French Guiana:The economy is tied closely to that of France throughsubsidies and imports. Besides the French space center at Kourou,fishing and forestry are the most important economic activities. Thelarge reserves of tropical hardwoods, not fully exploited, supportan expanding sawmill industry which provides sawn logs for export.Cultivation of crops is limited to the coastal area, where thepopulation is largely concentrated; rice and manioc are the majorcrops. French Guiana is heavily dependent on imports of food andenergy. Unemployment is a serious problem, particularly amongyounger workers.
French Polynesia:Since 1962, when France stationed militarypersonnel in the region, French Polynesia has changed from asubsistence economy to one in which a high proportion of the workforce is either employed by the military or supports the touristindustry. Tourism accounts for about one-fourth of GDP and is aprimary source of hard currency earnings. The small manufacturingsector primarily processes agricultural products. The territorybenefited from a five-year (1994-98) development agreement withFrance aimed principally at creating new jobs.
French Southern and Antarctic Lands:Economic activity is limited toservicing meteorological and geophysical research stations andFrench and other fishing fleets. The fish catches landed on IlesKerguelen by foreign ships are exported to France and Reunion.
Gabon:Gabon enjoys a per capita income four times that of mostnations of sub-Saharan Africa. This has supported a sharp decline inextreme poverty; yet because of high income inequality a largeproportion of the population remains poor. Gabon depended on timberand manganese until oil was discovered offshore in the early 1970s.The oil sector now accounts for 50% of GDP. Gabon continues to facefluctuating prices for its oil, timber, manganese, and uraniumexports. Despite the abundance of natural wealth, the economy ishobbled by poor fiscal management. In 1992, the fiscal deficitwidened to 2.4% of GDP, and Gabon failed to settle arrears on itsbilateral debt, leading to a cancellation of rescheduling agreementswith official and private creditors. Devaluation of its Francophonecurrency by 50% on 12 January 1994 sparked a one-time inflationarysurge, to 35%; the rate dropped to 6% in 1996. The IMF provided aone-year standby arrangement in 1994-95, a three-year EnhancedFinancing Facility (EFF) at near commercial rates beginning in late1995, and stand-by credit of $119 million in October 2000. Thoseagreements mandate progress in privatization and fiscal discipline.France provided additional financial support in January 1997 afterGabon had met IMF targets for mid-1996. In 1997, an IMF mission toGabon criticized the government for overspending on off-budgetitems, overborrowing from the central bank, and slipping on itsschedule for privatization and administrative reform. The rebound ofoil prices in 1999-2000 helped growth, but drops in productionhampered Gabon from fully realizing potential gains. An expecteddecline in oil output may lead to contraction in GDP in 2001-02.
Gambia, The:The Gambia has no important mineral or other naturalresources and has a limited agricultural base. About 75% of thepopulation depends on crops and livestock for its livelihood.Small-scale manufacturing activity features the processing ofpeanuts, fish, and hides. Reexport trade normally constitutes amajor segment of economic activity, but a 1999 government-imposedpreshipment inspection plan, instability of the Gambian dalasi, andthe stable political situation in Senegal have drawn some of thereexport trade away from Banjul. The government's 1998 seizure ofthe private peanut firm Alimenta eliminated the largest purchaser ofGambian groundnuts; the following two marketing seasons have seensignificantly lower prices and sales. A decline in tourism from 1999to 2000 has also held back growth. Unemployment and underemploymentrates are extremely high. Shortrun economic progress remains highlydependent on sustained bilateral and multilateral aid, onresponsible government economic management as forwarded by IMFtechnical help and advice, and on expected growth in theconstruction sector.
Gaza Strip:Economic output in the Gaza Strip - which comes underthe responsibility of the Palestinian Authority since the CairoAgreement of May 1994 - declined perhaps one-third between 1992 and1996. The downturn was largely the result of Israeli closurepolicies - the imposition of generalized border closures in responseto security incidents in Israel - which disrupted previouslyestablished labor and commodity market relationships between Israeland the WBGS (West Bank and Gaza Strip). The most serious negativesocial effect of this downturn was the emergence of highunemployment; unemployment in the WBGS during the 1980s wasgenerally under 5%; by 1995 it had risen to over 20%. Since 1997Israel's use of comprehensive closures has decreased and, in 1998,Israel implemented new policies to reduce the impact of closures andother security procedures on the movement of Palestinian goods andlabor. These changes fueled an almost three-year long economicrecovery in the West Bank and Gaza Strip; real GDP grew by 5% in1998 and 6% in 1999. Recovery was upended in the last quarter of2000 with the outbreak of Palestinian violence, which triggeredtight Israeli closures of Palestinian self-rule areas and a severedisruption of trade and labor movements.
Georgia:Georgia's economy has traditionally revolved around BlackSea tourism; cultivation of citrus fruits, tea, and grapes; miningof manganese and copper; and output of a small industrial sectorproducing wine, metals, machinery, chemicals, and textiles. Thecountry imports the bulk of its energy needs, including natural gasand oil products. Its only sizable internal energy resource ishydropower. Despite the severe damage the economy has suffered dueto civil strife, Georgia, with the help of the IMF and World Bank,has made substantial economic gains since 1995, increasing GDPgrowth and slashing inflation. The Georgian economy continues toexperience large budget deficits due to a failure to collect taxrevenues. Georgia also still suffers from energy shortages; itprivatized the distribution network in 1998, and deliveries aresteadily improving. The country is pinning its hopes for long-termrecovery on the development of an international transportationcorridor through the key Black Sea ports of P'ot'i and Bat'umi. Thegrowing trade deficit, continuing problems with tax evasion andcorruption, and political uncertainties cloud the short-termeconomic picture.
Germany:Germany possesses the world's third most technologicallypowerful economy after the US and Japan, but structural marketrigidities - including the substantial non-wage costs of hiring newworkers - have made unemployment a long-term, not just a cyclical,problem. Germany's aging population, combined with highunemployment, has pushed social security outlays to a levelexceeding contributions from workers. The modernization andintegration of the eastern German economy remains a costly long-termproblem, with annual transfers from western Germany amounting toroughly $70 billion. Growth picked up to 3% in 2000, largely due torecovering global demand; newly passed business and income tax cutsare expected to keep growth strong in 2001. Corporate restructuringand growing capital markets are transforming the German economy tomeet the challenges of European economic integration andglobalization in general.
Ghana:Well endowed with natural resources, Ghana has twice the percapita output of the poorer countries in West Africa. Even so, Ghanaremains heavily dependent on international financial and technicalassistance. Gold, timber, and cocoa production are major sources offoreign exchange. The domestic economy continues to revolve aroundsubsistence agriculture, which accounts for 36% of GDP and employs60% of the work force, mainly small landholders. In 1995-97, Ghanamade mixed progress under a three-year structural adjustment programin cooperation with the IMF. On the minus side, public sector wageincreases and regional peacekeeping commitments have led tocontinued inflationary deficit financing, depreciation of the cedi,and rising public discontent with Ghana's austerity measures.Political uncertainty and a depressed cocoa market led todisappointing growth in 2000. A rebound in the cocoa market shouldpush growth over 4% in 2001-02.
