Micronesia, Federated States of:Economic activity consistsprimarily of subsistence farming and fishing. The islands have fewmineral deposits worth exploiting, except for high-grade phosphate.The potential for a tourist industry exists, but the remoteness ofthe location and a lack of adequate facilities hinder development.In 1996, the country experienced a 20% reduction in revenues fromthe Compact of Free Association - the agreement between the US andMicronesia in which Micronesia receives $1.3 billion in financialand technical assistance over a 15-year period until 2001 - as aresult of the second step-down under the agreement. Since theserevenues accounted for 57% of consolidated government revenues,reduced Compact funding resulted in a severe depression. WhileMicronesia's economy appears to have bottomed out in 1999, thecountry's medium-term economic outlook remains fragile due to likelyfurther reductions in external grants made under the US Compactfunding. Geographical isolation and a poorly developedinfrastructure remain major impediments to long-term growth.
Midway Islands:The economy is based on providing support servicesfor the national wildlife refuge activities located on the islands.All food and manufactured goods must be imported.
Moldova:Moldova enjoys a favorable climate and good farmland buthas no major mineral deposits. As a result, the economy dependsheavily on agriculture, featuring fruits, vegetables, wine, andtobacco. Moldova must import all of its supplies of oil, coal, andnatural gas, largely from Russia. Energy shortages contributed tosharp production declines after the breakup of the Soviet Union in1991. As part of an ambitious reform effort, Moldova introduced aconvertible currency, freed all prices, stopped issuing preferentialcredits to state enterprises, backed steady land privatization,removed export controls, and freed interest rates. Yet these effortscould not offset the impact of political and economic difficulties,both internal and regional. In 1998, the economic troubles ofRussia, by far Moldova's leading trade partner, were a major causeof the 8.6% drop in GDP. In 1999, GDP fell again, by 4.4%, the fifthdrop in the past seven years; exports were down, and energy suppliescontinued to be erratic. GDP declined slightly in 2000, with aserious drought hurting agriculture. Growth should turn positive in2001.
Monaco:Monaco, situated on the French Mediterranean coast, is apopular resort, attracting tourists to its casino and pleasantclimate. The Principality has successfully sought to diversify intoservices and small, high-value-added, nonpolluting industries. Thestate has no income tax and low business taxes and thrives as a taxhaven both for individuals who have established residence and forforeign companies that have set up businesses and offices. The stateretains monopolies in a number of sectors, including tobacco, thetelephone network, and the postal service. Living standards arehigh, roughly comparable to those in prosperous French metropolitanareas. Monaco does not publish national income figures; theestimates below are extremely rough.
Mongolia:Economic activity traditionally has been based onagriculture and breeding of livestock. Mongolia also has extensivemineral deposits: copper, coal, molybdenum, tin, tungsten, and goldaccount for a large part of industrial production. Sovietassistance, at its height one-third of GDP, disappeared almostovernight in 1990-91, at the time of the dismantlement of the USSR.Mongolia was driven into deep recession, which was prolonged by theMongolian People's Revolutionary Party's (MPRP) reluctance toundertake serious economic reform. The Democratic Coalition (DC)government has embraced free-market economics, easing pricecontrols, liberalizing domestic and international trade, andattempting to restructure the banking system and the energy sector.Major domestic privatization programs were undertaken, as well asthe fostering of foreign investment through international tender ofthe oil distribution company, a leading cashmere company, and banks.Reform was held back by the ex-communist MPRP opposition and by thepolitical instability brought about through four successivegovernments under the DC. Economic growth picked up in 1997-99 afterstalling in 1996 due to a series of natural disasters and declinesin world prices of copper and cashmere. In August and September1999, the economy suffered from a temporary Russian ban on exportsof oil and oil products, and Mongolia remains vulnerable in thissector. Mongolia joined the World Trade Organization (WTrO) in 1997.The international donor community pledged over $300 million per yearat the last Consultative Group Meeting, held in Ulaanbaatar in June1999. The MPRP government, elected in July 2000, is anxious toimprove the investment climate; it must also deal with a heavyburden of external debt.
Montserrat:Severe volcanic activity, which began in July 1995, hasput a damper on this small, open economy. A catastrophic eruption inJune 1997 closed the airports and seaports, causing further economicand social dislocation. Two-thirds of the 12,000 inhabitants fledthe island. Some began to return in 1998, but lack of housinglimited the number. The agriculture sector continued to be affectedby the lack of suitable land for farming and the destruction ofcrops. Prospects for the economy depend largely on developments inrelation to the volcano and on public sector construction activity.The UK committed to a three year $125 million aid program in 1999 tohelp reconstruct the economy.
Morocco:Morocco faces the problems typical of developing countries- restraining government spending, reducing constraints on privateactivity and foreign trade, and achieving sustainable economicgrowth. Following structural adjustment programs supported by theIMF, World Bank, and the Paris Club, the dirham is now fullyconvertible for current account transactions, and reforms of thefinancial sector have been implemented. Drought conditions depressedactivity in the key agricultural sector and contributed to astagnant economy in 1999 and 2000. During that time, however,Morocco reported large foreign exchange inflows from the sale of amobile telephone license and partial privatization of thestate-owned telecommunications company. Favorable rainfalls have ledMorocco to predict a growth of 1% for 2001. Formidable long-termchallenges include: servicing the external debt; preparing theeconomy for freer trade with the EU; and improving education andattracting foreign investment to boost living standards and jobprospects for Morocco's youthful population.
Mozambique:Before the peace accord of October 1992, Mozambique'seconomy was devastated by a protracted civil war and socialistmismanagement. In 1994, it ranked as one of the poorest countries inthe world. Since then, Mozambique has undertaken a series ofeconomic reforms. Almost all aspects of the economy have beenliberalized to some extent. More than 900 state enterprises havebeen privatized. A value-added tax, introduced in 1999, launched thegovernment's comprehensive tax reform program. Pending are muchneeded commercial code reform and greater private sector involvementin the transportation, telecommunications, and energy sectors. Since1996, inflation has been low and foreign exchange rates relativelystable. Albeit from a small base, Mozambique's economy grew at anannual 10% rate in 1997-99, one of the highest growth rates in theworld. Growth slowed and inflation rose in 2000 due to devastatingflooding in the early part of the year. Both indicators shouldrecover in 2001. The country depends on foreign assistance tobalance the budget and to pay for a trade imbalance in which importsgreatly outnumber exports. The trade situation should improve in themedium term, however, as trade and transportation links to SouthAfrica and the rest of the region have been improved and sizeableforeign investments are beginning to materialize. Among theseinvestments are metal production (aluminum, steel), natural gas,power generation, agriculture, fishing, timber, and transportationservices. Mozambique has received a formal cancellation of a largeportion of its external debt through an IMF initiative and isscheduled to receive additional relief.
