Armenia:Under the old Soviet central planning system, Armenia haddeveloped a modern industrial sector, supplying machine tools,textiles, and other manufactured goods to sister republics inexchange for raw materials and energy. Since the implosion of theUSSR in December 1991, Armenia has switched to small-scaleagriculture away from the large agroindustrial complexes of theSoviet era. The agricultural sector has long-term needs for moreinvestment and updated technology. The privatization of industry hasbeen at a slower pace, but has been given renewed emphasis by thecurrent administration. Armenia is a food importer, and its mineraldeposits (gold, bauxite) are small. The ongoing conflict withAzerbaijan over the ethnic Armenian-dominated region ofNagorno-Karabakh and the breakup of the centrally directed economicsystem of the former Soviet Union contributed to a severe economicdecline in the early 1990s. By 1994, however, the ArmenianGovernment had launched an ambitious IMF-sponsored economic programthat has resulted in positive growth rates in 1995-2000. Armeniaalso managed to slash inflation and to privatize most small- andmedium-sized enterprises. The chronic energy shortages Armeniasuffered in recent years have been largely offset by the energysupplied by one of its nuclear power plants at Metsamor. Armenia'ssevere trade imbalance, importing three times its exports, has beenoffset somewhat by international aid, domestic restructuring of theeconomy, and foreign direct investment.
Aruba:Tourism is the mainstay of the Aruban economy, althoughoffshore banking and oil refining and storage are also important.The rapid growth of the tourism sector over the last decade hasresulted in a substantial expansion of other activities.Construction has boomed, with hotel capacity five times the 1985level. In addition, the reopening of the country's oil refinery in1993, a major source of employment and foreign exchange earnings,has further spurred growth. Aruba's small labor force and less than1% unemployment rate have led to a large number of unfilled jobvacancies, despite sharp rises in wage rates in recent years.
Ashmore and Cartier Islands:no economic activity
Atlantic Ocean:The Atlantic Ocean provides some of the world's mostheavily trafficked sea routes, between and within the Eastern andWestern Hemispheres. Other economic activity includes theexploitation of natural resources, e.g., fishing, the dredging ofaragonite sands (The Bahamas), and production of crude oil andnatural gas (Caribbean Sea, Gulf of Mexico, and North Sea).
Australia:Australia has a prosperous Western-style capitalisteconomy, with a per capita GDP at the level of the four dominantWest European economies. Rich in natural resources, Australia is amajor exporter of agricultural products, minerals, metals, andfossil fuels. Commodities account for 57% of the value of totalexports, so that a downturn in world commodity prices can have a bigimpact on the economy. The government is pushing for increasedexports of manufactured goods, but competition in internationalmarkets continues to be severe. While Australia has suffered fromthe low growth and high unemployment characterizing the OECDcountries in the early 1990s and during the recent financialproblems in East Asia, the economy has expanded at a solid 4% annualgrowth pace in the last five years. Canberra's emphasis on reformsis a key factor behind the economy's resilience to the regionalcrisis and its stronger than expected growth rate. Growth in 2001will depend on key international commodity prices, the extent ofrecovery in nearby Asian economies, and the strength of US andEuropean markets.
Austria:Austria with its well-developed market economy and highstandard of living is closely tied to other EU economies, especiallyGermany's. Membership in the EU has drawn an influx of foreigninvestors attracted by Austria's access to the single Europeanmarket and proximity to EU aspirant economies. In 2000, Austriamoved to further cut government spending and raise taxes to meet EMUdeficit targets after facing unexpected difficulties in reducing thepublic deficit. To meet increased competition from both EU andCentral European countries, Austria will need to emphasizeknowledge-based sectors of the economy and continue to deregulatethe service sector. Growth is expected to remain at about 3% in 2001.
Azerbaijan:Azerbaijan's most prominent products are oil, cotton,and natural gas. Azerbaijan's oil production declined through 1997but has registered an increase every year since. Negotiation of 19production-sharing arrangements (PSAs) with foreign firms, whichhave thus far committed $60 billion to oil field development, shouldgenerate the funds needed to spur future industrial development. Oilproduction under the first of these PSAs, with the AzerbaijanInternational Operating Company, began in November 1997. Azerbaijanshares all the formidable problems of the former Soviet republics inmaking the transition from a command to a market economy, but itsconsiderable energy resources brighten its long-term prospects. Bakuhas only recently begun making progress on economic reform, and oldeconomic ties and structures are slowly being replaced. An obstacleto economic progress, including stepped up foreign investment, isthe continuing conflict with Armenia over the Nagorno-Karabakhregion. Trade with Russia and the other former Soviet republics isdeclining in importance while trade is building up with Turkey,Iran, UAE, and the nations of Europe. Long-term prospects willdepend on world oil prices, the location of new pipelines in theregion, and Azerbaijan's ability to manage its oil wealth.
Bahamas, The:The Bahamas is a stable, developing nation with aneconomy heavily dependent on tourism and offshore banking. Tourismalone accounts for more than 60% of GDP and directly or indirectlyemploys 40% of the archipelago's labor force. Moderate growth intourism receipts and a boom in construction of new hotels, resorts,and residences led to an increase of the country's GDP by anestimated 3% in 1998, 6% in 1999, and 4.5% in 2000. Manufacturingand agriculture together contribute only 10% of GDP and show littlegrowth, despite government incentives aimed at those sectors.Overall growth prospects in the short run will depend heavily on thefortunes of the tourism sector and continued sturdy growth in theUS, which accounts for the majority of tourist visitors.
Bahrain:In Bahrain, petroleum production and refining account forabout 60% of export receipts, 60% of government revenues, and 30% ofGDP. With its highly developed communication and transportfacilities, Bahrain is home to numerous multinational firms withbusiness in the Gulf. Bahrain is dependent on Saudi Arabia for oilrevenue granted as aid. A large share of exports consists ofpetroleum products made from imported crude. Construction proceedson several major industrial projects. Unemployment, especially amongthe young, and the depletion of both oil and underground waterresources are major long-term economic problems.
Baker Island:no economic activity
Bangladesh:Despite sustained domestic and international efforts toimprove economic and demographic prospects, Bangladesh remains oneof the world's poorest, most densely populated, and least developednations. Although more than half of GDP is generated through theservice sector, nearly two-thirds of Bangladeshis are employed inthe agriculture sector, with rice as the single most importantproduct. Major impediments to growth include frequent cyclones andfloods, inefficient state-owned enterprises, inadequate portfacilities, a rapidly growing labor force that cannot be absorbed byagriculture, delays in exploiting energy resources (natural gas),insufficient power supplies, and slow implementation of economicreforms. Reform is stalled in many instances by political infightingand corruption at all levels of government. Even so, Prime MinisterSheikh HASINA's Awami League government has made some headwayimproving the climate for foreign investors and liberalizing thecapital markets. Progress on other economic reforms has been haltingbecause of opposition from the bureaucracy, public sector unions,and other vested interest groups.