Gibraltar:Gibraltar benefits from an extensive shipping trade,offshore banking, and its position as an international conferencecenter. The British military presence has been sharply reduced andnow contributes about 11% to the local economy. The financial sectoraccounts for 20% of GDP; tourism (almost 6 million visitors in1998), shipping services fees, and duties on consumer goods alsogenerate revenue. In recent years, Gibraltar has seen majorstructural change from a public to a private sector economy, butchanges in government spending still have a major impact on thelevel of employment.
Glorioso Islands:no economic activity
Greece:Greece has a mixed capitalist economy with the public sectoraccounting for about half of GDP. Tourism is a key industry,providing a large portion of GDP and foreign exchange earnings.Greece is a major beneficiary of EU aid, equal to about 4% of GDP.The economy has improved steadily over the last few years, as thegovernment has tightened policy in the run-up to Greece's entry intothe EU's Economic and Monetary Union (EMU) on 1 January 2001. Inparticular, Greece has cut its budget deficit to below 1% of GDP andtightened monetary policy, with the result that inflation fell from20% in 1990 to 3.1% in 2000. Major challenges remaining include thereduction of unemployment and further restructuring of the economy,including the privatization of some leading state enterprises.Growth, 3.8% in 2000, may fall off to 3%-3.5% in 2001.
Greenland:The economy remains critically dependent on exports offish and substantial support from the Danish Government, whichsupplies about half of government revenues. The public sector,including publicly owned enterprises and the municipalities, playsthe dominant role in the economy. Despite several interestinghydrocarbon and minerals exploration activities, it will takeseveral years before production can materialize. Tourism is the onlysector offering any near-term potential, and even this is limiteddue to a short season and high costs.
Grenada:In this island economy progress in fiscal reforms andprudent macroeconomic management have kept annual growth steadysince 1998. The increase in economic activity has been led byconstruction and trade. Tourist facilities are being expanded;tourism is the leading foreign exchange earner. Major short-termconcerns are the rising fiscal deficit and the deterioration in theexternal account balance. Grenada shares a common central bank and acommon currency with seven other members of the Organization ofEastern Caribbean States (OECS).
Guadeloupe:The economy depends on agriculture, tourism, lightindustry, and services. It also depends on France for largesubsidies and imports. Tourism is a key industry, with most touristsfrom the US; an increasingly large number of cruise ships visit theislands. The traditional sugarcane crop is slowly being replaced byother crops, such as bananas (which now supply about 50% of exportearnings), eggplant, and flowers. Other vegetables and root cropsare cultivated for local consumption, although Guadeloupe is stilldependent on imported food, mainly from France. Light industryfeatures sugar and rum production. Most manufactured goods and fuelare imported. Unemployment is especially high among the young.Hurricanes periodically devastate the economy.
Guam:The economy depends on US military spending, tourism, and theexport of fish and handicrafts. Total US grants, wage payments, andprocurement outlays amounted to $1 billion in 1998. Over the past 20years, the tourist industry has grown rapidly, creating aconstruction boom for new hotels and the expansion of older ones.More than 1 million tourists visit Guam each year. The industry hasrecently suffered setbacks because of the continuing Japaneseslowdown; the Japanese normally make up almost 90% of the tourists.Most food and industrial goods are imported. Guam faces the problemof building up the civilian economic sector to offset the impact ofmilitary downsizing.
Guatemala:The agricultural sector accounts for about one-fourth ofGDP, two-thirds of exports, and half of the labor force. Coffee,sugar, and bananas are the main products. Former President ARZU(1996-2000) worked to implement a program of economic liberalizationand political modernization. The 1996 signing of the peace accords,which ended 36 years of civil war, removed a major obstacle toforeign investment. In 1998, Hurricane Mitch caused relativelylittle damage to Guatemala compared to its neighbors. Ongoingchallenges include increasing government revenues, negotiatingfurther assistance from international donors, and increasing theefficiency and openness of both government and private financialoperations. Despite low international prices for Guatemala's maincommodities, the economy grew by 3% in 2000 and is forecast to growby 4% in 2001. Guatemala, along with Honduras and El Salvador,recently concluded a free trade agreement with Mexico and has movedto protect international property rights. However, the PORTILLOadministration has undertaken a review of privatizations under theprevious administration, thereby creating some uncertainty amonginvestors.
Guernsey:Financial services - banking, fund management, insurance,etc. - account for about 55% of total income in this tiny ChannelIsland economy. Tourism, manufacturing, and horticulture, mainlytomatoes and cut flowers, have been declining. Light tax and deathduties make Guernsey a popular tax haven. The evolving economicintegration of the EU nations is changing the rules of the gameunder which Guernsey operates.
Guinea:Guinea possesses major mineral, hydropower, and agriculturalresources, yet remains a poor underdeveloped nation. The countrypossesses over 30% of the world's bauxite reserves and is the secondlargest bauxite producer. The mining sector accounted for about 75%of exports in 1999. Long-run improvements in government fiscalarrangements, literacy, and the legal framework are needed if thecountry is to move out of poverty. The government made encouragingprogress in budget management in 1997-99, and reform progress waspraised in the World Bank/IMF October 2000 assessment. However,escalating fighting along the Sierra Leonean and Liberian borderswill cause major economic disruptions. In addition to direct defensecosts, the violence has led to a sharp decline in investorconfidence. Foreign mining companies have reduced expatriate staff,while panic buying has created food shortages and inflation in localmarkets. Real GDP growth is expected to fall to 2% in 2001.
Guinea-Bissau:One of the 20 poorest countries in the world,Guinea-Bissau depends mainly on farming and fishing. Cashew cropshave increased remarkably in recent years, and the country now rankssixth in cashew production. Guinea-Bissau exports fish and seafoodalong with small amounts of peanuts, palm kernels, and timber. Riceis the major crop and staple food. However, intermittent fightingbetween Senegalese-backed government troops and a military juntadestroyed much of the country's infrastructure and caused widespreaddamage to the economy in 1998; the civil war led to a 28% drop inGDP that year, with partial recovery in 1999-2000. Before the war,trade reform and price liberalization were the most successful partof the country's structural adjustment program under IMFsponsorship. The tightening of monetary policy and the developmentof the private sector had also begun to reinvigorate the economy.Because of high costs, the development of petroleum, phosphate, andother mineral resources is not a near-term prospect. However,unexploited offshore oil reserves could provide much-needed revenuein the long run.
Guyana:Severe drought and political turmoil contributed to Guyana'snegative growth of -1.8% for 1998 following six straight years ofgrowth of 5% or better. Growth came back to a positive 1.8% in 1999and 3% in 2000. Underlying growth factors have included expansion inthe key agricultural and mining sectors, a more favorable atmospherefor business initiative, a more realistic exchange rate, a moderateinflation rate, and continued support by internationalorganizations. President JAGDEO, the former finance minister, istaking steps to reform the economy, including drafting an investmentcode and restructuring the inefficient and unresponsive publicsector. Problems include a shortage of skilled labor and a deficientinfrastructure. The government must persist in efforts to manage itssizable external debt and attract new investment.