Namibia:The economy is heavily dependent on the extraction andprocessing of minerals for export. Mining accounts for 20% of GDP.Namibia is the fourth-largest exporter of nonfuel minerals in Africaand the world's fifth-largest producer of uranium. Rich alluvialdiamond deposits make Namibia a primary source for gem-qualitydiamonds. Namibia also produces large quantities of lead, zinc, tin,silver, and tungsten. Half of the population depends on agriculture(largely subsistence agriculture) for its livelihood. Namibia mustimport some of its food. Although per capita GDP is four times theper capita GDP of Africa's poorer countries, the majority ofNamibia's people live in pronounced poverty because of large-scaleunemployment, the great inequality of income distribution, and thelarge amount of wealth going to foreigners. The Namibian economy hasclose links to South Africa. GDP growth in 2000 was led by gains inthe diamond and fish sectors. Agreement has been reached on theprivatization of several more enterprises in coming years, whichshould stimulate long-run foreign investment. Growth in 2001 couldbe 5.5% provided the world economy remains stable.
Nauru:Revenues of this tiny island have come from exports ofphosphates, but reserves are expected to be exhausted within five toten years. Phosphate production has declined since 1989, as demandhas fallen in traditional markets and as the marginal cost ofextracting the remaining phosphate increases, making it lessinternationally competitive. While phosphates have given Nauruansone of the highest per capita incomes in the Third World, few otherresources exist with most necessities being imported, includingfresh water from Australia. The rehabilitation of mined land and thereplacement of income from phosphates are serious long-termproblems. In anticipation of the exhaustion of Nauru's phosphatedeposits, substantial amounts of phosphate income have been investedin trust funds to help cushion the transition and provide forNauru's economic future. The government has been borrowing heavilyfrom the trusts to finance fiscal deficits. To cut costs thegovernment has called for a freezing of wages, a reduction ofover-staffed public service departments, privatization of numerousgovernment agencies, and closure of some overseas consulates. Inrecent years Nauru has encouraged the registration of offshore banksand corporations. Tens of billions of dollars have been channeledthrough their accounts. Few comprehensive statistics on the Naurueconomy exist, with estimates of Nauru's per capita GDP varyingwidely.
Navassa Island:no economic activity
Nepal:Nepal is among the poorest and least developed countries inthe world with nearly half of its population living below thepoverty line. Agriculture is the mainstay of the economy, providinga livelihood for over 80% of the population and accounting for 41%of GDP. Industrial activity mainly involves the processing ofagricultural produce including jute, sugarcane, tobacco, and grain.Production of textiles and carpets has expanded recently andaccounted for about 80% of foreign exchange earnings in the pastthree years. Agricultural production is growing by about 5% onaverage as compared with annual population growth of 2.3%. Since May1991, the government has been moving forward with economic reforms,particularly those that encourage trade and foreign investment,e.g., by reducing business licenses and registration requirements inorder to simplify investment procedures. The government has alsobeen cutting expenditures by reducing subsidies, privatizing stateindustries, and laying off civil servants. More recently, however,political instability - five different governments over the past fewyears - has hampered Kathmandu's ability to forge consensus toimplement key economic reforms. Nepal has considerable scope foraccelerating economic growth by exploiting its potential inhydropower and tourism, areas of recent foreign investment interest.Prospects for foreign trade or investment in other sectors willremain poor, however, because of the small size of the economy, itstechnological backwardness, its remoteness, its landlockedgeographic location, and its susceptibility to natural disaster. Theinternational community's role of funding more than 60% of Nepal'sdevelopment budget and more than 28% of total budgetary expenditureswill likely continue as a major ingredient of growth.
Netherlands:The Netherlands is a prosperous and open economydepending heavily on foreign trade. The economy is noted for stableindustrial relations, moderate inflation, a sizable current accountsurplus, and an important role as a European transportation hub.Industrial activity is predominantly in food processing, chemicals,petroleum refining, and electrical machinery. A highly mechanizedagricultural sector employs no more than 4% of the labor force butprovides large surpluses for the food-processing industry and forexports. The Dutch rank third worldwide in value of agriculturalexports, behind the US and France. The Dutch economy has expanded by3% or more in each of the last four years and real GDP growth islikely to be about 3.6% in 2001. The government in 2001 willimplement its most comprehensive tax reform since World War II,designed to reduce high income tax levels and redirect the fiscalburden onto consumption. The Dutch were among the first 11 EUcountries establishing the euro currency zone on 1 January 1999.
Netherlands Antilles:Tourism, petroleum refining, and offshorefinance are the mainstays of this small economy, which is closelytied to the outside world. Although GDP has declined slightly ineach of the past five years, the islands enjoy a high per capitaincome and a well-developed infrastructure as compared with othercountries in the region. Almost all consumer and capital goods areimported, with Venezuela, the US, and Mexico being the majorsuppliers. Poor soils and inadequate water supplies hamper thedevelopment of agriculture.
New Caledonia:New Caledonia has more than 20% of the world's knownnickel resources. In recent years, the economy has suffered becauseof depressed international demand for nickel, the principal sourceof export earnings. Only a negligible amount of the land is suitablefor cultivation, and food accounts for about 20% of imports. Inaddition to nickel, the substantial financial support from Franceand tourism are keys to the health of the economy. The situation in1998 was clouded by the spillover of financial problems in East Asiaand by lower prices for nickel. Nickel prices jumped in 1999-2000,and large additions were made to capacity. French Governmentinterests in the New Caledonian nickel industry are beingtransferred to local ownership.
New Zealand:Since 1984 the government has accomplished majoreconomic restructuring, moving an agrarian economy dependent onconcessionary British market access toward a more industrialized,free market economy that can compete globally. This dynamic growthhas boosted real incomes, broadened and deepened the technologicalcapabilities of the industrial sector, and contained inflationarypressures. Inflation remains among the lowest in the industrialworld. Per capita GDP has been moving up toward the levels of thebig West European economies. New Zealand's heavy dependence on tradeleaves its growth prospects vulnerable to economic performance inAsia, Europe, and the US. With the FY00/01 budget pushing up pensionand other public outlays, the government's ability to meet fiscaltargets will depend on sustained economic growth.
Nicaragua:Nicaragua, one of the hemisphere's poorest countries,faces low per capita income, flagging socio-economic indicators, andhuge external debt. While the country has made progress towardmacro-economic stabilization over the past few years, a bankingcrisis and scandal has shaken the economy. Managua will continue tobe dependent on international aid and debt relief under the HeavilyIndebted Poor Countries (HIPC) initiative. Donors have made aidconditional on improving governability, the openness of governmentfinancial operation, poverty alleviation, and human rights.Nicaragua met the conditions for additional debt service relief inDecember 2000. Growth should remain moderate to high in 2001.