Barbados:Historically, the Barbadian economy had been dependent onsugarcane cultivation and related activities, but production inrecent years has diversified into manufacturing and tourism. Thestart of the Port Charles Marina project in Speightstown helped thetourism industry continue to expand in 1996-2000. Offshore financeand information services are important foreign exchange earners, andthere is also a light manufacturing sector. The government continuesits efforts to reduce unemployment, encourage direct foreigninvestment, and privatize remaining state-owned enterprises. Growthshould remain steady in 2001, with new tourist facilities a plusfactor.
Bassas da India:no economic activity
Belarus:Belarus has seen little structural reform since 1995, whenPresident LUKASHENKO launched the country on the path of "marketsocialism." In keeping with this policy, LUKASHENKO reimposedadministrative controls over prices and currency exchange rates andexpanded the state's right to intervene in the management of privateenterprise. In addition to the burdens imposed by extremely highinflation, businesses have been subject to pressure on the part ofcentral and local governments, e.g., arbitrary changes inregulations, numerous rigorous inspections, and retroactiveapplication of new business regulations prohibiting practices thathad been legal. Further economic problems are two consecutive badharvests, 1998-99, and persistent trade deficits. Close relationswith Russia, possibly leading to reunion, color the pattern ofeconomic developments. For the time being, Belarus remainsself-isolated from the West and its open-market economies.
Belgium:This modern private enterprise economy has capitalized onits central geographic location, highly developed transport network,and diversified industrial and commercial base. Industry isconcentrated mainly in the populous Flemish area in the north,although the government is encouraging investment in the southernregion of Wallonia. With few natural resources, Belgium must importsubstantial quantities of raw materials and export a large volume ofmanufactures, making its economy unusually dependent on the state ofworld markets. About three-quarters of its trade is with other EUcountries. Belgium's public debt is expected to fall below 100% ofGDP in 2002, and the government has succeeded in balancing isbudget. Belgium became a charter member of the European MonetaryUnion (EMU) in January 1999. Economic growth in 2000 was broadbased, putting the government in a good position to pursue itsenergy market liberalization policies and planned tax cuts.
Belize:The small, essentially private enterprise economy is basedprimarily on agriculture, agro-based industry, and merchandising,with tourism and construction assuming greater importance. Sugar,the chief crop, accounts for nearly half of exports, while thebanana industry is the country's largest employer. The government'stough austerity program in 1997 resulted in an economic slowdownthat continued in 1998. The trade deficit has been growing, mostlyas a result of low export prices for sugar and bananas. The touristand construction sectors strengthened in early 1999, supportinggrowth of 6% in 1999 and 4% in 2000. Aided by international donors,the government's key short-term objective remains the reduction ofpoverty.
Benin:The economy of Benin remains underdeveloped and dependent onsubsistence agriculture, cotton production, and regional trade.Growth in real output averaged a sound 5% in 1996-99, but a rapidpopulation rise offset much of this growth. Inflation has subsidedover the past several years. Commercial and transport activities,which make up a large part of GDP, are vulnerable to developments inNigeria, particularly fuel shortages. The Paris Club and bilateralcreditors have eased the external debt situation in recent years.While high fuel prices constrained growth in 2000, increased cottonproduction - enabled by a major restructuring program - and anexpansion of the Cotonou port, may lead to increased growth in 2001.
Bermuda:Bermuda enjoys one of the highest per capita incomes in theworld, having successfully exploited its location by providingfinancial services for international firms and luxury touristfacilities for 360,000 visitors annually. The tourist industry,which accounts for an estimated 28% of GDP, attracts 84% of itsbusiness from North America. The industrial sector is small, andagriculture is severely limited by a lack of suitable land. About80% of food needs are imported. International business contributesover 60% of Bermuda's economic output; a failed independence vote inlate 1995 can be partially attributed to Bermudian fears of scaringaway foreign firms. Government economic priorities are the furtherstrengthening of the tourist and international financial sectors.
Bhutan:The economy, one of the world's smallest and leastdeveloped, is based on agriculture and forestry, which provide themain livelihood for more than 90% of the population. Agricultureconsists largely of subsistence farming and animal husbandry. Ruggedmountains dominate the terrain and make the building of roads andother infrastructure difficult and expensive. The economy is closelyaligned with India's through strong trade and monetary links. Theindustrial sector is technologically backward, with most productionof the cottage industry type. Most development projects, such asroad construction, rely on Indian migrant labor. Bhutan's hydropowerpotential and its attraction for tourists are key resources. TheBhutanese Government has made some progress in expanding thenation's productive base and improving social welfare. Modeleducation, social, and environment programs in Bhutan are underwaywith support from multilateral development organizations. Eacheconomic program takes into account the government's desire toprotect the country's environment and cultural traditions. Detailedcontrols and uncertain policies in areas like industrial licensing,trade, labor, and finance continue to hamper foreign investment.
Bolivia:Bolivia, long one of the poorest and least developed LatinAmerican countries, has made considerable progress toward thedevelopment of a market-oriented economy. Successes under PresidentSANCHEZ DE LOZADA (1993-97) included the signing of a free tradeagreement with Mexico and joining the Southern Cone Common Market(Mercosur), as well as the privatization of the state airline,telephone company, railroad, electric power company, and oilcompany. His successor, Hugo BANZER Suarez has tried to furtherimprove the country's investment climate with an anticorruptioncampaign. Growth slowed in 1999, in part due to tight governmentbudget policies, which limited needed appropriations foranti-poverty programs, and the fallout from the Asian financialcrisis. In 2000, major civil disturbances in April, and again inSeptember and October, held down overall growth to 2.5%.
Bosnia and Herzegovina:Bosnia and Herzegovina ranked next to TheFormer Yugoslav Republic of Macedonia as the poorest republic in theold Yugoslav federation. Although agriculture is almost all inprivate hands, farms are small and inefficient, and the republictraditionally is a net importer of food. Industry has been greatlyoverstaffed, one reflection of the socialist economic structure ofYugoslavia. TITO had pushed the development of military industriesin the republic with the result that Bosnia hosted a large share ofYugoslavia's defense plants. The bitter interethnic warfare inBosnia caused production to plummet by 80% from 1990 to 1995,unemployment to soar, and human misery to multiply. With an uneasypeace in place, output recovered in 1996-98 at high percentage ratesfrom a low base; but output growth slowed appreciably in 1999 and2000, and GDP remains far below the 1990 level. Economic data are oflimited use because, although both entities issue figures,national-level statistics are not available. Moreover, official datado not capture the large share of activity that occurs on the blackmarket. The marka - the national currency introduced in 1998 - hasgained wide acceptance, and the Central Bank of Bosnia andHerzegovina has dramatically increased its reserve holdings.Implementation of privatization, however, has been slower thananticipated. Banking reform accelerated in early 2001 as all thecommunist-era payments bureaus were shut down. The country receivessubstantial amounts of reconstruction assistance and humanitarianaid from the international community but will have to prepare for anera of declining assistance.