Haiti:About 80% of the population lives in abject poverty. Nearly70% of all Haitians depend on the agriculture sector, which consistsmainly of small-scale subsistence farming and employs abouttwo-thirds of the economically active work force. The country hasexperienced little job creation since the former President PREVALtook office in February 1996, although the informal economy isgrowing. Following legislative elections in May 2000, fraught withirregularities, international donors - including the US and EU -suspended almost all aid to Haiti. This destabilized the Haitiancurrency, the gourde, and, combined with a 40% fuel price hike inSeptember, caused widespread price increases. Prices appear to haveleveled off in January 2001.
Heard Island and McDonald Islands:no economic activity
Holy See (Vatican City):This unique, noncommercial economy issupported financially by contributions (known as Peter's Pence) fromRoman Catholics throughout the world, the sale of postage stamps andtourist mementos, fees for admission to museums, and the sale ofpublications. The incomes and living standards of lay workers arecomparable to, or somewhat better than, those of counterparts whowork in the city of Rome.
Honduras:Honduras, one of the poorest countries in the WesternHemisphere, is banking on expanded trade privileges under theEnhanced Caribbean Basin Initiative and on debt relief under theHeavily Indebted Poor Countries (HIPC) initiative. Whilereconstruction from 1998's Hurricane Mitch is at an advanced stage,and the country has met most of its macroeconomic targets, it failedto meet the IMF's goals to liberalize its energy andtelecommunications sectors. Economic growth has rebounded nicelysince the hurricane and should continue in 2001.
Hong Kong:Hong Kong has a bustling free market economy highlydependent on international trade. Natural resources are limited, andfood and raw materials must be imported. Indeed, imports andexports, including reexports, each exceed GDP in dollar value. Evenbefore Hong Kong reverted to Chinese administration on 1 July 1997it had extensive trade and investment ties with China. Per capitaGDP compares with the level in the four big countries of WesternEurope. GDP growth averaged a strong 5% in 1989-97. The widespreadAsian economic difficulties in 1998 hit this trade-dependent economyquite hard, with GDP down 5%. The economy is undergoing a rapidrecovery, with growth of 10% in 2000 to be followed by projectedgrowth of 5% in 2001.
Howland Island:no economic activity
Hungary:Hungary continues to demonstrate strong economic growth andto work toward accession to the European Union. The private sectoraccounts for over 80% of GDP. Foreign ownership of and investment inHungarian firms is widespread, with cumulative foreign directinvestment totaling $23 billion by 2000. Hungarian sovereign debtwas upgraded in 2000 to the second-highest rating among all theCentral European transition economies. Inflation - a top economicconcern in 2000 - is still high at almost 10%, pushed upward byhigher world oil and gas and domestic food prices. Economic reformmeasures such as health care reform, tax reform, and localgovernment financing have not yet been addressed by the ORBANgovernment.
Iceland:Iceland's Scandinavian-type economy is basicallycapitalistic, yet with an extensive welfare system, lowunemployment, and remarkably even distribution of income. In theabsence of other natural resources (except for abundant hydrothermaland geothermal power), the economy depends heavily on the fishingindustry, which provides 70% of export earnings and employs 12% ofthe work force. The economy remains sensitive to declining fishstocks as well as to drops in world prices for its main exports:fish and fish products, aluminum, and ferrosilicon. The center-rightgovernment plans to continue its policies of reducing the budget andcurrent account deficits, limiting foreign borrowing, containinginflation, revising agricultural and fishing policies, diversifyingthe economy, and privatizing state-owned industries. The governmentremains opposed to EU membership, primarily because of Icelanders'concern about losing control over their fishing resources. Iceland'seconomy has been diversifying into manufacturing and serviceindustries in the last decade, and new developments in softwareproduction, biotechnology, and financial services are taking place.The tourism sector is also expanding, with the recent trends inecotourism and whale watching. Growth has been remarkably steadyover the past five years at 4%-5%.
India:India's economy encompasses traditional village farming,modern agriculture, handicrafts, a wide range of modern industries,and a multitude of support services. More than a third of thepopulation is too poor to be able to afford an adequate diet.India's international payments position remained strong in 2000 withadequate foreign exchange reserves, moderately depreciating nominalexchange rates, and booming exports of software services. Growth inmanufacturing output slowed, and electricity shortages continue inmany regions.
Indian Ocean:The Indian Ocean provides major sea routes connectingthe Middle East, Africa, and East Asia with Europe and the Americas.It carries a particularly heavy traffic of petroleum and petroleumproducts from the oilfields of the Persian Gulf and Indonesia. Itsfish are of great and growing importance to the bordering countriesfor domestic consumption and export. Fishing fleets from Russia,Japan, South Korea, and Taiwan also exploit the Indian Ocean, mainlyfor shrimp and tuna. Large reserves of hydrocarbons are being tappedin the offshore areas of Saudi Arabia, Iran, India, and westernAustralia. An estimated 40% of the world's offshore oil productioncomes from the Indian Ocean. Beach sands rich in heavy minerals andoffshore placer deposits are actively exploited by borderingcountries, particularly India, South Africa, Indonesia, Sri Lanka,and Thailand.
Indonesia:Indonesia, a vast polyglot nation, faces severe economicproblems, stemming from secessionist movements and the low level ofsecurity in the regions, the lack of reliable legal recourse incontract disputes, corruption, weaknesses in the banking system, andstrained relations with the IMF. Investor confidence will remain lowand few new jobs will be created under these circumstances. Growthof 4.8% in 2000 is not sustainable, being attributable to favorableshort-term factors, including high world oil prices, a surge innonoil exports, and increased domestic demand for consumer durables.
Iran:Iran's economy is a mixture of central planning, stateownership of oil and other large enterprises, village agriculture,and small-scale private trading and service ventures. PresidentKHATAMI has continued to follow the market reform plans of formerPresident RAFSANJANI and has indicated that he will pursuediversification of Iran's oil-reliant economy although he has madelittle progress toward that goal. The strong oil market in 1996helped ease financial pressures on Iran and allowed for Tehran'stimely debt service payments. Iran's financial situation tightenedin 1997 and deteriorated further in 1998 because of lower oilprices. The subsequent zoom in oil prices in 1999-2000 afforded Iranfiscal breathing room but does not solve Iran's structural economicproblems, including the encouragement of foreign investment.