Niger:Niger is a poor, landlocked Sub-Saharan nation, whose economycenters on subsistence agriculture, animal husbandry, reexporttrade, and increasingly less on uranium, because of declining worlddemand. The 50% devaluation of the West African franc in January1994 boosted exports of livestock, cowpeas, onions, and the productsof Niger's small cotton industry. The government relies on bilateraland multilateral aid - which was suspended following the April 1999coup d'etat - for operating expenses and public investment. In 2000,the World Bank approved a structural adjustment loan of $35 millionto help support fiscal reforms. However, reforms could provedifficult given the government's bleak financial situation.
Nigeria:The oil-rich Nigerian economy, long hobbled by politicalinstability, corruption, and poor macroeconomic management, isundergoing substantial economic reform under the new civilianadministration. Nigeria's former military rulers failed to diversifythe economy away from overdependence on the capital-intensive oilsector, which provides 20% of GDP, 95% of foreign exchange earnings,and about 65% of budgetary revenues. The largely subsistenceagricultural sector has failed to keep up with rapid populationgrowth, and Nigeria, once a large net exporter of food, now mustimport food. Following the signing of an IMF stand-by agreement inAugust 2000, Nigeria received a debt-restructuring deal from theParis Club and a $1 billion loan from the IMF, both contingent oneconomic reforms. Increases in foreign investment and oil productioncombined with high world oil prices should push growth over 4% in2001-02.
Niue:Government expenditures regularly exceed revenues, and theshortfall is made up by critically needed grants from New Zealandthat are used to pay wages to public employees. Niue has cutgovernment expenditures by reducing the public service by almosthalf. The agricultural sector consists mainly of subsistencegardening, although some cash crops are grown for export. Industryconsists primarily of small factories to process passion fruit, limeoil, honey, and coconut cream. The sale of postage stamps to foreigncollectors is an important source of revenue. The island in recentyears has suffered a serious loss of population because of migrationof Niueans to New Zealand. Efforts to increase GDP include thepromotion of tourism and a financial services industry.
Norfolk Island:Tourism, the primary economic activity, has steadilyincreased over the years and has brought a level of prosperityunusual among inhabitants of the Pacific islands. The agriculturalsector has become self-sufficient in the production of beef,poultry, and eggs.
Northern Mariana Islands:The economy benefits substantially fromfinancial assistance from the US. The rate of funding has declinedas locally generated government revenues have grown. The key touristindustry employs about 50% of the work force and accounts forroughly one-fourth of GDP. Japanese tourists predominate. Annualtourist entries have exceeded one-half million in recent years, butfinancial difficulties in Japan have caused a temporary slowdown.The agricultural sector is made up of cattle ranches and small farmsproducing coconuts, breadfruit, tomatoes, and melons. Garmentproduction is by far the most important industry with employment of12,000 mostly Chinese workers and sizable shipments to the US underduty and quota exemptions.
Norway:The Norwegian economy is a prosperous bastion of welfarecapitalism, featuring a combination of free market activity andgovernment intervention. The government controls key areas, such asthe vital petroleum sector (through large-scale state enterprises).The country is richly endowed with natural resources - petroleum,hydropower, fish, forests, and minerals - and is highly dependent onits oil production and international oil prices; in 1999, oil andgas accounted for 35% of exports. Only Saudi Arabia exports more oilthan Norway. Oslo opted to stay out of the EU during a referendum inNovember 1994. Growth picked up in 2000 to 2.7%, compared to themeager 0.8% of 1999, but may fall back in 2001. The government movedahead with privatization in 2000, even proposing the sale of up toone-third of the 100% state-owned oil company Statoil. Despite theirhigh per capita income and generous welfare benefits, Norwegiansworry about that time in the next two decades when the oil and gasbegin to run out. Accordingly, Norway has been saving itsoil-boosted budget surpluses in a Government Petroleum Fund, whichis invested abroad and now is valued at more than $43 billion.
Oman:Oman's economic performance improved significantly in 2000 duelargely to the upturn in oil prices. The government is moving aheadwith privatization of its utilities, the development of a body ofcommercial law to facilitate foreign investment, and increasedbudgetary outlays. Oman continues to liberalize its markets andjoined the World Trade Organization (WTrO) in November 2000.
Pacific Ocean:The Pacific Ocean is a major contributor to the worldeconomy and particularly to those nations its waters directly touch.It provides low-cost sea transportation between East and West,extensive fishing grounds, offshore oil and gas fields, minerals,and sand and gravel for the construction industry. In 1996, over 60%of the world's fish catch came from the Pacific Ocean. Exploitationof offshore oil and gas reserves is playing an ever-increasing rolein the energy supplies of Australia, NZ, China, US, and Peru. Thehigh cost of recovering offshore oil and gas, combined with the wideswings in world prices for oil since 1985, has slowed but notstopped new drillings.
Pakistan:Pakistan is a poor, heavily populated country, sufferingfrom internal political disputes, lack of foreign investment, and acostly confrontation with neighboring India. Pakistan's economicoutlook continues to be marred by its weak foreign exchangeposition, which relies on international creditors for hard currencyinflows. The MUSHARRAF government will face an estimated $21 billionin foreign debt coming due in 2000-03, despite having reschedulednearly $2 billion in debt with Paris Club members. Foreign loans andgrants provide approximately 25% of government revenue, but debtservice obligations total nearly 50% of government expenditure.Although Pakistan successfully negotiated a $600 million IMFStand-By Arrangement, future loan installments will be jeopardizedif Pakistan misses critical IMF benchmarks on revenue collection andthe fiscal deficit. MUSHARRAF has complied largely with IMFrecommendations to raise petroleum prices, widen the tax net,privatize public sector assets, and improve the balance of trade.However, Pakistan's economic prospects remain uncertain; too littlehas changed despite the new administration's intentions. Foreignexchange reserves hover at roughly $1 billion, GDP growth hinges oncrop performance, the import bill has been hammered by high oilprices, and both foreign and domestic investors remain wary ofcommitting to projects in Pakistan.
Palau:The economy consists primarily of subsistence agriculture andfishing. The government is the major employer of the work force,relying heavily on financial assistance from the US. The populationenjoys a per capita income of twice that of the Philippines and muchof Micronesia. Long-run prospects for the tourist sector have beengreatly bolstered by the expansion of air travel in the Pacific andthe rising prosperity of leading East Asian countries.
Palmyra Atoll:no economic activity
Panama:Panama's economy is based primarily on a well-developedservices sector that accounts for three-fourths of GDP. Servicesinclude the Panama Canal, banking, the Colon Free Zone, insurance,container ports, flagship registry, and tourism. A slump in ColonFree Zone and agricultural exports, high oil prices, and thewithdrawal of US military forces held back economic growth in 2000.The government plans public works programs, tax reforms, and newregional trade agreements in order to stimulate growth in 2001.