Botswana:Botswana has maintained one of the world's highest growthrates since independence in 1966. Through fiscal discipline andsound management, Botswana has transformed itself from one of thepoorest countries in the world to a middle-income country with a percapita GDP of $6,600 in 2000. Diamond mining has fueled much ofBotswana's economic expansion and currently accounts for more thanone-third of GDP and for three-fourths of export earnings. Tourism,subsistence farming, and cattle raising are other key sectors. Thegovernment must deal with high rates of unemployment and poverty.Unemployment officially is 19%, but unofficial estimates place itcloser to 40%. HIV/AIDS infection rates are the highest in the worldand threaten Botswana's impressive economic gains.
Bouvet Island:no economic activity; declared a nature reserve
Brazil:Possessing large and well-developed agricultural, mining,manufacturing, and service sectors, Brazil's economy outweighs thatof all other South American countries and is expanding its presencein world markets. In the late eighties and early nineties, highinflation hindered economic activity and investment. "The RealPlan", instituted in the spring of 1994, sought to breakinflationary expectations by pegging the real to the US dollar.Inflation was brought down to single digit annual figures, but notfast enough to avoid substantial real exchange rate appreciationduring the transition phase of the "Real Plan". This appreciationmeant that Brazilian goods were now more expensive relative to goodsfrom other countries, which contributed to large current accountdeficits. However, no shortage of foreign currency ensued because ofthe financial community's renewed interest in Brazilian markets asinflation rates stabilized and the debt crisis of the eighties fadedfrom memory. The maintenance of large current account deficits viacapital account surpluses became problematic as investors becamemore risk averse to emerging market exposure as a consequence of theAsian financial crisis in 1997 and the Russian bond default inAugust 1998. After crafting a fiscal adjustment program and pledgingprogress on structural reform, Brazil received a $41.5 billionIMF-led international support program in November 1998. In January1999, the Brazilian Central Bank announced that the real would nolonger be pegged to the US dollar. This devaluation helped moderatethe downturn in economic growth in 1999 that investors had expressedconcerns about over the summer of 1998. Brazil's debt to GDP ratiofor 1999 beat the IMF target and helped reassure investors thatBrazil will maintain tight fiscal and monetary policy even with afloating currency. The economy continued to recover in 2000, withinflation remaining in the single digits and expected growth for2001 of 4.5%. Foreign direct investment set a record of more than$30 billion in 2000.
British Indian Ocean Territory:All economic activity isconcentrated on the largest island of Diego Garcia, where jointUK-US defense facilities are located. Construction projects andvarious services needed to support the military installations aredone by military and contract employees from the UK, Mauritius, thePhilippines, and the US. There are no industrial or agriculturalactivities on the islands. When the Ilois return, they plan toreestablish sugarcane production and fishing.
British Virgin Islands:The economy, one of the most stable andprosperous in the Caribbean, is highly dependent on tourism, whichgenerates an estimated 45% of the national income. An estimated350,000 tourists, mainly from the US, visited the islands in 1997.In the mid-1980s, the government began offering offshoreregistration to companies wishing to incorporate in the islands, andincorporation fees now generate substantial revenues. An estimated250,000 companies were on the offshore registry by yearend 1997. Theadoption of a comprehensive insurance law in late 1994, whichprovides a blanket of confidentiality with regulated statutorygateways for investigation of criminal offenses, is expected to makethe British Virgin Islands even more attractive to internationalbusiness. Livestock raising is the most important agriculturalactivity; poor soils limit the islands' ability to meet domesticfood requirements. Because of traditionally close links with the USVirgin Islands, the British Virgin Islands has used the dollar asits currency since 1959.
Brunei:This small, wealthy economy is a mixture of foreign anddomestic entrepreneurship, government regulation and welfaremeasures, and village tradition. Exports of crude oil and naturalgas account for over half of GDP. Per capita GDP is far above mostother Third World countries, and substantial income from overseasinvestment supplements income from domestic production. Thegovernment provides for all medical services and subsidizes rice andhousing. Brunei's leaders are concerned that steadily increasedintegration in the world economy will undermine internal socialcohesion although it became a more prominent player by serving aschairman for the 2000 APEC (Asian Pacific Economic Cooperation)forum. Plans for the future include upgrading the labor force,reducing unemployment, strengthening the banking and touristsectors, and, in general, a further widening of the economic basebeyond oil and gas.
Bulgaria:Bulgaria, a former communist country struggling to enterthe European market economy, suffered a major economic downturn in1996 and 1997, with triple digit inflation and GDP contraction of10.6% and 6.9%. The current government - which took office in May1997 after pre-term parliamentary elections - stabilized the economyand promoted growth by implementing a currency board, practicingsound financial policies, invigorating privatization, and pursuingstructural reforms. Additionally, strong assistance frominternational financial institutions - most notably the IMF whichapproved a three-year Extended Fund Facility worth approximately$900 million in September 1998 - played a critical role in turningthe economy around. After several years of tumult, Bulgaria'seconomy has stabilized. Its better-than-expected economicperformance in 1999 - despite the impact of the Kosovo conflict, the1998 Russian financial crisis, and structural reforms - and stronggrowth in 2000 portends solid growth over the next few years; thisassumes continued fiscal restraint, additional structural reforms,aid from abroad, and prosperous times in the EU economy.
Burkina Faso:One of the poorest countries in the world, landlockedBurkina Faso has a high population density, few natural resources,and a fragile soil. About 90% of the population is engaged in(mainly subsistence) agriculture which is highly vulnerable tovariations in rainfall. Industry remains dominated by unprofitablegovernment-controlled corporations. Following the African franccurrency devaluation in January 1994 the government updated itsdevelopment program in conjunction with international agencies, andexports and economic growth have increased. Maintenance of itsmacroeconomic progress in 2001-02 depends on continued lowinflation, reduction in the trade deficit, and reforms designed toencourage private investment.
Burma:Burma has a mixed economy with private activity dominant inagriculture, light industry, and transport, and with substantialstate-controlled activity, mainly in energy, heavy industry, and therice trade. Government policy in the 1990s has aimed at revitalizingthe economy after three decades of tight central planning. Privateactivity markedly increased in the early to mid-1990s, but began todecline in the past several years due to frustrations with theunfriendly business environment and political pressure from westernnations. Published estimates of Burma's foreign trade are greatlyunderstated because of the volume of black-market, illicit, andborder trade. A major ongoing problem is the failure to achievemonetary and fiscal stability. Burma remains a poor Asian countryand living standards for the majority have not improved over thepast decade. Short-term growth will continue to be restrainedbecause of poor government planning and minimal foreign investment.