Iraq:Iraq's economy is dominated by the oil sector, which hastraditionally provided about 95% of foreign exchange earnings. Inthe 1980s, financial problems caused by massive expenditures in theeight-year war with Iran and damage to oil export facilities by Iranled the government to implement austerity measures, borrow heavily,and later reschedule foreign debt payments; Iraq suffered economiclosses of at least $100 billion from the war. After the end ofhostilities in 1988, oil exports gradually increased with theconstruction of new pipelines and restoration of damaged facilities.Iraq's seizure of Kuwait in August 1990, subsequent internationaleconomic sanctions, and damage from military action by aninternational coalition beginning in January 1991 drasticallyreduced economic activity. Although government policies supportinglarge military and internal security forces and allocating resourcesto key supporters of the regime have hurt the economy,implementation of the UN's oil-for-food program in December 1996 hashelped improve conditions for the average Iraqi citizen. For thefirst six, six-month phases of the program, Iraq was allowed toexport limited amounts of oil in exchange for food, medicine, andsome infrastructure spare parts. In December 1999, the UN SecurityCouncil authorized Iraq to export under the program as much oil asrequired to meet humanitarian needs. Oil exports are now more thanthree-quarters their prewar level. Per capita food imports haveincreased significantly, while medical supplies and health careservices are steadily improving. Per capita output and livingstandards are still well below the prewar level, but any estimateshave a wide range of error.
Ireland:Ireland is a small, modern, trade-dependent economy withgrowth averaging a robust 9% in 1995-2000. Agriculture, once themost important sector, is now dwarfed by industry, which accountsfor 38% of GDP and about 80% of exports and employs 28% of the laborforce. Although exports remain the primary engine for Ireland'srobust growth, the economy is also benefiting from a rise inconsumer spending and recovery in both construction and businessinvestment. Over the past decade, the Irish government hasimplemented a series of national economic programs designed to curbinflation, reduce government spending, increase labor force skills,and promote foreign investment. Ireland joined in launching the eurocurrency system in January 1999 along with 10 other EU nations. TheIrish economy is in danger of overheating, with the tight labormarket driving up wage demands and inflation.
Israel:Israel has a technologically advanced market economy withsubstantial government participation. It depends on imports of crudeoil, grains, raw materials, and military equipment. Despite limitednatural resources, Israel has intensively developed its agriculturaland industrial sectors over the past 20 years. Israel is largelyself-sufficient in food production except for grains. Cuts diamonds,high-technology equipment, and agricultural products (fruits andvegetables) are the leading exports. Israel usually posts sizablecurrent account deficits, which are covered by large transferpayments from abroad and by foreign loans. Roughly half of thegovernment's external debt is owed to the US, which is its majorsource of economic and military aid. The influx of Jewish immigrantsfrom the former USSR topped 750,000 during the period 1989-99,bringing the population of Israel from the former Soviet Union to 1million, one-sixth of the total population, and adding scientificand professional expertise of substantial value for the economy'sfuture. The influx, coupled with the opening of new markets at theend of the Cold War, energized Israel's economy, which grew rapidlyin the early 1990s. But growth began moderating in 1996 when thegovernment imposed tighter fiscal and monetary policies and theimmigration bonus petered out. Growth was a strong 5.9% in 2000. Butthe outbreak of Palestinian unrest in late September and thecollapse of the BARAK Government - coupled with a cooling off in thehigh-technology and tourist sectors - undercut the boom andforeshadows a slowdown to 2%-3% in 2001.
Italy:Italy has a diversified industrial economy with roughly thesame total and per capita output as France and the UK. Thiscapitalistic economy remains divided into a developed industrialnorth, dominated by private companies, and a less developedagricultural south, with more than 20% unemployment. Most rawmaterials needed by industry and more than 75% of energyrequirements are imported. Since 1992, Italy has adopted budgetscompliant with the requirements of the European Monetary Union(EMU); wage moderation agreements by representatives of government,labor, and employers have helped to bring Italy's inflation intoconformity with EMU requirements. Italy's economic performance,however, has lagged behind that of its EU partners and it must workto stimulate employment, promote labor flexibility, reform itsexpensive pension system, and tackle the informal economy.
Jamaica:Key sectors in this island economy are bauxite (alumina andbauxite account for more than half of exports) and tourism. Sinceassuming office in 1992, Prime Minister PATTERSON has eliminatedmost price controls, streamlined tax schedules, and privatizedgovernment enterprises. Continued tight monetary and fiscal policieshave helped slow inflation - although inflationary pressures aremounting - and stabilize the exchange rate, but have resulted in theslowdown of economic growth (moving from 1.5% in 1992 to 0.5% in1995). In 1996, GDP showed negative growth (-1.4%) and remainednegative through 1999. Serious problems include: high interestrates; increased foreign competition; the weak financial conditionof business in general resulting in receiverships or closures anddownsizings of companies; the shift in investment portfolios tonon-productive, short-term high yield instruments; a pressured,sometimes sliding, exchange rate; a widening merchandise tradedeficit; and a growing internal debt for government bailouts tovarious ailing sectors of the economy, particularly the financialsector. Depressed economic conditions in 1999-2000 led to increasedcivil unrest, including a mounting crime rate. Jamaica's medium-termprospects will depend upon encouraging investment in the productivesectors, maintaining a competitive exchange rate, stabilizing thelabor environment, selling off reacquired firms, and implementingproper fiscal and monetary policies.
Jan Mayen:Jan Mayen is a volcanic island with no exploitablenatural resources. Economic activity is limited to providingservices for employees of Norway's radio and meteorological stationslocated on the island.
Japan:Government-industry cooperation, a strong work ethic, masteryof high technology, and a comparatively small defense allocation (1%of GDP) have helped Japan advance with extraordinary rapidity to therank of second most technologically powerful economy in the worldafter the US and third largest economy in the world after the US andChina. One notable characteristic of the economy is the workingtogether of manufacturers, suppliers, and distributors inclosely-knit groups called keiretsu. A second basic feature has beenthe guarantee of lifetime employment for a substantial portion ofthe urban labor force. Both features are now eroding. Industry, themost important sector of the economy, is heavily dependent onimported raw materials and fuels. The much smaller agriculturalsector is highly subsidized and protected, with crop yields amongthe highest in the world. Usually self-sufficient in rice, Japanmust import about 50% of its requirements of other grain and foddercrops. Japan maintains one of the world's largest fishing fleets andaccounts for nearly 15% of the global catch. For three decadesoverall real economic growth had been spectacular: a 10% average inthe 1960s, a 5% average in the 1970s, and a 4% average in the 1980s.Growth slowed markedly in the 1990s largely because of theaftereffects of overinvestment during the late 1980s andcontractionary domestic policies intended to wring speculativeexcesses from the stock and real estate markets. Government effortsto revive economic growth have met little success and were furtherhampered in late 2000 by the slowing of the US and Asian economies.The crowding of habitable land area and the aging of the populationare two major long-run problems. Robotics constitutes a keylong-term economic strength, with Japan possessing 410,000 of theworld's 720,000 "working robots".
