid-1990s have significantly improved the country's macroeconomic and structural conditions.
Yemen will likely address the unemployment problem, attempt to curb population growth, and implement the privatization policy in hopes of achieving long-term economic growth. The government has yet to lift subsidies on diesel fuel completely, cut military spending, downsize the public bureaucracy, or quash corruption in its public institutions and ministries. Much work will need to be done on the political front to achieve social and political stability, particularly to soothe the tensions between the current government and rural tribal groups and southern Marxists.