Burundi:Burundi is a landlocked, resource-poor country with anunderdeveloped manufacturing sector. The economy is predominantlyagricultural with roughly 90% of the population dependent onsubsistence agriculture. Its economic health depends on the coffeecrop, which accounts for 80% of foreign exchange earnings. Theability to pay for imports therefore rests largely on the vagariesof the climate and the international coffee market. Since October1993 the nation has suffered from massive ethnic-based violencewhich has resulted in the death of perhaps 250,000 persons and thedisplacement of about 800,000 others. Only one in four children goto school, and one in nine adults has HIV/AIDS. Foods, medicines,and electricity remain in short supply.
Cambodia:Cambodia's economy slowed dramatically in 1997-98 due tothe regional economic crisis, civil violence, and politicalinfighting. Foreign investment and tourism fell off. In 1999, thefirst full year of peace in 30 years, progress was made on economicreforms and growth resumed at 4%. GDP growth for 2000 had beenprojected to reach 5.5%, but the worst flooding in 70 years severelydamaged agricultural crops, and high oil prices hurt industrialproduction, and growth for the year is estimated at only 4%. Tourismis Cambodia's fastest growing industry, with arrivals up 34% in2000. The long-term development of the economy after decades of warremains a daunting challenge. The population lacks education andproductive skills, particularly in the poverty-ridden countryside,which suffers from an almost total lack of basic infrastructure.Fear of renewed political instability and corruption within thegovernment discourage foreign investment and delay foreign aid. Onthe brighter side, the government is addressing these issues withassistance from bilateral and multilateral donors.
Cameroon:Because of its oil resources and favorable agriculturalconditions, Cameroon has one of the best-endowed primary commodityeconomies in sub-Saharan Africa. Still, it faces many of the seriousproblems facing other underdeveloped countries, such as a top-heavycivil service and a generally unfavorable climate for businessenterprise. Since 1990, the government has embarked on various IMFand World Bank programs designed to spur business investment,increase efficiency in agriculture, improve trade, and recapitalizethe nation's banks. In June 2000, the government completed anIMF-sponsored, three-year structural adjustment program; however,the IMF is pressing for more reforms, including increased budgettransparency and privatization. Higher oil prices in 2000 helped tooffset the country's lower cocoa export revenues. A rebound in thecocoa market should increase growth to over 5% in 2001.
Canada:As an affluent, high-tech industrial society, Canada todayclosely resembles the US in its market-oriented economic system,pattern of production, and high living standards. Since World WarII, the impressive growth of the manufacturing, mining, and servicesectors has transformed the nation from a largely rural economy intoone primarily industrial and urban. Real rates of growth haveaveraged nearly 3.0% since 1993. Unemployment is falling andgovernment budget surpluses are being partially devoted to reducingthe large public sector debt. The 1989 US-Canada Free TradeAgreement (FTA) and 1994 North American Free Trade Agreement (NAFTA)(which included Mexico) have touched off a dramatic increase intrade and economic integration with the US. With its great naturalresources, skilled labor force, and modern capital plant Canadaenjoys solid economic prospects. Two shadows loom, the first beingthe continuing constitutional impasse between English- andFrench-speaking areas, which has been raising the possibility of asplit in the federation. Another long-term concern is the flow southto the US of professional persons lured by higher pay, lower taxes,and the immense high-tech infrastructure.
Cape Verde:Cape Verde's low per capita GDP reflects a poor naturalresource base, including serious water shortages exacerbated bycycles of long-term drought. The economy is service-oriented, withcommerce, transport, and public services accounting for almost 70%of GDP. Although nearly 70% of the population lives in rural areas,the share of agriculture in GDP in 1998 was only 13%, of whichfishing accounts for 1.5%. About 90% of food must be imported. Thefishing potential, mostly lobster and tuna, is not fully exploited.Cape Verde annually runs a high trade deficit, financed by foreignaid and remittances from emigrants; remittances constitute asupplement to GDP of more than 20%. Economic reforms, launched bythe new democratic government in 1991, are aimed at developing theprivate sector and attracting foreign investment to diversify theeconomy. Prospects for 2001 depend heavily on the maintenance of aidflows, remittances, and the momentum of the government's developmentprogram.
Cayman Islands:With no direct taxation, the islands are a thrivingoffshore financial center. More than 40,000 companies wereregistered in the Cayman Islands as of 1997, including almost 600banks and trust companies; banking assets exceed $500 billion. Astock exchange was opened in 1997. Tourism is also a mainstay,accounting for about 70% of GDP and 75% of foreign currencyearnings. The tourist industry is aimed at the luxury market andcaters mainly to visitors from North America. Total tourist arrivalsexceeded 1.2 million visitors in 1997. About 90% of the islands'food and consumer goods must be imported. The Caymanians enjoy oneof the highest outputs per capita and one of the highest standardsof living in the world.
Central African Republic:Subsistence agriculture, together withforestry, remains the backbone of the economy of the Central AfricanRepublic (CAR), with more than 70% of the population living inoutlying areas. The agricultural sector generates half of GDP.Timber has accounted for about 16% of export earnings and thediamond industry for nearly 54%. Important constraints to economicdevelopment include the CAR's landlocked position, a poortransportation system, a largely unskilled work force, and a legacyof misdirected macroeconomic policies. The 50% devaluation of thecurrencies of 14 Francophone African nations on 12 January 1994 hadmixed effects on the CAR's economy. Diamond, timber, coffee, andcotton exports increased, leading an estimated rise of GDP of 7% in1994 and nearly 5% in 1995. Military rebellions and social unrest in1996 were accompanied by widespread destruction of property and adrop in GDP of 2%. The IMF approved an Extended Structure AdjustmentFacility in 1998 and the World Bank extended further credits in 1999and approved a $10 million loan in early 2001. The government hasset targets of 3.5% GDP growth in 2001 and 2002. As of January 2001,many civil servants were owed as much as 30 months pay, leading themto go on strike and further damaging the economy.
Chad:Landlocked Chad's economic development suffers from itsgeographic remoteness, drought, lack of infrastructure, andpolitical turmoil. About 85% of the population depends onagriculture, including the herding of livestock. Of Africa'sFrancophone countries, Chad benefited least from the 50% devaluationof their currencies in January 1994. Financial aid from the WorldBank, the African Development Fund, and other sources is directedlargely at the improvement of agriculture, especially livestockproduction. The World Bank's decision to back the Doba oil fielddevelopment and the Chad-Cameroon pipeline will add Chad to thegroup of already booming West African oil exporters. However, therank and file may not benefit much from the oil development projects.