Jarvis Island:no economic activity
Jersey:The economy is based largely on international financialservices, agriculture, and tourism. Potatoes, cauliflower, tomatoes,and especially flowers are important export crops, shipped mostly tothe UK. The Jersey breed of dairy cattle is known worldwide andrepresents an important export income earner. Milk products go tothe UK and other EU countries. In 1996 the finance sector accountedfor about 60% of the island's output. Tourism, another mainstay ofthe economy, accounts for 24% of GDP. In recent years, thegovernment has encouraged light industry to locate in Jersey, withthe result that an electronics industry has developed alongside thetraditional manufacturing of knitwear. All raw material and energyrequirements are imported, as well as a large share of Jersey's foodneeds. Light taxes and death duties make the island a popular taxhaven.
Johnston Atoll:Economic activity is limited to providing servicesto US military personnel and contractors located on the island. Allfood and manufactured goods must be imported.
Jordan:Jordan is a small Arab country with inadequate supplies ofwater and other natural resources such as oil. The Persian Gulfcrisis, which began in August 1990, aggravated Jordan's alreadyserious economic problems, forcing the government to stop most debtpayments and suspend rescheduling negotiations. Aid from Gulf Arabstates, worker remittances, and trade revenues contracted. Refugeesflooded the country, producing serious balance-of-payments problems,stunting GDP growth, and straining government resources. The economyrebounded in 1992, largely due to the influx of capital repatriatedby workers returning from the Gulf. After averaging 9% in 1992-95,GDP growth averaged only 1.5% during 1996-99. In an attempt to spurgrowth, King ABDALLAH has undertaken limited economic reform,including partial privatization of some state-owned enterprises andJordan's entry in January 2000 into the World Trade Organization(WTrO). Debt, poverty, and unemployment are fundamental ongoingeconomic problems.
Juan de Nova Island:Up to 12,000 tons of guano are mined per year.
Kazakhstan:Kazakhstan, the second largest of the former Sovietrepublics in territory, possesses enormous fossil fuel reserves aswell as plentiful supplies of other minerals and metals. It also isa large agricultural - livestock and grain - producer. Kazakhstan'sindustrial sector rests on the extraction and processing of thesenatural resources and also on a growing machine-building sectorspecializing in construction equipment, tractors, agriculturalmachinery, and some defense items. The breakup of the USSR inDecember 1991 and the collapse of demand for Kazakhstan'straditional heavy industry products resulted in a short-termcontraction of the economy, with the steepest annual declineoccurring in 1994. In 1995-97, the pace of the government program ofeconomic reform and privatization quickened, resulting in asubstantial shifting of assets into the private sector. The CaspianPipeline Consortium agreement to build a new pipeline from westernKazakhstan's Tengiz oil field to the Black Sea increases prospectsfor substantially larger oil exports in several years. Kazakhstan'seconomy again turned downward in 1998 with a 2% decline in GDP dueto slumping oil prices and the August financial crisis in Russia.The recovery of international oil prices in 1999, combined with awell-timed tenge devaluation and a bumper grain harvest, pulled theeconomy out of recession in 2000. Astana has embarked upon anindustrial policy designed to diversify the economy away fromoverdependence on the oil sector by developing light industry.
Kenya:Kenya is well placed to serve as an engine of growth in EastAfrica, but its economy has been stagnating because of poormanagement and uneven commitment to reform. In 1993, the governmentof Kenya implemented a program of economic liberalization and reformthat included the removal of import licensing, price controls, andforeign exchange controls. With the support of the World Bank, IMF,and other donors, the reforms led to a brief turnaround in economicperformance following a period of negative growth in the early1990s. Kenya's real GDP grew 5% in 1995 and 4% in 1996, andinflation remained under control. Growth slowed after 1997,averaging only 1.5% in 1997-2000. In 1997, political violencedamaged the tourist industry, and Kenya's Enhanced StructuralAdjustment Program lapsed due to the government's failure tomaintain reform or address public sector corruption. Severe droughtin 1999 and 2000 caused water and energy rationing and reducedagricultural sector productivity. A new economic team was put inplace in 1999 to revitalize the reform effort, strengthen the civilservice, and curb corruption. The IMF and World Bank renewed theirsupport to Kenya in mid-2000, but a number of setbacks to theeconomic reform program in late 2000 have renewed donor and privatesector concern about the government's commitment to soundgovernance. Long-term barriers to development include electricityshortages, inefficient government dominance of key sectors, endemiccorruption, and high population growth.
Kingman Reef:no economic activity
Kiribati:A remote country of 33 scattered coral atolls, Kiribatihas few national resources. Commercially viable phosphate depositswere exhausted at the time of independence from the UK in 1979.Copra and fish now represent the bulk of production and exports. Theeconomy has fluctuated widely in recent years. Economic developmentis constrained by a shortage of skilled workers, weakinfrastructure, and remoteness from international markets. Tourismprovides more than one-fifth of GDP. The financial sector is at anearly stage of development as is the expansion of private sectorinitiatives. Foreign financial aid, largely from the UK and Japan,is a critical supplement to GDP, equal to 25%-50% of GDP in recentyears. Remittances from workers abroad account for more than $5million each year. Performance in 2000 fell short of the 2.5% growthin 1999, which benefited from increased copra production andexceptionally large revenues from fishing licenses.
Korea, North:North Korea, one of the world's most centrally plannedand isolated economies, faces desperate economic conditions.Industrial capital stock is nearly beyond repair as a result ofyears of underinvestment and spare parts shortages. The nation facesits seventh year of food shortages because of weather-relatedproblems, including major drought in 2000, and chronic shortages offertilizer and fuel. Massive international food aid deliveries haveallowed the regime to escape the major consequence of spreadingeconomic failure, such as mass starvation, but the populationremains vulnerable to prolonged malnutrition and deterioratingliving conditions. Large-scale military spending eats up resourcesneeded for expanding investment and consumption goods. In 2000, theregime placed emphasis on expanding foreign trade links, embracingmodern technology, and attracting foreign investment, but in no wayat the expense of relinquishing central control over key nationalassets or undergoing market-oriented reforms.
Korea, South:As one of the Four Dragons of East Asia, South Koreahas achieved an incredible record of growth. Three decades ago GDPper capita was comparable with levels in the poorer countries ofAfrica and Asia. Today its GDP per capita is seven times India's, 16times North Korea's, and comparable to the lesser economies of theEuropean Union. This success through the late 1980s was achieved bya system of close government/business ties, including directedcredit, import restrictions, sponsorship of specific industries, anda strong labor effort. The government promoted the import of rawmaterials and technology at the expense of consumer goods andencouraged savings and investment over consumption. The Asianfinancial crisis of 1997-99 exposed certain longstanding weaknessesin South Korea's development model, including high debt/equityratios, massive foreign borrowing, and an undisciplined financialsector. By 1999 GDP growth had recovered, reversing the substantialdecline of 1998. Seoul has pressed the country's largest businessgroups to restructure and to strengthen their financial base. Growthin 2001 likely will be a more sustainable rate of 5%.