Papua New Guinea:Papua New Guinea is richly endowed with naturalresources, but exploitation has been hampered by the rugged terrainand the high cost of developing infrastructure. Agriculture providesa subsistence livelihood for 85% of the population. Mineraldeposits, including oil, copper, and gold, account for 72% of exportearnings. The 3.4% average annual growth rate of GDP during1979-1998 conceals considerable year-to-year variation resultingfrom external economic shocks, natural disasters, and economicmanagement problems. There has been little growth in the last halfof the 1990s, with real GDP in 1999 barely 3% higher than in 1994,not enough to compensate for population growth. A new administrationunder the leadership of Prime Minister Mekere MORAUTA in July 1999has promised to restore integrity to state institutions, tostabilize the kina, to restore stability to the national budget, toprivatize public enterprises where appropriate, and to ensureongoing peace on Bougainville. The government has had considerablesuccess in attracting international support, specifically gainingthe support of the IMF and the World Bank in securing developmentassistance loans. Significant challenges remain for MORAUTA,however, including gaining further investor confidence, specificallyfor the proposed Papua New Guinea-Australia oil pipeline, continuingefforts to privatize government assets, and in maintaining thesupport from members of Parliament who after 15 July 2001 candismiss him with a vote of no-confidence.
Paracel Islands:China announced plans in 1997 to open the islandsfor tourism.
Paraguay:Paraguay has a market economy marked by a large informalsector. The informal sector features both reexport of importedconsumer goods to neighboring countries as well as the activities ofthousands of microenterprises and urban street vendors. Because ofthe importance of the informal sector, accurate economic measuresare difficult to obtain. A large percentage of the populationderives their living from agricultural activity, often on asubsistence basis. The formal economy grew by an average of about 3%annually in 1995-97, but GDP declined slightly in 1998 and 1999. Ona per capita basis, real income has stagnated at 1980 levels. Mostobservers attribute Paraguay's poor economic performance topolitical uncertainty, corruption, lack of progress on structuralreform, substantial internal and external debt, and deficientinfrastructure. Growth rebounded slightly in 2000.
Peru:The Peruvian economy has become increasingly market-oriented,with major privatizations completed since 1990 in the mining,electricity, and telecommunications industries. Thanks to strongforeign investment and the cooperation between the FUJIMORIgovernment and the IMF and World Bank, growth was strong in 1994-97and inflation was brought under control. In 1998, El Nino's impacton agriculture, the financial crisis in Asia, and instability inBrazilian markets undercut growth. And 1999 was another lean yearfor Peru, with the aftermath of El Nino and the Asian financialcrisis working its way through the economy. Political instabilityresulting from the presidential election and FUJIMORI's subsequentdeparture from office limited economic growth in 2000.
Philippines:In 1998 the Philippine economy - a mixture ofagriculture, light industry, and supporting services - deterioratedas a result of spillover from the Asian financial crisis and poorweather conditions. Growth fell to about -0.5% in 1998 from 5% in1997, but recovered to about 3% in 1999 and 3.6% in 2000. Thegovernment has promised to continue its economic reforms to help thePhilippines match the pace of development in the newlyindustrialized countries of East Asia. The strategy includesimproving infrastructure, overhauling the tax system to bolstergovernment revenues, moving toward further deregulation andprivatization of the economy, and increasing trade integration withthe region.
Pitcairn Islands:The inhabitants of this tiny economy exist onfishing, subsistence farming, handicrafts, and postage stamps. Thefertile soil of the valleys produces a wide variety of fruits andvegetables, including citrus, sugarcane, watermelons, bananas, yams,and beans. Bartering is an important part of the economy. The majorsources of revenue are the sale of postage stamps to collectors andthe sale of handicrafts to passing ships.
Poland:Poland has steadfastly pursued a policy of liberalizing theeconomy and today stands out as one of the most successful and opentransition economies. GDP growth has been strong and steady since1992 - the best performance in the region. The privatization ofsmall and medium state-owned companies and a liberal law onestablishing new firms has allowed for the rapid development of avibrant private sector. In contrast, Poland's large agriculturalsector remains handicapped by structural problems, surplus labor,inefficient small farms, and lack of investment. Restructuring andprivatization of "sensitive sectors" (e.g., coal, steel, railroads,and energy) has begun. Structural reforms in health care, education,the pension system, and state administration have resulted in largerthan expected fiscal pressures. Further progress in public financedepends mainly on privatization of Poland's remaining state sector.The government's determination to enter the EU as soon as possibleaffects most aspects of its economic policies. Improving Poland'soutsized current account deficit and reining in inflation arepriorities. Warsaw leads the region in foreign investment and needsa continued large inflow.
Portugal:Portugal is an upcoming capitalist economy with a percapita GDP two-thirds that of the four big West European economies.The country qualified for the European Monetary Union (EMU) in 1998and joined with 10 other European countries in launching the euro on1 January 1999. The year 2000 was marked by moderation in growth,inflation, and unemployment. The country continues to run a sizabletrade deficit. The government is working to reform the tax system,to modernize capital plant, and to increase the country'scompetitiveness in the increasingly integrated world markets. Growthis expected to fall off slightly in 2001. Improvement in theeducation sector is critical to the long-run catch-up process.
Puerto Rico:Puerto Rico has one of the most dynamic economies inthe Caribbean region. A diverse industrial sector has surpassedagriculture as the primary locus of economic activity and income.Encouraged by duty-free access to the US and by tax incentives, USfirms have invested heavily in Puerto Rico since the 1950s. USminimum wage laws apply. Sugar production has lost out to dairyproduction and other livestock products as the main source of incomein the agricultural sector. Tourism has traditionally been animportant source of income, with estimated arrivals of nearly 5million tourists in 1999. Prospects for 2001 are clouded by aprobable slowing down in both the construction and tourist sectorsand by increasing inflation, particularly in energy and food prices;estimated growth will be 2%.
Qatar:Oil accounts for more than 30% of GDP, roughly 80% of exportearnings, and 66% of government revenues. Proved oil reserves of 3.7billion barrels should ensure continued output at current levels for23 years. Oil has given Qatar a per capita GDP comparable to that ofthe leading West European industrial countries. Qatar's provedreserves of natural gas exceed 7 trillion cubic meters, more than 5%of the world total, third largest in the world. Production andexport of natural gas are becoming increasingly important. Long-termgoals feature the development of offshore petroleum and thediversification of the economy. In 2000, Qatar posted its highestever trade surplus of $6 billion, due mainly to high oil prices andincreased natural gas exports.
Reunion:The economy has traditionally been based on agriculture.Sugarcane has been the primary crop for more than a century, and insome years it accounts for 85% of exports. The government has beenpushing the development of a tourist industry to relieve highunemployment, which amounts to more than 40% of the labor force. Thegap in Reunion between the well-off and the poor is extraordinaryand accounts for the persistent social tensions. The white andIndian communities are substantially better off than other segmentsof the population, often approaching European standards, whereasminority groups suffer the poverty and unemployment typical of thepoorer nations of the African continent. The outbreak of severerioting in February 1991 illustrates the seriousness ofsocioeconomic tensions. The economic well-being of Reunion dependsheavily on continued financial assistance from France.