Chile:Chile has a market-oriented economy characterized by a highlevel of foreign trade. During the early 1990s, Chile's reputationas a role model for economic reform was strengthened when thedemocratic government of Patricio AYLWIN - which took over from themilitary in 1990 - deepened the economic reform initiated by themilitary government. Growth in real GDP averaged 8% during 1991-97,but fell to half that level in 1998 because of tight monetarypolicies implemented to keep the current account deficit in checkand lower export earnings - the latter a product of the globalfinancial crisis. A severe drought exacerbated the recession in1999, reducing crop yields and causing hydroelectric shortfalls andelectricity rationing, and Chile experienced negative economicgrowth for the first time in more than 15 years. Despite the effectsof the recession, Chile maintained its reputation for strongfinancial institutions and sound policy that have given it thestrongest sovereign bond rating in South America. By the end of1999, exports and economic activity had begun to recover, and growthrebounded to 5.5% in 2000. Unemployment remains stubbornly high,however, putting pressure on President LAGOS to improve livingstandards. Meanwhile, Chile has launched free trade negotiationswith the US.
China: In late 1978 the Chinese leadership began moving the economy from a sluggish Soviet-style centrally planned economy to a more market-oriented system. Whereas the system operates within a political framework of strict Communist control, the economic influence of non-state managers and enterprises has been steadily increasing. The authorities have switched to a system of household responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprise in services and light manufacturing, and opened the economy to increased foreign trade and investment. The result has been a quadrupling of GDP since 1978. In 2000, with its 1.26 billion people but a GDP of just $3,600 per capita, China stood as the second largest economy in the world after the US (measured on a purchasing power parity basis). Agricultural output doubled in the 1980s, and industry also posted major gains, especially in coastal areas near Hong Kong and opposite Taiwan, where foreign investment helped spur output of both domestic and export goods. On the darker side, the leadership has often experienced in its hybrid system the worst results of socialism (bureaucracy and lassitude) and of capitalism (windfall gains and stepped-up inflation). Beijing thus has periodically backtracked, retightening central controls at intervals. The government has struggled to (a) collect revenues due from provinces, businesses, and individuals; (b) reduce corruption and other economic crimes; and (c) keep afloat the large state-owned enterprises many of which had been shielded from competition by subsides and had been losing the ability to pay full wages and pensions. From 80 to 120 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time low-paying jobs. Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China's population control program, which is essential to maintaining growth in living standards. Another long-term threat to continued rapid economic growth is the deterioration in the environment, notably air pollution, soil erosion, and the steady fall of the water table especially in the north. China continues to lose arable land because of erosion and economic development. Weakness in the global economy in 2001 could hamper growth in exports. Beijing will intensify efforts to stimulate growth through spending on infrastructure—such as water control and power grids—and poverty relief and through rural tax reform aimed at eliminating arbitrary local levies on farmers.
Christmas Island:Phosphate mining had been the only significanteconomic activity, but in December 1987 the Australian Governmentclosed the mine. In 1991, the mine was reopened by union workers.With the support of the government, Australian-based Casinos AustriaInternational Ltd. built a $34 million casino on Christmas Island,which opened in 1993. As of yearend 1999, gaming facilities at thecasino were temporarily closed but were expected to reopen in early2000. Another economic prospect is the possible location of aspace-launching site on the island.
Clipperton Island:Although 115 species of fish have been identifiedin the territorial waters of Clipperton Island, the only economicactivity is tuna fishing.
Cocos (Keeling) Islands:Grown throughout the islands, coconuts arethe sole cash crop. Copra and fresh coconuts are the major exportearners. Small local gardens and fishing contribute to the foodsupply, but additional food and most other necessities must beimported from Australia.
Colombia:Colombia is poised for muted growth in the next severalyears, marking continued recovery from the severe 1999 recessionwhen GDP fell by about 4%. President PASTRANA's well-respectedeconomic team is working to keep the economy on track, maintaininglow interest rates, for example. In accordance with its IMF loanagreement, the administration also is taking steps to improve thepublic sector's fiscal health. However, many challenges to improvedprosperity remain. Unemployment was stuck at a record 20% in 2000,contributing to the extreme inequality in income distribution. Twoof Colombia's leading exports, oil and coffee, face an uncertainfuture; new exploration is needed to offset declining oilproduction, while coffee harvests and prices are depressed. The lackof public security is a key concern for investors, making progressin the government's peace negotiations with insurgent groups animportant driver of economic performance. Colombia is looking forcontinued support from the international community to boost economicand peace prospects.
Comoros:One of the world's poorest countries, Comoros is made up ofthree islands that have inadequate transportation links, a young andrapidly increasing population, and few natural resources. The loweducational level of the labor force contributes to a subsistencelevel of economic activity, high unemployment, and a heavydependence on foreign grants and technical assistance. Agriculture,including fishing, hunting, and forestry, is the leading sector ofthe economy. It contributes 40% to GDP, employs 80% of the laborforce, and provides most of the exports. The country is notself-sufficient in food production; rice, the main staple, accountsfor the bulk of imports. The government is struggling to upgradeeducation and technical training, to privatize commercial andindustrial enterprises, to improve health services, to diversifyexports, to promote tourism, and to reduce the high populationgrowth rate. Continued foreign support is essential if the goal of4% annual GDP growth is to be met. Remittances from 150,000 Comoransabroad help supplement GDP.
Congo, Democratic Republic of the:The economy of the DemocraticRepublic of the Congo - a nation endowed with vast potential wealth- has declined drastically since the mid-1980s. The new governmentinstituted a tight fiscal policy that initially curbed inflation andcurrency depreciation, but these small gains were quickly reversedwhen the foreign-backed rebellion in the eastern part of the countrybegan in August 1998. The war has dramatically reduced nationaloutput and government revenue and has increased external debt.Foreign businesses have curtailed operations due to uncertaintyabout the outcome of the conflict and because of increasedgovernment harassment and restrictions. The war has intensified theimpact of such basic problems as an uncertain legal framework,corruption, raging inflation, and lack of openness in governmenteconomic policy and financial operations. A number of IMF and WorldBank missions have met with the government to help it develop acoherent economic plan but associated reforms are on hold.
Congo, Republic of the:The economy is a mixture of villageagriculture and handicrafts, an industrial sector based largely onoil, support services, and a government characterized by budgetproblems and overstaffing. Oil has supplanted forestry as themainstay of the economy, providing a major share of governmentrevenues and exports. In the early 1980s, rapidly rising oilrevenues enabled the government to finance large-scale developmentprojects with GDP growth averaging 5% annually, one of the highestrates in Africa. Moreover, the government has mortgaged asubstantial portion of its oil earnings, contributing to thegovernment's shortage of revenues. The 12 January 1994 devaluationof Franc Zone currencies by 50% resulted in inflation of 61% in1994, but inflation has subsided since. Economic reform effortscontinued with the support of international organizations, notablythe World Bank and the IMF. The reform program came to a halt inJune 1997 when civil war erupted. Denis SASSOU-NGUESSO, who returnedto power when the war ended in October 1997, publicly expressedinterest in moving forward on economic reforms and privatization andin renewing cooperation with international financial institutions.However, economic progress was badly hurt by slumping oil prices andthe resumption of armed conflict in December 1998, which worsenedthe Republic of the Congo's budget deficit. Even with the IMF'srenewed confidence and high world oil prices, Congo is unlikely torealize growth of more than 5% in 2001-02. With the return tofragile peace, the IMF approved a $14 million credit in November2000 to aid post-conflict reconstruction.
