Indeed, the country suffered severely from the economic sanctions that were imposed by the US in 1986 after Libya was blamed for the bombing of a Berlin disco that killed two American servicemen. The consequence included a sharp decline in oil production, which fell to around 1.4 million barrels per day in the 1990s, from peak production of 3.3 million barrels per day in 1979. Output at the country's dilapidated liquefied natural gas plant, built by ExxonMobil in the late 1960s, has fallen to just 15 percent of capacity. Unemployment rose to about 30 percent.
Libya's economy continues to be overwhelmingly driven by the hydrocarbons sector, despite efforts to diversify the economy. Thanks to the increased oil and gas prices in the past three years, the country has received a massive influx of revenues, generating a large fiscal surplus.
This has made possible a boom in investment and business opportunities for foreign companies, which have been accompanied and facilitated by some reformist measures, such as privatisation and reform of banks and preparations to reform other state-owned enterprises.
However, state-owned entities continue to play a significant role in many sectors. In some cases, work is going ahead on long-standing but costly ventures that have questionable economic merit, and that might be shelved if government revenues fall:
Oil and gas.
Following the rounds of licensing in the past five years, the bulk of new activity is presently in exploration, though a number of firms with mature fields are beginning or preparing to carry out enhanced recovery programmes.
A raft of new construction and real estate deals has recently been agreed.
Tourism. A new Dubai-based real estate company, Nobles Properties, has just agreed a project with Oya Tourism and Development to build and develop a large residential and commercial property complex in Tripoli.
Afriqiyah Airways, a part-private Libyan airline established in 1999, is expanding its fleet and has all but eclipsed state-owned Libyan Arab Airlines as Libya's leading airline. Last month, OAO Russian Railways announced that it had begun work on building track.
Telecommunications. Chinese telecoms firms Huawei and ZTE have just won contracts to expand the mobile telecoms network run by state-owned Libyana.
Despite Libya's international political rehabilitation, doing business in and with Libya retains some idiosyncratic practical challenges and risks for foreign companies and governments:
Leveraging history. In July, Qadhafi agreed a new package of "compensation" from Italy for colonial misrule. The deal will benefit Italy, as Italian companies. The deal illustrates Qadhafi's willingness repeatedly to play the colonial compensation card with Italy. Similarly, though he recently described problems in US relations as "completely closed", it is possible that he may seek to leverage past disputes in the future.
Sensitivities. Libyan officials and Qadhafi's family are prone to taking arbitrary or disproportionate measures, for example because of perceived slights or attacks.
Nevertheless, the level of business opportunities for foreign firms should be high for at least the near future. Political disputes may continue to have short-lived repercussions for foreign firms, but economic policy and the overall business environment will remain broadly stable.
Meanwhile, endemic corruption and high unemployment persist, and the lack of real economic incentives is driving skilled professionals out of the country. It was reporthed that, doctors, engineers, and economists are going elsewhere, rather than subsist on 600 Libyan dinars ($450) per month.
Other issues seriously obstructing Libya's political and economic development include the state ownership of banks, a government controlled media and the ban on political opposition parties.
Libya is a country that has responded to international criticisms but how and how far is where it gets difficult.
With oil prices on the rise, none of these difficulties are deterring foreign oil companies from aggressively competing to win exploration rights and investment opportunities in Libya.
With the current wolrd's economic turmoil though, Libya has become a very attractive place for doing business.
There are opportunities in Libya that do not exist in other Middle Eastern countries.