Kuwait:Kuwait is a small, relatively open economy with proved crudeoil reserves of about 94 billion barrels - 10% of world reserves.Petroleum accounts for nearly half of GDP, 90% of export revenues,and 75% of government income. Kuwait's climate limits agriculturaldevelopment. Consequently, with the exception of fish, it dependsalmost wholly on food imports. About 75% of potable water must bedistilled or imported. Higher oil prices put the FY99/00 budget intoa $2 billion surplus. The FY00/01 budget covers only nine monthsbecause of a change in the fiscal year. The budget for FY01/02,which begins 1 April, contains higher expenditures for salaries,construction, and other general categories. Kuwait continues itsdiscussions with foreign oil companies to develop fields in thenorthern part of the country.
Kyrgyzstan:Kyrgyzstan is a small, poor, mountainous country with apredominantly agricultural economy. Cotton, wool, and meat are themain agricultural products and exports. Industrial exports includegold, mercury, uranium, and electricity. Kyrgyzstan has been one ofthe most progressive countries of the former Soviet Union incarrying out market reforms. Following a successful stabilizationprogram, which lowered inflation from 88% in 1994 to 15% for 1997,attention is turning toward stimulating growth. Much of thegovernment's stock in enterprises has been sold. Drops in productionhad been severe since the breakup of the Soviet Union in December1991, but by mid-1995 production began to recover and exports beganto increase. Pensioners, unemployed workers, and government workerswith salary arrears continue to suffer. Foreign assistance played asubstantial role in the country's economic turnaround in 1996-97.Growth was held down to 2.1% in 1998 largely because of thespillover from Russia's economic difficulties, but moved ahead to3.6% in 1999 and an estimated 5.7% in 2000. The government hasadopted a series of measures to combat such persistent problems asexcessive external debt, inflation, and inadequate revenuecollection.
Laos:The government of Laos - one of the few remaining officialcommunist states - began decentralizing control and encouragingprivate enterprise in 1986. The results, starting from an extremelylow base, were striking - growth averaged 7% during 1988-97. Reformefforts subsequently slowed, and GDP growth dropped an average of 3percentage points. Because Laos depends heavily on its trade withThailand, it was damaged by the regional financial crisis beginningin 1997. Government mismanagement deepened the crisis, and from June1997 to June 1999 the Lao kip lost 87% of its value. Laos' foreignexchange problems peaked in September 1999 when the kip fell from3,500 kip to the dollar to 9,000 kip to the dollar in a matter ofweeks. Now that the currency has stabilized, however, the governmentseems content to let the current situation persist, despite limitedgovernment revenue and foreign exchange reserves. A landlockedcountry with a primitive infrastructure, Laos has no railroads, arudimentary road system, and limited external and internaltelecommunications. Electricity is available in only a few urbanareas. Subsistence agriculture accounts for half of GDP and provides80% of total employment. For the foreseeable future the economy willcontinue to depend on aid from the IMF and other internationalsources; Japan is currently the largest bilateral aid donor; aidfrom the former USSR/Eastern Europe has been cut sharply.
Latvia:In 2000, Latvia's transitional economy recovered from the1998 Russian financial crisis, largely due to the SKELE government'sbudget stringency and a gradual reorientation of exports toward EUcountries, lessening Latvia's trade dependency on Russia. Latviaofficially joined the World Trade Organization in February 1999 -the first Baltic state to join - and was invited at the Helsinki EUSummit in December 1999 to begin accession talks in early 2000.Unemployment fell to 7.8% in 2000, down from 9.6% in 1999, and 9.2%in 1998. Privatization of large state-owned utilities and theshipping industry faced more delays in 2000, and politicalinstability will continue to delay completion of the privatizationprocess over the next year. Latvia projects 6% GDP growth, 2.5%-3.0%inflation, and a 1.7% fiscal deficit in 2001. Preparing for EUmembership over the next few years remains a top foreign policy goal.
Lebanon:The 1975-91 civil war seriously damaged Lebanon's economicinfrastructure, cut national output by half, and all but endedLebanon's position as a Middle Eastern entrepot and banking hub.Peace enabled the central government to restore control in Beirut,begin collecting taxes, and regain access to key port and governmentfacilities. Economic recovery was helped by a financially soundbanking system and resilient small- and medium-scale manufacturers.Family remittances, banking services, manufactured and farm exports,and international aid provided the main sources of foreign exchange.Lebanon's economy has made impressive gains since the launch in 1993of "Horizon 2000," the government's $20 billion reconstructionprogram. Real GDP grew 8% in 1994, 7% in 1995, 4% per year in 1996and 1997 but slowed to 2% in 1998, -1% in 1999, and 1% in 2000.Annual inflation fell during the course of the 1990s from more than100% to 0%, and foreign exchange reserves jumped from $1.4 billionto more than $6 billion. Burgeoning capital inflows have generatedforeign payments surpluses, and the Lebanese pound has remained verystable for the past two years. Lebanon has rebuilt much of itswar-torn physical and financial infrastructure. Solidere, a$2-billion firm, has managed the reconstruction of Beirut's centralbusiness district; the stock market reopened in January 1996; andinternational banks and insurance companies are returning. Thegovernment nonetheless faces serious challenges in the economicarena. It has funded reconstruction by tapping foreign exchangereserves and by borrowing heavily - mostly from domestic banks. Thenewly re-installed HARIRI government's announced policies fail toaddress the ever-increasing budgetary deficits and national debtburden. The gap between rich and poor has widened in the 1990s,resulting in grassroots dissatisfaction over the skewed distributionof the reconstruction's benefits.
Lesotho:Small, landlocked, and mountainous, Lesotho's primarynatural resource is water. Its economy is based on subsistenceagriculture, livestock, and remittances from miners employed inSouth Africa. The number of such mineworkers has declined steadilyover the past several years. A small manufacturing base dependslargely on farm products that support the milling, canning, leather,and jute industries. Agricultural products are exported primarily toSouth Africa. Proceeds from membership in a common customs unionwith South Africa form the majority of government revenue. Althoughdrought has decreased agricultural activity over the past few years,completion of a major hydropower facility in January 1998 nowpermits the sale of water to South Africa, generating royalties forLesotho. The pace of substantial privatization has increased inrecent years. In December 1999, the government embarked on anine-month IMF staff-monitored program aimed at structuraladjustment and stabilization of macroeconomic fundamentals. Thegovernment is in the process of applying for a three-year successorprogram with the IMF under its Poverty Reduction and Growth Facility.
Liberia:A civil war in 1989-96 destroyed much of Liberia's economy,especially the infrastructure in and around Monrovia. Manybusinessmen fled the country, taking capital and expertise withthem. Some returned during 1997. Many will not return. Richlyendowed with water, mineral resources, forests, and a climatefavorable to agriculture, Liberia had been a producer and exporterof basic products, while local manufacturing, mainly foreign owned,had been small in scope. The democratically elected government,installed in August 1997, inherited massive international debts andcurrently relies on revenues from its maritime registry to providethe bulk of its foreign exchange earnings. The restoration of theinfrastructure and the raising of incomes in this ravaged economydepend on the implementation of sound macro- and micro-economicpolicies of the new government, including the encouragement offoreign investment. Recent growth has been from a low base, andcontinued growth will require major policy successes.