Cook Islands:Like many other South Pacific island nations, the CookIslands' economic development is hindered by the isolation of thecountry from foreign markets, the limited size of domestic markets,lack of natural resources, periodic devastation from naturaldisasters, and inadequate infrastructure. Agriculture provides theeconomic base with major exports made up of copra and citrus fruit.Manufacturing activities are limited to fruit processing, clothing,and handicrafts. Trade deficits are made up for by remittances fromemigrants and by foreign aid, overwhelmingly from New Zealand. Inthe 1980s and 1990s, the country lived beyond its means, maintaininga bloated public service and accumulating a large foreign debt.Subsequent reforms, including the sale of state assets, thestrengthening of economic management, the encouragement of tourism,and a debt restructuring agreement, have rekindled investment andgrowth.
Coral Sea Islands:no economic activity
Costa Rica:Costa Rica's basically stable economy depends ontourism, agriculture, and electronics exports. Poverty has beensubstantially reduced over the past 15 years, and a strong socialsafety net has been put into place. Foreign investors remainattracted by the country's political stability and high educationlevels, and tourism continues to bring in foreign exchange. However,traditional export sectors have not kept pace. Low coffee prices andan overabundance of bananas have hurt the agricultural sector. Thegovernment continues to grapple with its large deficit and massiveinternal debt and with the need to modernize the state-ownedelectricity and telecommunications sector.
Cote d'Ivoire:Cote d'Ivoire is among the world's largest producersand exporters of coffee, cocoa beans, and palm oil. Consequently,the economy is highly sensitive to fluctuations in internationalprices for these products and to weather conditions. Despitegovernment attempts to diversify the economy, it is still largelydependent on agriculture and related activities, which engageroughly 68% of the population. After several years of laggingperformance, the Ivorian economy began a comeback in 1994, due tothe 50% devaluation of the CFA franc and improved prices for cocoaand coffee, growth in nontraditional primary exports such aspineapples and rubber, limited trade and banking liberalization,offshore oil and gas discoveries, and generous external financingand debt rescheduling by multilateral lenders and France. Moreover,government adherence to donor-mandated reforms led to a jump ingrowth to 5% annually in 1996-99. Growth was negative in 2000because of the difficulty of meeting the conditions of internationaldonors, continued low prices of key exports, and post-coupinstability. In 2001-02, a moderate rebound in the cocoa marketcould boost growth back above 3%; however, political instabilitycould impede growth again.
Croatia:Before the dissolution of Yugoslavia, the Republic ofCroatia, after Slovenia, was the most prosperous and industrializedarea, with a per capita output perhaps one-third above the Yugoslavaverage. Croatia faces considerable economic problems stemming from:the legacy of longtime communist mismanagement of the economy;damage during the internecine fighting to bridges, factories, powerlines, buildings, and houses; the large refugee and displacedpopulation, both Croatian and Bosnian; and the disruption ofeconomic ties. Stepped-up Western aid and investment, especially inthe tourist and oil industries, would help bolster the economy. Theeconomy emerged from its mild recession in 2000 with tourism themain factor. Massive unemployment remains a key negative element.The government's failure to press the economic reforms needed tospur growth is largely the result of coalition politics and publicresistance, particularly from the trade unions, to measures thatwould cut jobs, wages, or social benefits.
Cuba:The government, the primary player in the economy, hasundertaken limited reforms in recent years to stem excess liquidity,increase enterprise efficiency, and alleviate serious shortages offood, consumer goods, and services, but prioritizing of politicalcontrol makes extensive reforms unlikely. Living standards for theaverage Cuban, without access to dollars, remain at a depressedlevel compared with 1990. The liberalized farmers' marketsintroduced in 1994, sell above-quota production at market prices,expand legal consumption alternatives, and reduce black marketprices. Income taxes and increased regulations introduced since 1996have sharply reduced the number of legally self-employed from a highof 208,000 in January 1996. Havana announced in 1995 that GDPdeclined by 35% during 1989-93 as a result of lost Soviet aid anddomestic inefficiencies. The slide in GDP came to a halt in 1994when Cuba reported growth in GDP of 0.7%. Cuba reported that GDPincreased by 2.5% in 1995 and 7.8% in 1996, before slowing down in1997 and 1998 to 2.5% and 1.2% respectively. Growth recovered with a6.2% increase in GDP in 1999 and a 5.6% increase in 2000. Much ofCuba's recovery can be attributed to tourism revenues and foreigninvestment. Growth in 2001 should continue at the same level as thegovernment balances the need for economic loosening against itsconcern for firm political control.
Cyprus:Economic affairs are affected by the division of thecountry. The Greek Cypriot economy is prosperous but highlysusceptible to external shocks. Erratic growth rates in the 1990sreflect the economy's vulnerability to swings in tourist arrivals,caused by political instability on the island and fluctuations ineconomic conditions in Western Europe. Economic policy is focused onmeeting the criteria for admission to the EU. As in the Turkishsector, water shortage is a growing problem, and severaldesalination plants are planned. The Turkish Cypriot economy hasabout one-fifth the population and one-third the per capita GDP ofthe south. Because it is recognized only by Turkey, it has had muchdifficulty arranging foreign financing, and foreign firms havehesitated to invest there. It remains heavily dependent onagriculture and government service, which together employ about halfof the work force. Moreover, the small, vulnerable economy hassuffered because the Turkish lira is legal tender. To compensate forthe economy's weakness, Turkey provides direct and indirect aid totourism, education, industry, etc.
Czech Republic:Basically one of the most stable and prosperous ofthe post-Communist states, the Czech Republic has been recoveringfrom recession since mid-1999. The economy grew about 2.5% in 2000and should achieve somewhat higher growth in 2001. Growth is led byexports to the EU, especially Germany, and foreign investment, whiledomestic demand is reviving. Uncomfortably high fiscal and currentaccount deficits could be future problems. Unemployment is down to8.7% as job creation continues in the rebounding economy; inflationis up to 3.8% but still moderate. The EU put the Czech Republic justbehind Poland and Hungary in preparations for accession, which willgive further impetus and direction to structural reform. Moves tocomplete banking, telecommunications and energy privatization willadd to foreign investment, while intensified restructuring amonglarge enterprises and banks and improvements in the financial sectorshould strengthen output growth.