Romania:Romania, one of the poorest countries in Central andEastern Europe, began the transition from communism in 1989 with alargely obsolete industrial base and a pattern of output unsuited tothe country's needs. Over the past decade economic restructuring haslagged behind most other countries in the region. Consequently,living standards have continued to fall - real wages are down over40%. Corruption too has worsened. The EU ranks Romania last amongenlargement candidates, and the European Bank for Reconstruction andDevelopment (EBRD) rates Romania's transition progress the region'sworst. The country emerged in 2000 from a punishing three-yearrecession thanks to strong demand in EU export markets. A newgovernment elected in November 2000 promises to promote economicreform. Bucharest hopes to receive financial and technicalassistance from international financial institutions and Westerngovernments; negotiations over a new IMF standby agreement are tobegin early in 2001. If reform stalls, Romania's ability to borrowfrom both public and private sources could quickly dry up, leadingto another financial crisis.
Russia:A decade after the implosion of the Soviet Union in 1991,Russia is still struggling to establish a modern market economy andachieve strong economic growth. In contrast to its trading partnersin Central Europe - which were able to overcome the initialproduction declines that accompanied the launch of market reformswithin three to five years - Russia saw its economy contract forfive years, as the executive and legislature dithered over theimplementation of many of the basic foundations of a market economy.Russia achieved a slight recovery in 1997, but the government'sstubborn budget deficits and the country's poor business climatemade it vulnerable when the global financial crisis swept through in1998. The crisis culminated in the August depreciation of the ruble,a debt default by the government, and a sharp deterioration inliving standards for most of the population. The economy reboundedin 1999 and 2000, buoyed by the competitive boost from the weakruble and a surging trade surplus fueled by rising world oil prices.This recovery, along with a renewed government effort in 2000 toadvance lagging structural reforms, have raised business andinvestor confidence over Russia's prospects in its second decade oftransition. Yet serious problems persist. Russia remains heavilydependent on exports of commodities, particularly oil, natural gas,metals, and timber, which account for over 80% of exports, leavingthe country vulnerable to swings in world prices. Russia'sagricultural sector remains beset by uncertainty over land ownershiprights, which has discouraged needed investment and restructuring.Another threat is negative demographic trends, fueled by low birthrates and a deteriorating health situation - including an alarmingrise in AIDS cases - that have contributed to a nearly 2% drop inthe population since 1992. Russia's industrial base is increasinglydilapidated and must be replaced or modernized if the country is toachieve sustainable economic growth. Other problems includewidespread corruption, capital flight, and brain drain.
Rwanda:Rwanda is a rural country with about 90% of the populationengaged in (mainly subsistence) agriculture. It is the most denselypopulated country in Africa; is landlocked; and has few naturalresources and minimal industry. Primary exports are coffee and tea.The 1994 genocide decimated Rwanda's fragile economic base, severelyimpoverished the population, particularly women, and eroded thecountry's ability to attract private and external investment.However, Rwanda has made significant progress in stabilizing andrehabilitating its economy. GDP has rebounded, and inflation hasbeen curbed. In June 1998, Rwanda signed an Enhanced StructuralAdjustment Facility (ESAF) with the IMF. Rwanda has also embarkedupon an ambitious privatization program with the World Bank.Continued growth in 2001 depends on the maintenance of internationalaid levels and the strengthening of world prices of coffee and tea.
Saint Helena:The economy depends largely on financial assistancefrom the UK, which amounted to about $5 million in 1997 or almostone-half of annual budgetary revenues. The local population earnsincome from fishing, the raising of livestock, and sales ofhandicrafts. Because there are few jobs, 25% of the work force hasleft to seek employment on Ascension Island, on the Falklands, andin the UK.
Saint Kitts and Nevis:The economy has traditionally depended on thegrowing and processing of sugarcane; decreasing world prices havehurt the industry in recent years. Tourism, export-orientedmanufacturing, and offshore banking activity have assumed largerroles. Most food is imported. The government has undertaken aprogram designed to revitalize the faltering sugar sector. It isalso working to improve revenue collection in order to better fundsocial programs. In 1997 some leaders in Nevis were urgingseparation from Saint Kitts on the basis that Nevis was paying farmore in taxes than it was receiving in government services, but thevote on cessation failed in August 1998. In late September 1998,Hurricane Georges caused approximately $445 million in damages andlimited GDP growth for the year.
Saint Lucia:The recent changes in the EU import preference regimeand the increased competition from Latin American bananas have madeeconomic diversification increasingly important in Saint Lucia.Improvement in the construction sector and growth of the tourismindustry helped expand GDP in 1998-99. The agriculture sectorregistered its fifth year of decline in 1997 primarily because of asevere decline in banana production. The manufacturing sector is themost diverse in the Eastern Caribbean, and the government isbeginning to develop regulations for the small offshore financialsector.
Saint Pierre and Miquelon:The inhabitants have traditionally earnedtheir livelihood by fishing and by servicing fishing fleetsoperating off the coast of Newfoundland. The economy has beendeclining, however, because of disputes with Canada over fishingquotas and a steady decline in the number of ships stopping at SaintPierre. In 1992, an arbitration panel awarded the islands anexclusive economic zone of 12,348 sq km to settle a longstandingterritorial dispute with Canada, although it represents only 25% ofwhat France had sought. The islands are heavily subsidized by Franceto the great betterment of living standards. The government hopes anexpansion of tourism will boost economic prospects.
Saint Vincent and the Grenadines: Agriculture, dominated by banana production, is the most important sector of this lower-middle-income economy. The services sector, based mostly on a growing tourist industry, is also important. The government has been relatively unsuccessful at introducing new industries, and a high unemployment rate persists. The continuing dependence on a single crop represents the biggest obstacle to the islands' development; tropical storms wiped out substantial portions of crops in both 1994 and 1995. The tourism sector has considerable potential for development over the next decade. Recent growth has been stimulated by strong activity in the construction sector and an improvement in tourism. There is a small manufacturing sector and a small offshore financial sector whose particularly restrictive secrecy laws have caused some international concern.
Samoa:The economy of Samoa has traditionally been dependent ondevelopment aid, family remittances from overseas, and agriculturalexports. The country is vulnerable to devastating storms.Agriculture employs two-thirds of the labor force, and furnishes 90%of exports, featuring coconut cream, coconut oil, and copra. Themanufacturing sector mainly processes agricultural products. Tourismis an expanding sector, accounting for 15% of GDP; about 85,000tourists visited the islands in 2000. The Samoan Government hascalled for deregulation of the financial sector, encouragement ofinvestment, and continued fiscal discipline. Observers point to theflexibility of the labor market as a basic strength for futureeconomic advances. Foreign reserves are in a relatively healthystate, the external debt is stable, and inflation is low.
San Marino:The tourist sector contributes over 50% of GDP. In 1999more than 3 million tourists visited San Marino. The key industriesare banking, wearing apparel, electronics, and ceramics. Mainagricultural products are wine and cheeses. The per capita level ofoutput and standard of living are comparable to those of the mostprosperous regions of Italy, which supplies much of its food.