Libya:The socialist-oriented economy depends primarily uponrevenues from the oil sector, which contributes practically allexport earnings and about one-quarter of GDP. These oil revenues anda small population give Libya one of the highest per capita GDPs inAfrica, but little of this income flows down to the lower orders ofsociety. In this statist society, import restrictions andinefficient resource allocations have led to periodic shortages ofbasic goods and foodstuffs. The nonoil manufacturing andconstruction sectors, which account for about 20% of GDP, haveexpanded from processing mostly agricultural products to include theproduction of petrochemicals, iron, steel, and aluminum. Climaticconditions and poor soils severely limit agricultural output, andLibya imports about 75% of its food requirements. Higher oil pricesin 1999 and 2000 led to an increase in export revenues, whichimproved macroeconomic balances and helped to stimulate the economy.Following the suspension of UN sanctions in 1999, Libya has beentrying to increase its attractiveness to foreign investors, andseveral foreign companies have visited in search of contracts.
Liechtenstein:Despite its small size and limited natural resources,Liechtenstein has developed into a prosperous, highlyindustrialized, free-enterprise economy with a vital financialservice sector and living standards on a par with the urban areas ofits large European neighbors. Low business taxes - the maximum taxrate is 18% - and easy incorporation rules have induced 73,700holding or so-called letter box companies to establish nominaloffices in Liechtenstein, providing 30% of state revenues. Thecountry participates in a customs union with Switzerland and usesthe Swiss franc as its national currency. It imports more than 90%of its energy requirements. Liechtenstein has been a member of theEuropean Economic Area (an organization serving as a bridge betweenEuropean Free Trade Association (EFTA) and EU) since May 1995. Thegovernment is working to harmonize its economic policies with thoseof an integrated Europe.
Lithuania:Lithuania, the Baltic state that has conducted the mosttrade with Russia, has been slowly rebounding from the 1998 Russianfinancial crisis. High unemployment and weak consumption have heldback recovery. GDP growth for 2000 - estimated at 2.9% - fell behindthat of Estonia and Latvia, and unemployment is estimated at 10.8%,the country's highest since regaining independence in 1990. For2001, Lithuanians forecast 3.2% growth, 1.8% inflation, and a fiscaldeficit of 3.3%. In early 2001, the Lithuanian Government announcedthat it will repeg its currency, the litas, to the euro (the litasis currently pegged to the dollar) some time in 2002. Lithuania mustratify 25 agreements along with other legal documents andobligations by 1 May 2001 before gaining World Trade Organizationmembership. Lithuania was invited to the Helsinki summit in December1999 and began EU accession talks in early 2000. Privatization ofthe large, state-owned utilities, particularly in the energy sector,remains a key challenge for 2001.
Luxembourg:The stable, high-income economy features solid growth,low inflation, and low unemployment. The industrial sector,initially dominated by steel, has become increasingly diversified toinclude chemicals, rubber, and other products. Growth in thefinancial sector has more than compensated for the decline in steel.Services, especially banking, account for a substantial proportionof the economy. Agriculture is based on small family-owned farms.The economy depends on foreign and trans-border workers for 30% ofits labor force. Luxembourg has a custom union with Belgium and theNetherlands, and, as a member of the EU, enjoys the advantages ofthe open European market. It joined with 10 other EU members tolaunch the euro on 1 January 1999.
Macau:The economy is based largely on tourism (including gambling)and textile and fireworks manufacturing. Efforts to diversify havespawned other small industries - toys, artificial flowers, andelectronics. The tourist sector has accounted for roughly 25% ofGDP, and the clothing industry has provided about three-fourths ofexport earnings; the gambling industry probably represents over 40%of GDP. More than 8 million tourists visited Macau in 2000. Macaudepends on China for most of its food, fresh water, and energyimports. Japan and Hong Kong are the main suppliers of raw materialsand capital goods. Output dropped 5% in 1998 and 3% in 1999, with asmall 2% gain in 2000. Macau reverted to Chinese administration on20 December 1999. Gang violence, a dark spot in the economy,probably will be reduced in 2000-01 to the advantage of the tourismsector.
Macedonia, The Former Yugoslav Republic of:At independence inNovember 1991, Macedonia was the least developed of the Yugoslavrepublics, producing a mere 5% of the total federal output of goodsand services. The collapse of Yugoslavia ended transfer paymentsfrom the center and eliminated advantages from inclusion in a defacto free trade area. An absence of infrastructure, UN sanctions onits largest market Yugoslavia, and a Greek economic embargo hinderedeconomic growth until 1996. GDP has subsequently increased eachyear, rising by 5% in 2000. Successful privatization in 2000 boostedthe country's reserves to over $700 million. Also, the leadershipdemonstrated a continuing commitment to economic reform, free trade,and regional integration. Inflation jumped to 11% in 2000, largelydue to higher oil prices.
Madagascar:Madagascar faces problems of chronic malnutrition,underfunded health and education facilities, a roughly 3% annualpopulation growth rate, and severe loss of forest cover, accompaniedby erosion. Agriculture, including fishing and forestry, is themainstay of the economy, accounting for 30% of GDP and contributingmore than 70% to export earnings. Industry features textilemanufacturing and the processing of agricultural products. Growth inoutput in 1992-97 averaged less than the growth rate of thepopulation. Growth has been held back by antigovernment strikes anddemonstrations, a decline in world coffee prices, and the erraticcommitment of the government to economic reform. The extent ofgovernment reforms, outside financial aid, and foreign investmentwill be key determinants of future growth. For 2001, growth shouldagain be about 5%.
Malawi:Landlocked Malawi ranks among the world's least developedcountries. The economy is predominately agricultural, with about 90%of the population living in rural areas. Agriculture accounts for37% of GDP and 85% of export revenues. The economy depends onsubstantial inflows of economic assistance from the IMF, the WorldBank, and individual donor nations. In late 2000, Malawi wasapproved for relief under the Heavily Indebted Poor Countries (HIPC)program. The government faces strong challenges, e.g., to fullydevelop a market economy, to improve educational facilities, to faceup to environmental problems, and to deal with the rapidly growingproblem of HIV/AIDS.
Malaysia:GDP grew at 8.6% in 2000, mainly on the strength ofdouble-digit export growth and continued government fiscal stimulus.As an oil exporter, Malaysia also benefited from higher petroleumprices. Higher export revenues allowed the country to register acurrent account surplus, but foreign exchange reserves have beendeclining - from a peak of $34.5 billion in April 2000 to $29.7billion by December - as foreign investors pulled money out of thecountry. Despite this development, Kuala Lumpur is unlikely toabandon its currency peg soon. An economic slowdown in key Westernmarkets, especially the United States, and lower world demand forelectronics products will slow GDP growth to 3%-6% in 2001,according to private forecasters. Over the longer term, Malaysia'sfailure to make substantial progress on key reforms of the corporateand financial sectors clouds prospects for sustained growth and thereturn of critical foreign investment.
