Iraq opened on Thursday its biggest trade fair in more than 20 years, the latest step in Baghdad's efforts to rebuild an economy battered by decades of conflict and sanctions and combat unemployment.

More than 1,500 companies from Iraq and 21 other countries are taking part in the Baghdad International Fair, which was opened by Prime Minister Nuri al-Maliki and is due to run until November 10.

"This is the new Iraq," Maliki said in a speech at the fair, held in the Mansur neighbourhood of west Baghdad.

"I hope all the companies here take advantage of this opportunity."

He added: "The state we are talking about is in the construction stage, and it needs all types of construction."

According to Bassem Saddam Sultan, the deputy chief of the fair's organising committee, the overall attendance was the highest in more than 20 years.

The fair was opened under heavy security, with journalists having to pass through multiple searches before being allowed in, in a city that still sees regular violent attacks, despite improved security compared to the worst of Iraq's bloodshed in 2006 and 2007.

Iraq's state-dominated economy is heavily dependent on exports of crude oil, but while the energy sector accounts for around two-thirds of gross domestic product, it only accounts for one percent of employment.

As a result, unemployment is often cited as a complaint by Iraqis.

Baghdad has looked to invite foreign companies to rebuild critical infrastructure, which is crumbling as a result of decades of under investment, as well as to work in several key sectors such as transport, housing and agriculture.