Sao Tome and Principe:This small poor island economy has becomeincreasingly dependent on cocoa since independence 25 years ago.However, cocoa production has substantially declined because ofdrought and mismanagement. The resulting shortage of cocoa forexport has created a persistent balance-of-payments problem. SaoTome has to import all fuels, most manufactured goods, consumergoods, and a significant amount of food. Over the years, it has beenunable to service its external debt and has had to depend onconcessional aid and debt rescheduling. Sao Tome benefited from $200million in debt relief in December 2000 under the Highly IndebtedPoor Countries (HIPC) program. Considerable potential exists fordevelopment of a tourist industry, and the government has takensteps to expand facilities in recent years. The government also hasattempted to reduce price controls and subsidies, but economicgrowth has remained sluggish. Sao Tome is also optimistic thatsignificant petroleum discoveries are forthcoming in its territorialwaters in the oil-rich waters of the Gulf of Guinea. Corruptionscandals continue to weaken the economy. At the same time, progressin the economic reform program has attracted international financialinstitutions' support, and GDP growth will likely rise to at least4% in 2001-02.
Saudi Arabia:This is an oil-based economy with strong governmentcontrols over major economic activities. Saudi Arabia has thelargest reserves of petroleum in the world (26% of the provedreserves), ranks as the largest exporter of petroleum, and plays aleading role in OPEC. The petroleum sector accounts for roughly 75%of budget revenues, 40% of GDP, and 90% of export earnings. About35% of GDP comes from the private sector. Roughly 5 million foreignworkers play an important role in the Saudi economy, for example, inthe oil and service sectors. Saudi Arabia was a key player in thesuccessful efforts of OPEC and other oil producing countries toraise the price of oil in 1999-2000 to its highest level since theGulf war by reducing production. Riyadh expects to have a moderatebudget deficit in 2001, in part because of increased spending foreducation and other social programs. The government in 1999announced plans to begin privatizing the electricity companies,which follows the ongoing privatization of the telecommunicationscompany. The government is expected to continue calling for privatesector growth to lessen the kingdom's dependence on oil and increaseemployment opportunities for the swelling Saudi population.Shortages of water and rapid population growth will constraingovernment efforts to increase self-sufficiency in agriculturalproducts.
Senegal:In January 1994, Senegal undertook a bold and ambitiouseconomic reform program with the support of the international donorcommunity. This reform began with a 50% devaluation of Senegal'scurrency, the CFA franc, which is linked at a fixed rate to theFrench franc. Government price controls and subsidies have beensteadily dismantled. After seeing its economy contract by 2.1% in1993, Senegal made an important turnaround, thanks to the reformprogram, with real growth in GDP averaging 5% annually in 1995-99.Annual inflation has been pushed down to 2%, and the fiscal deficithas been cut to less than 1.5% of GDP. Investment rose steadily from13.8% of GDP in 1993 to 16.5% in 1997. As a member of the WestAfrican Economic and Monetary Union (UEMOA), Senegal is workingtoward greater regional integration with a unified external tariff.Senegal also realized full Internet connectivity in 1996, creating aminiboom in information technology-based services. Private activitynow accounts for 82% of GDP. On the negative side, Senegal facesdeep-seated urban problems of chronic unemployment, juveniledelinquency, and drug addiction. Real GDP growth is expected to riseabove 6%, while inflation is likely to hold at 2% in 2001-02.
Seychelles:Since independence in 1976, per capita output in thisIndian Ocean archipelago has expanded to roughly seven times the oldnear-subsistence level. Growth has been led by the tourist sector,which employs about 30% of the labor force and provides more than70% of hard currency earnings, and by tuna fishing. In recent yearsthe government has encouraged foreign investment in order to upgradehotels and other services. At the same time, the government hasmoved to reduce the dependence on tourism by promoting thedevelopment of farming, fishing, and small-scale manufacturing. Thevulnerability of the tourist sector was illustrated by the sharpdrop in 1991-92 due largely to the Gulf war. Although the industryhas rebounded, the government recognizes the continuing need forupgrading the sector in the face of stiff international competition.Other issues facing the government are the curbing of the budgetdeficit and further privatization of public enterprises. Growthslowed in 1998-2000, due to sluggish tourist and tuna sectors. Tightcontrols on exchange rates and the scarcity of foreign exchange havehindered short-term economic prospects. The black market value ofthe Seychelles ruppee is half the official exchange rate; without adevaluation of the currency the tourist sector should remainsluggish as vacationers seek cheaper destinations such as Comoros,Mauritius, and Madagascar.
Sierra Leone:Sierra Leone is an extremely poor African nation withtremendous inequality in income distribution. It does havesubstantial mineral, agricultural, and fishery resources. However,the economic and social infrastructure is not well developed, andserious social disorders continue to hamper economic development.About two-thirds of the working-age population engages insubsistence agriculture. Manufacturing consists mainly of theprocessing of raw materials and of light manufacturing for thedomestic market. Bauxite and rutile mines have been shut down bycivil strife. The major source of hard currency is found in themining of diamonds, the large majority of which are smuggled out ofthe country. The resurgence of internal warfare in 1999 broughtanother substantial drop in GDP, with GNP recovering part of the wayin 2000. The fate of the economy depends upon the maintenance ofdomestic peace and the continued receipt of substantial aid fromabroad.
Singapore:Singapore is blessed with a highly developed andsuccessful free-market economy, a remarkably open andcorruption-free business environment, stable prices, and the fifthhighest per capita GDP in the world. Exports, particularly inelectronics and chemicals, and services are the main drivers of theeconomy. Mainly because of robust exports, especially electronicgoods, the economy grew 10.1% in 2000. Forecasters, however, areprojecting only 4%-6% growth in 2001 largely because of weakerglobal demand, especially in the US. The government promotes highlevels of savings and investment through a mandatory savings schemeand spends heavily in education and technology. It also ownsgovernment-linked companies (GLCs) - particularly in manufacturing -that operate as commercial entities. As Singapore looks to a futureincreasingly marked by globalization, the country is positioningitself as the region's financial and high-tech hub.
Slovakia:Slovakia continues the difficult transition from acentrally planned economy to a modern market economy. The economicslowdown in 1999 stemmed from large budget and current accountdeficits, fast-growing external debt, and persistent corruption.Even though GDP growth reached only 2.2% in 2000, the year wasmarked by positive developments such as foreign direct investment of$1.5 billion, strong export performance, restructuring andprivatization in the banking sector, entry into the OECD, andinitial efforts to stem corruption. Strong challenges face thegovernment in 2001, especially the maintenance of fiscal balance,the further privatization of the economy, and the reduction ofunemployment.