Denmark:This thoroughly modern market economy features high-techagriculture, up-to-date small-scale and corporate industry,extensive government welfare measures, comfortable living standards,and high dependence on foreign trade. Denmark is a net exporter offood and energy and has a comfortable balance of payments surplus.The center-left coalition government has reduced the formerly highunemployment rate and attained a budget surplus as well as followedthe previous government's policies of maintaining low inflation anda stable currency. The coalition has lowered marginal income taxrates and raised environmental taxes thus maintaining overall taxrevenues. Problems of bottlenecks, and longer term demographicchanges reducing the labor force, are being addressed through labormarket reforms. The government has been successful in meeting, andeven exceeding, the economic convergence criteria for participatingin the third phase (a common European currency) of the EuropeanMonetary Union (EMU), but Denmark, in a September 2000 referendum,reconfirmed its decision not to join the 11 other EU members in theeuro. Even so, the Danish currency remains pegged to the euro.
Djibouti:The economy is based on service activities connected withthe country's strategic location and status as a free trade zone innortheast Africa. Two-thirds of the inhabitants live in the capitalcity, the remainder being mostly nomadic herders. Scanty rainfalllimits crop production to fruits and vegetables, and most food mustbe imported. Djibouti provides services as both a transit port forthe region and an international transshipment and refueling center.It has few natural resources and little industry. The nation is,therefore, heavily dependent on foreign assistance to help supportits balance of payments and to finance development projects. Anunemployment rate of 40% to 50% continues to be a major problem.Inflation is not a concern, however, because of the fixed tie of thefranc to the US dollar. Per capita consumption dropped an estimated35% over the last seven years because of recession, civil war, and ahigh population growth rate (including immigrants and refugees).Faced with a multitude of economic difficulties, the government hasfallen in arrears on long-term external debt and has been strugglingto meet the stipulations of foreign aid donors. The year 2001 willsee only small growth as port activity should decrease now thatEthiopia has more trade route options.
Dominica:The economy depends on agriculture and is highlyvulnerable to climatic conditions, notably tropical storms.Agriculture, primarily bananas, accounts for 21% of GDP and employs40% of the labor force. Development of the tourist industry remainsdifficult because of the rugged coastline, lack of beaches, and thelack of an international airport. Hurricane Luis devastated thecountry's banana crop in September 1995; tropical storms had wipedout one-quarter of the crop in 1994 as well. The subsequent recoveryhas been fueled by increases in construction, soap production, andtourist arrivals. The government is attempting to develop anoffshore financial industry in order to diversify the island'sproduction base.
Dominican Republic:The Dominican economy experienced dramaticgrowth over the last decade, even though the economy was hit hard byHurricane Georges in 1998. Although the country has long been viewedprimarily as an exporter of sugar, coffee, and tobacco, in recentyears the service sector has overtaken agriculture as the economy'slargest employer, due to growth in tourism and free trade zones. Thecountry suffers from marked income inequality; the poorest half ofthe population receives less than one-fifth of GNP, while therichest ten percent enjoy 40% of national income. In December 2000,the new MEJIA administration passed broad new tax legislation whichit hopes will provide enough revenue to offset rising oil prices andto service foreign debt.
Ecuador:Ecuador has substantial oil resources and rich agriculturalareas. Because the country exports primary products such as oil,bananas, and shrimp, fluctuations in world market prices can have asubstantial domestic impact. Ecuador joined the World TradeOrganization in 1996, but has failed to comply with many of itsaccession commitments. In recent years, growth has been uneven dueto ill-conceived fiscal stabilization measures. The aftermath of ElNino and depressed oil market of 1997-98 drove Ecuador's economyinto a free-fall in 1999. The beginning of 1999 saw the bankingsector collapse, which helped precipitate an unprecedented defaulton external loans later that year. Continued economic instabilitydrove a 70% depreciation of the currency throughout 1999, whicheventually forced a desperate government to "dollarize" the currencyregime in 2000. The move stabilized the currency, but did not staveoff the ouster of the government. The new president, Gustavo NOBOAhas yet to complete negotiations for a long sought IMF accord. Hewill find it difficult to push through the reforms necessary to make"dollarization" work in the long run.
Egypt:A series of IMF arrangements - along with massive externaldebt relief resulting from Egypt's participation in the Gulf warcoalition - helped Egypt improve its macroeconomic performanceduring the 1990s. Sound fiscal and monetary policies through themid-1990s helped to tame inflation, slash budget deficits, and buildup foreign reserves, while structural reforms such as privatizationand new business legislation prompted increased foreign investment.By mid-1998, however, the pace of structural reform slackened, andlower combined hard currency earnings resulted in pressure on theEgyptian pound and sporadic US dollar shortages. External paymentswere not in crisis, but Cairo's attempts to curb demand for foreignexchange convinced some investors and currency traders thatgovernment financial operations lacked transparency andcoordination. Monetary pressures have since eased, however, with the1999-2000 higher oil prices, a rebound in tourism, and a series ofmini-devaluations of the pound. The development of a gas exportmarket is a major plus factor in future growth.
El Salvador:El Salvador is a struggling Central American economywhich has been suffering from a weak tax collection system, factoryclosings, the aftermaths of Hurricane Mitch of 1998 and thedevastating earthquakes of early 2001, and weak world coffee prices.On the bright side, in recent years inflation has fallen to singledigit levels, and total exports have grown substantially. The tradedeficit has been offset by remittances (an estimated $1.6 billion in2000) from Salvadorans living abroad and by external aid. As of 1January 2001, the US dollar was made legal tender alongside thecolon.
Equatorial Guinea:The discovery and exploitation of large oilreserves have contributed to dramatic economic growth in recentyears. Forestry, farming, and fishing are also major components ofGDP. Subsistence farming predominates. Although pre-independenceEquatorial Guinea counted on cocoa production for hard currencyearnings, the deterioration of the rural economy under successivebrutal regimes has diminished potential for agriculture-led growth.A number of aid programs sponsored by the World Bank and the IMFhave been cut off since 1993 because of the government's grosscorruption and mismanagement. Businesses, for the most part, areowned by government officials and their family members. Undevelopednatural resources include titanium, iron ore, manganese, uranium,and alluvial gold. The country responded favorably to thedevaluation of the CFA franc in January 1994. Boosts in productionand high world oil prices stimulated growth in 2000, with oilaccounting for 90% of greatly increased exports.
Eritrea:With independence from Ethiopia on 24 May 1993, Eritreafaced the economic problems of a small, desperately poor country.The economy is largely based on subsistence agriculture, with 80% ofthe population involved in farming and herding. The small industrialsector consists mainly of light industries with outmodedtechnologies. Domestic output (GDP) is substantially augmented byworker remittances from abroad. Government revenues come from customduties and taxes on income and sales. Road construction is a topdomestic priority. In the long term, Eritrea may benefit from thedevelopment of offshore oil, offshore fishing, and tourism.Eritrea's economic future depends on its ability to masterfundamental social and economic problems, e.g., by reducingilliteracy, promoting job creation, expanding technical training,attracting foreign investment, and streamlining the bureaucracy.Eritrea's agriculture over the last two years was severely weakenedby war and drought, and many farmlands must wait to be demined.Another major difficulty is the ports, which prior to the war wereEthiopia's preferred outlets but since have seen trade dry up.