Maldives:Tourism, Maldives largest industry, accounts for 20% ofGDP and more than 60% of the Maldives' foreign exchange receipts.Over 90% of government tax revenue comes from import duties andtourism-related taxes. Almost 400,000 tourists visited the islandsin 1998. Fishing is a second leading sector. The MaldivianGovernment began an economic reform program in 1989 initially bylifting import quotas and opening some exports to the privatesector. Subsequently, it has liberalized regulations to allow moreforeign investment. Agriculture and manufacturing continue to play aminor role in the economy, constrained by the limited availabilityof cultivable land and the shortage of domestic labor. Most staplefoods must be imported. Industry, which consists mainly of garmentproduction, boat building, and handicrafts, accounts for about 18%of GDP. Maldivian authorities worry about the impact of erosion andpossible global warming on their low-lying country; 80% of the areais one meter or less above sea level.
Mali:Mali is among the poorest countries in the world, with 65% ofits land area desert or semidesert. Economic activity is largelyconfined to the riverine area irrigated by the Niger. About 10% ofthe population is nomadic and some 80% of the labor force is engagedin farming and fishing. Industrial activity is concentrated onprocessing farm commodities. Mali is heavily dependent on foreignaid and vulnerable to fluctuations in world prices for cotton, itsmain export. In 1997, the government continued its successfulimplementation of an IMF-recommended structural adjustment programthat is helping the economy grow, diversify, and attract foreigninvestment. Mali's adherence to economic reform and the 50%devaluation of the African franc in January 1994 have pushed upeconomic growth to a sturdy 5% average in 1996-2000. Growth shouldremain around 5% in 2001-02, and inflation should stay less than 2%.
Malta:Major resources are limestone, a favorable geographiclocation, and a productive labor force. Malta produces only about20% of its food needs, has limited freshwater supplies, and has nodomestic energy sources. The economy is dependent on foreign trade,manufacturing (especially electronics and textiles), and tourism.Malta is privatizing state-controlled firms and liberalizing marketsin order to prepare for membership in the European Union. However,the island is divided politically over the question of joining theEU. The sizable budget deficit remains a key concern.
Man, Isle of:Offshore banking, manufacturing, and tourism are keysectors of the economy. The government's policy of offeringincentives to high-technology companies and financial institutionsto locate on the island has paid off in expanding employmentopportunities in high-income industries. As a result, agricultureand fishing, once the mainstays of the economy, have declined intheir shares of GDP. Banking and other services now contribute 42%to GDP. Trade is mostly with the UK. The Isle of Man enjoys freeaccess to EU markets.
Marshall Islands:US Government assistance is the mainstay of thistiny island economy. Agricultural production is concentrated onsmall farms, and the most important commercial crops are coconuts,tomatoes, melons, and breadfruit. Small-scale industry is limited tohandicrafts, fish processing, and copra. The tourist industry, now asmall source of foreign exchange employing less than 10% of thelabor force, remains the best hope for future added income. Theislands have few natural resources, and imports far exceed exports.Under the terms of the Compact of Free Association, the US providesroughly $65 million in annual aid. Negotiations were underway in1999 for an extended agreement. Government downsizing, drought, adrop in construction, and the decline in tourism and foreigninvestment due to the Asian financial difficulties caused GDP tofall in 1996-98.
Martinique:The economy is based on sugarcane, bananas, tourism, andlight industry. Agriculture accounts for about 6% of GDP and thesmall industrial sector for 11%. Sugar production has declined, withmost of the sugarcane now used for the production of rum. Bananaexports are increasing, going mostly to France. The bulk of meat,vegetable, and grain requirements must be imported, contributing toa chronic trade deficit that requires large annual transfers of aidfrom France. Tourism has become more important than agriculturalexports as a source of foreign exchange. The majority of the workforce is employed in the service sector and in administration.
Mauritania:A majority of the population still depends onagriculture and livestock for a livelihood, even though most of thenomads and many subsistence farmers were forced into the cities byrecurrent droughts in the 1970s and 1980s. Mauritania has extensivedeposits of iron ore, which account for half of total exports. Thedecline in world demand for this ore, however, has led to cutbacksin production. The nation's coastal waters are among the richestfishing areas in the world, but overexploitation by foreignersthreatens this key source of revenue. The country's first deepwaterport opened near Nouakchott in 1986. In the past, drought andeconomic mismanagement have resulted in a buildup of foreign debt.In March 1999, the government signed an agreement with a joint WorldBank-IMF mission on a $54 million enhanced structural adjustmentfacility (ESAF). Mauritania withdrew its membership in the EconomicCommunity of West African States (ECOWAS) in 2000. Privatization anddebt relief are in full swing, and the rate of economic growthappears to be accelerating, especially in the construction,telecommunication, and information sectors. Diamonds and petroleumare beginning to be explored and exploited.
Mauritius:Since independence in 1968, Mauritius has developed froma low-income, agriculturally based economy to a middle-incomediversified economy with growing industrial, financial, and touristsectors. For most of the period, annual growth has been in the orderof 5% to 6%. This remarkable achievement has been reflected inincreased life expectancy, lowered infant mortality, and amuch-improved infrastructure. Sugarcane is grown on about 90% of thecultivated land area and accounts for 25% of export earnings. Thegovernment's development strategy centers on foreign investment.Mauritius has attracted more than 9,000 offshore entities, manyaimed at commerce in India and South Africa, and investment in thebanking sector alone has reached over $1 billion. Economicperformance since 1991 has continued strong with solid growth andlow unemployment.
Mayotte:Economic activity is based primarily on the agriculturalsector, including fishing and livestock raising. Mayotte is notself-sufficient and must import a large portion of its foodrequirements, mainly from France. The economy and future developmentof the island are heavily dependent on French financial assistance,an important supplement to GDP. Mayotte's remote location is anobstacle to the development of tourism.
Mexico:Mexico has a free market economy with a mixture of modernand outmoded industry and agriculture, increasingly dominated by theprivate sector. The number of state-owned enterprises in Mexico hasfallen from more than 1,000 in 1982 to fewer than 200 in 2000. TheZEDILLO administration privatized and expanded competition inseaports, railroads, telecommunications, electricity, natural gasdistribution, and airports. A strong export sector helped to cushionthe economy's decline in 1995 and led the recovery in 1996-2000.Private consumption became the leading driver of growth in 2000,accompanied by increased employment and higher real wages. Mexicostill needs to overcome many structural problems as it strives tomodernize its economy and raise living standards. Incomedistribution is very unequal, with the top 20% of income earnersaccounting for 55% of income. Trade with the US and Canada hastripled since NAFTA was implemented in 1994. Mexico completed freetrade agreements with the EU, Israel, El Salvador, Honduras, andGuatemala in 2000, and is pursuing additional trade agreements withcountries in Latin America and Asia to lessen its dependence on theUS.