Slovenia:Although Slovenia enjoys one of the highest GDPs percapita among the transition economies of Central Europe, it needs tospeed up the privatization process and the dismantling ofrestrictions on foreign investment. About 45% of the economy remainsin state hands, and the level of foreign direct investment inflowsas a percent of GDP is the lowest in the region. Analysts arepredicting between 4.0% and 4.2% growth for 2001. Export growth isexpected to slow in 2001 and 2002 as EU markets soften. Inflationrose from 6.1% to 8.9% in 2000 and remains a matter of concern.
Solomon Islands:The bulk of the population depends on agriculture,fishing, and forestry for at least part of their livelihood. Mostmanufactured goods and petroleum products must be imported. Theislands are rich in undeveloped mineral resources such as lead,zinc, nickel, and gold. However, severe ethnic violence, the closingof key business enterprises, and an empty government treasury haveled to a continuing economic downslide. Deliveries of crucial fuelsupplies (including those for electrical generation) by tankers havebecome sporadic due to the government's inability to pay and attacksagainst ships. Telecommunications are threatened by the lack oftechnical and maintenance staff many of whom have left the country.
Somalia:One of the world's poorest and least developed countries,Somalia has few resources. Moreover, much of the economy has beendevastated by the civil war. Agriculture is the most importantsector, with livestock accounting for about 40% of GDP and about 65%of export earnings. Nomads and semi-nomads, who are dependent uponlivestock for their livelihood, make up a large portion of thepopulation. Livestock and bananas are the principal exports; sugar,sorghum, corn, fish, and qat are products for the domestic market.The small industrial sector, based on the processing of agriculturalproducts, accounts for 10% of GDP; most facilities have been shutdown because of the civil strife. Moreover, ongoing civildisturbances in Mogadishu and outlying areas have interfered withany substantial economic advance and with international aidarrangements. Due to the civil strife, economic data is susceptibleto an exceptionally wide margin of error.
South Africa:South Africa is a middle-income, developing countrywith an abundant supply of resources, well-developed financial,legal, communications, energy, and transport sectors, a stockexchange that ranks among the 10 largest in the world, and a moderninfrastructure supporting an efficient distribution of goods tomajor urban centers throughout the region. However, growth has notbeen strong enough to cut into the 30% unemployment, and dauntingeconomic problems remain from the apartheid era, especially theproblems of poverty and lack of economic empowerment among thedisadvantaged groups. Other problems are crime, corruption, andHIV/AIDS. At the start of 2000, President MBEKI vowed to promoteeconomic growth and foreign investment, and to reduce poverty byrelaxing restrictive labor laws, stepping up the pace ofprivatization, and cutting unneeded governmental spending.
South Georgia and the South Sandwich Islands:Some fishing takesplace in adjacent waters. There is a potential source of income fromharvesting fin fish and krill. The islands receive income frompostage stamps produced in the UK.
Southern Ocean:Fisheries in 1998-99 (1 July to 30 June) landed119,898 metric tons, of which 85% was krill and 14% Patagoniantoothfish. International agreements were adopted in late 1999 toreduce illegal, unreported, and unregulated fishing, which in the1998-99 season landed five to six times more Patagonian toothfishthan the regulated fishery. In the 1999-2000 antarctic summer 13,193tourists, most of them seaborne, visited the Southern Ocean andAntarctica, compared to 10,013 the previous year. Nearly 16,000tourists are expected during the 2000-01 season.
Spain:Spain's mixed capitalist economy supports a GDP that on a percapita basis is 80% that of the four leading West Europeaneconomies. Its center-right government successfully worked to gainadmission to the first group of countries launching the Europeansingle currency on 1 January 1999. The AZNAR administration hascontinued to advocate liberalization, privatization, andderegulation of the economy and has introduced some tax reforms tothat end. Unemployment has been steadily falling under the AZNARadministration but remains the highest in the EU at 14%. Thegovernment intends to make further progress in changing labor lawsand reforming pension schemes, which are key to the sustainabilityof both Spain's internal economic advances and its competitivenessin a single currency area. Adjusting to the monetary and othereconomic policies of an integrated Europe - and further reducingunemployment - will pose challenges to Spain in the next few years.
Spratly Islands:Economic activity is limited to commercial fishing.The proximity to nearby oil- and gas-producing sedimentary basinssuggests the potential for oil and gas deposits, but the region islargely unexplored, and there are no reliable estimates of potentialreserves; commercial exploitation has yet to be developed.
Sri Lanka:In 1977, Colombo abandoned statist economic policies andits import substitution trade policy for market-oriented policiesand export-oriented trade. Sri Lanka's most dynamic sectors now arefood processing, textiles and apparel, food and beverages,telecommunications, and insurance and banking. By 1996 plantationcrops made up only 20% of exports (compared with 93% in 1970), whiletextiles and garments accounted for 63%. GDP grew at an annualaverage rate of 5.5% throughout the 1990s until a drought and adeteriorating security situation lowered growth to 3.8% in 1996. Theeconomy rebounded in 1997-98 with growth of 6.4% and 4.7% - butslowed to 4.3% in 1999. Growth increased to 5.6% in 2000, withgrowth in tourism and exports leading the way. But a resurgence ofcivil war between the Sinhalese and the minority Tamils and apossible slowdown in tourism dampen prospects for 2001. For the nextround of reforms, the central bank of Sri Lanka recommends thatColombo expand market mechanisms in nonplantation agriculture,dismantle the government's monopoly on wheat imports, and promotemore competition in the financial sector.
Sudan:Sudan is buffeted by civil war, chronic instability, adverseweather, weak world agricultural prices, a drop in remittances fromabroad, and counterproductive economic policies. The privatesector's main areas of activity are agriculture (which employs 80%of the work force), trading, and light industry which is mostlyprocessing of agricultural goods. Most of the 1990s werecharacterized by sluggish economic growth as the IMF suspendedlending, declared Sudan a non-cooperative state, and threatened toexpel Sudan from the IMF. Starting in 1997, Sudan began implementingIMF macroeconomic reforms which have successfully stabilizedinflation at 10% or less. Sudan continues to have limitedinternational credit resources as over 75% of Sudan's debt of $24.9billion is in arrears and Khartoum's continued prosecution of thecivil war works to isolate Sudan. In 1999, Sudan began exporting oiland in 1999-2000 had recorded its first trade surpluses. Current oilproduction stands at 185,000 barrels per day, of which about 70% isexported and the rest refined for domestic consumption. Despite itsmany infrastructure problems, Sudan's increased oil production, thereturn of regular rainfall, and recent investments in irrigationschemes should allow the country to achieve economic growth of 6% in2001.