Estonia:In 2000, Estonia rebounded from the Russian financialcrisis by scaling back its budget and reorienting trade away fromRussian markets into EU member states. After GDP shrank 1.1% in1999, the economy made a strong recovery in 2000, with growthestimated at 6.4% - the highest in Central and Eastern Europe.Estonia joined the World Trade Organization in November 1999 - thesecond Baltic state to join - and continues its EU accession talks.For 2001, Estonians predict GDP to grow around 6%, inflation ofbetween 4.2%-5.3%, and a balanced budget. Substantial gains weremade in completing privatization of Estonia's few remaining large,state-owned companies in 2000, and this momentum is expected tocontinue in 2001. Estonia hopes to join the EU during the next roundof enlargement tentatively set for 2004.
Ethiopia:Ethiopia's economy is based on agriculture, which accountsfor half of GDP, 90% of exports, and 80% of total employment. Theagricultural sector suffers from frequent periods of drought andpoor cultivation practices, and as many as 4.6 million people needfood assistance annually. Coffee is critical to the Ethiopianeconomy, and Ethiopia earned $267 million in 1999 by exporting105,000 metric tons. According to current estimates, coffeecontributes 10% of Ethiopia's GDP. More than 15 million people (25%of the population) derive their livelihood from the coffee sector.Other exports include live animals, hides, gold, and qat. InDecember 1999, Ethiopia signed a $1.4 billion joint venture deal todevelop a huge natural gas field in the Somali Regional State. Thewar with Eritrea forced the government to spend scarce resources onthe military and to scale back ambitious development plans. Foreigninvestment has declined significantly. Government taxes imposed inlate 1999 to raise money for the war depressed an already weakeconomy. The war forced the government to improve roads and otherparts of the previously neglected infrastructure, but only certainregions of the nation benefited. Recovery from the war is mostlycontingent on natural factors. A drought has continued into the endof 2000 and food relief is expected to be needed through mid-2001 atleast. Ethiopia may receive Highly Indebted Poor Countries (HIPC)debt relief by the end of the year.
Europa Island:no economic activity
Falkland Islands (Islas Malvinas): The economy was formerly based on agriculture, mainly sheep farming, but today fishing contributes the bulk of economic activity. In 1987 the government began selling fishing licenses to foreign trawlers operating within the Falklands exclusive fishing zone. These license fees total more than $40 million per year, which goes to support the island's health, education, and welfare system. Squid accounts for 75% of the fish taken. Dairy farming supports domestic consumption; crops furnish winter fodder. Exports feature shipments of high-grade wool to the UK and the sale of postage stamps and coins. To encourage tourism, the Falkland Islands Development Corporation has built three lodges for visitors attracted by the abundant wildlife and trout fishing. The islands are now self-financing except for defense. The British Geological Survey announced a 200-mile oil exploration zone around the islands in 1993, and early seismic surveys suggest substantial reserves capable of producing 500,000 barrels per day; to date no exploitable site has been identified. An agreement between Argentina and the UK in 1995 seeks to defuse licensing and sovereignty conflicts that would dampen foreign interest in exploiting potential oil reserves.
Faroe Islands:The Faroese economy has had a strong performancesince 1994, mostly as a result of increasing fish landings and highand stable export prices. Unemployment is falling and there aresigns of labor shortages in several sectors. The positive economicdevelopment has helped the Faroese Home Rule Government produceincreasing budget surpluses which in turn help to reduce the largepublic debt, most of it owed to Denmark. However, the totaldependence on fishing makes the Faroese economy extremelyvulnerable, and the present fishing efforts appear in excess of whatis required to ensure a sustainable level of fishing in the longterm. Oil finds close to the Faroese area give hope for deposits inthe immediate Faroese area, which may eventually lay the basis for amore diversified economy and thus less dependence on Denmark andDanish economic assistance. Aided by a substantial annual subsidy(15% of GDP) from Denmark, the Faroese have a standard of living notfar below the Danes and other Scandinavians.
Fiji:Fiji, endowed with forest, mineral, and fish resources, is oneof the most developed of the Pacific island economies, though stillwith a large subsistence sector. Sugar exports and a growing touristindustry are the major sources of foreign exchange. Sugar processingmakes up one-third of industrial activity. Roughly 300,000 touristsvisit each year, including thousands of Americans following thestart of regularly scheduled non-stop air service from Los Angeles.Fiji's growth slowed in 1997 because the sugar industry sufferedfrom low world prices and rent disputes between farmers andlandowners. Drought in 1998 further damaged the sugar industry, butits recovery in 1999 contributed to robust GDP growth. Long-termproblems include low investment and uncertain property rights. Thepolitical turmoil in Fiji has had a severe impact with the economyshrinking by 8% in 1999 and over 7,000 people losing their jobs. Theinterim government's 2001 budget is an attempt to attract foreigninvestment and restart economic activity. The government's abilityto manage the budget and fulfill predictions of 4% growth for 2001will depend on a return to stability, a regaining of investorconfidence, and the absence of international sanctions (which couldcripple Fiji's sugar and textile industry).
Finland:Finland has a highly industrialized, largely free-marketeconomy, with per capita output roughly that of the UK, France,Germany, and Italy. Its key economic sector is manufacturing -principally the wood, metals, engineering, telecommunications, andelectronics industries. Trade is important, with exports equalingmore than one-third of GDP. Except for timber and several minerals,Finland depends on imports of raw materials, energy, and somecomponents for manufactured goods. Because of the climate,agricultural development is limited to maintaining self-sufficiencyin basic products. Forestry, an important export earner, provides asecondary occupation for the rural population. Rapidly increasingintegration with Western Europe - Finland was one of the 11countries joining the euro monetary system (EMU) on 1 January 1999 -will dominate the economic picture over the next several years.Growth in 2001 will be bolstered by strong private consumption, yetmay be 1 or 2 points lower than in 2000, largely because of aweakening in export demand.
France:France is in the midst of transition, from an economy thatfeatured extensive government ownership and intervention to one thatrelies more on market mechanisms. The government remains dominant insome sectors, particularly power, public transport, and defenseindustries, but it has been relaxing its control since themid-1980s. The Socialist-led government has sold off part of itsholdings in France Telecom, Air France, Thales, Thomson Multimedia,and the European Aerospace and Defense Company (EADS). Thetelecommunications sector is gradually being opened to competition.France's leaders remain committed to a capitalism in which theymaintain social equity by means of laws, tax policies, and socialspending that reduce income disparity and the impact of free marketson public health and welfare. The government has done little to cutgenerous unemployment and retirement benefits which impose a heavytax burden and discourage hiring. It has also shied from measuresthat would dramatically increase the use of stock options andretirement investment plans; such measures would boost the stockmarket and fast-growing IT firms as well as ease the burden on thepension system, but would disproportionately benefit the rich. Inaddition to the tax burden, the reduction of the work week to35-hours has drawn criticism for lowering the competitiveness ofFrench companies.