Libya's economy is based overwhelmingly on oil production, though agriculture and livestock herding are still important to many rural families. Receipts from oil exports account for nearly all income from foreign trade.

Libya has invested much of its oil profits in the development of other parts of its economy, including agriculture, industry, and mining. Agriculture is expanding south from the coast to newly irrigated areas of desert. Most of the large farms, which are owned by the government, have begun to produce foods that were formerly imported, including corn (maize), wheat, and citrus fruits, as well as cattle, sheep, and poultry. Decreased oil revenues in the 1980s, however, set back Libya's economic development, and the country must still import much of its food. Industry is dominated by oil production, but forms of local industry include traditional handicrafts, food processing, textiles, and construction. The government is working to develop medium and heavy industry to help reduce Libya's dependence on imports.