Suriname:The economy is dominated by the bauxite industry, whichaccounts for more than 15% of GDP and 70% of export earnings. Afterassuming power in the fall of 1996, the WIJDENBOSCH government endedthe structural adjustment program of the previous government,claiming it was unfair to the poorer elements of society. Taxrevenues fell as old taxes lapsed and the government failed toimplement new tax alternatives. By the end of 1997, the allocationof new Dutch development funds was frozen as Surinamese Governmentrelations with the Netherlands deteriorated. Economic growth slowedin 1998, with decline in the mining, construction, and utilitysectors. Rampant government expenditures, poor tax collection, abloated civil service, and reduced foreign aid in 1999 contributedto the fiscal deficit, estimated at 11% of GDP. The governmentsought to cover this deficit through monetary expansion, which ledto a dramatic increase in inflation and exchange rate depreciation.Suriname's economic prospects for the medium term will depend onrenewed commitment to responsible monetary and fiscal policies andto the introduction of structural reforms to liberalize markets andpromote competition. The new government of Ronald VENETIAAN hasbegun an austerity program, raised taxes, and attempted to controlspending. the exchange rate has responded by stabilizing. The DutchGovernment has restarted the aid flow, which will allow Suriname toaccess international development financing.
Svalbard:Coal mining is the major economic activity on Svalbard.The treaty of 9 February 1920 gives the 41 signatories equal rightsto exploit mineral deposits, subject to Norwegian regulation.Although US, UK, Dutch, and Swedish coal companies have mined in thepast, the only companies still mining are Norwegian and Russian. Thesettlements on Svalbard are essentially company towns. The Norwegianstate-owned coal company employs nearly 60% of the Norwegianpopulation on the island, runs many of the local services, andprovides most of the local infrastructure. There is also sometrapping of seal, polar bear, fox, and walrus.
Swaziland:In this small landlocked economy, subsistence agricultureoccupies more than 60% of the population. Manufacturing features anumber of agroprocessing factories. Mining has declined inimportance in recent years: diamond mines have shut down because ofthe depletion of easily accessible reserves; high-grade iron oredeposits were depleted by 1978; and health concerns have cut worlddemand for asbestos. Exports of soft drink concentrate, sugar, andwood pulp are the main earners of hard currency. Surrounded by SouthAfrica, except for a short border with Mozambique, Swaziland isheavily dependent on South Africa from which it receives four-fifthsof its imports and to which it sends two-thirds of its exports.Remittances from the Southern African Customs Union and Swaziworkers in South African mines substantially supplement domesticallyearned income. The government is trying to improve the atmospherefor foreign investment. Overgrazing, soil depletion, drought, andsometimes floods persist as problems for the future. Prospects for2001 are strengthened by government millennium projects for a newconvention center, additional hotels, an amusement park, a newairport, and stepped-up roadbuilding and factory construction plans.
Sweden:Aided by peace and neutrality for the whole twentiethcentury, Sweden has achieved an enviable standard of living under amixed system of high-tech capitalism and extensive welfare benefits.It has a modern distribution system, excellent internal and externalcommunications, and a skilled labor force. Timber, hydropower, andiron ore constitute the resource base of an economy heavily orientedtoward foreign trade. Privately owned firms account for about 90% ofindustrial output, of which the engineering sector accounts for 50%of output and exports. Agriculture accounts for only 2% of GDP and2% of the jobs. In recent years, however, this extraordinarilyfavorable picture has been somewhat clouded by budgetarydifficulties, high unemployment, and a gradual loss ofcompetitiveness in international markets. Sweden has harmonized itseconomic policies with those of the EU, which it joined at the startof 1995. GDP growth is forecast for 4% in 2001.
Switzerland:Switzerland, a prosperous and stable modern marketeconomy with a per capita GDP 20% above that of the big westernEuropean economies, experienced solid growth of 3% in 2000, butgrowth is expected to fall back to about 2% in 2001. The Swiss inrecent years have brought their economic practices largely intoconformity with the EU's to enhance their internationalcompetitiveness. Although the Swiss are not pursuing full EUmembership in the near term, in 1999 Bern and Brussels signedagreements to further liberalize trade ties, and the agreementsshould come into force in 2001. Switzerland is still considered asafe haven for investors, because it has maintained a degree of banksecrecy and has kept up the franc's long-term external value.
Syria:Syria's predominantly statist economy is on a shaky footingbecause of Damascus's failure to implement extensive economicreform. The dominant agricultural sector remains underdeveloped,with roughly 80% of agricultural land still dependent on rain-fedsources. Although Syria has sufficient water supplies in theaggregate at normal levels of precipitation, the great distancebetween major water supplies and population centers poses seriousdistribution problems. The water problem is exacerbated by rapidpopulation growth, industrial expansion, and increased waterpollution. Private investment is critical to the modernization ofthe agricultural, energy, and export sectors. Oil production isleveling off, and the efforts of the nonoil sector to penetrateinternational markets have fallen short. Syria's inadequateinfrastructure, outmoded technological base, and weak educationalsystem make it vulnerable to future shocks and hamper competitionwith neighbors such as Jordan and Israel. The government recognizesthe need to open the economy to additional domestic and foreigninvestment.
Tajikistan:Tajikistan has the lowest per capita GDP among the 15former Soviet republics. Cotton is the most important crop. Mineralresources, varied but limited in amount, include silver, gold,uranium, and tungsten. Industry consists only of a large aluminumplant, hydropower facilities, and small obsolete factories mostly inlight industry and food processing. The Tajikistani economy has beengravely weakened by six years of civil conflict and by the loss ofsubsidies from Moscow and of markets for its products. Most of itspeople live in abject poverty. Tajikistan depends on aid from Russiaand Uzbekistan and on international humanitarian assistance for muchof its basic subsistence needs. The future of Tajikistan's economyand the potential for attracting foreign investment depend uponstability and continued progress in the peace process.
Tanzania:Tanzania is one of the poorest countries in the world. Theeconomy is heavily dependent on agriculture, which accounts for halfof GDP, provides 85% of exports, and employs 80% of the work force.Topography and climatic conditions, however, limit cultivated cropsto only 4% of the land area. Industry is mainly limited toprocessing agricultural products and light consumer goods. The WorldBank, the International Monetary Fund, and bilateral donors haveprovided funds to rehabilitate Tanzania's deteriorated economicinfrastructure. Growth in 1991-2000 featured a pick up in industrialproduction and a substantial increase in output of minerals, led bygold. Natural gas exploration in the Rufiji Delta looks promisingand production could start by 2002. Recent banking reforms havehelped increase private sector growth and investment. Continueddonor support and solid macroeconomic policies should allow Tanzaniato achieve real GDP growth of 6% in 2001 and in 2002.
Thailand:After enjoying the world's highest growth rate from 1985to 1995 - averaging almost 9% annually - increased speculativepressure on Thailand's currency in 1997 led to a crisis thatuncovered financial sector weaknesses and forced the government tofloat the baht. Long pegged at 25 to the dollar, the baht reachedits lowest point of 56 to the dollar in January 1998 and the economycontracted by 10.2% that same year. Thailand entered a recoverystage in 1999, expanding 4.2% and grew about the same amount in2000, largely due to strong exports - which increased about 20% in2000. An ailing financial sector and the slow pace of corporate debtrestructuring, combined with a softening of global demand, is likelyto slow growth in 2001.