Bassas da Indiano economic activity
BelarusBelarus's economy in 2003-04 posted 6.1% and 6.4% growth.Still, the economy continues to be hampered by high inflation,persistent trade deficits, and ongoing rocky relations with Russia,Belarus' largest trading partner and energy supplier. Belarus hasseen little structural reform since 1995, when President LUKASHENKOlaunched the country on the path of "market socialism." In keepingwith this policy, LUKASHENKO reimposed administrative controls overprices and currency exchange rates and expanded the state's right tointervene in the management of private enterprises. In addition,businesses have been subject to pressure on the part of central andlocal governments, e.g., arbitrary changes in regulations, numerousrigorous inspections, retroactive application of new businessregulations, and arrests of "disruptive" businessmen and factoryowners. A wide range of redistributive policies has helped those atthe bottom of the ladder; the Gini coefficient is among the lowestin the world. For the time being, Belarus remains self-isolated fromthe West and its open-market economies. Growth has been strong inrecent years, despite the roadblocks in a tough, centrally directedeconomy and the high, but decreasing, rate of inflation. Growth hasbeen buoyed by increased Russian demand for generally noncompetitiveBelarusian goods.
BelgiumThis modern private enterprise economy has capitalized onits central geographic location, highly developed transport network,and diversified industrial and commercial base. Industry isconcentrated mainly in the populous Flemish area in the north. Withfew natural resources, Belgium must import substantial quantities ofraw materials and export a large volume of manufactures, making itseconomy unusually dependent on the state of world markets. Roughlythree-quarters of its trade is with other EU countries. Public debtis nearly 100% of GDP. On the positive side, the government hassucceeded in balancing its budget, and income distribution isrelatively equal. Belgium began circulating the euro currency inJanuary 2002. Economic growth in 2001-03 dropped sharply because ofthe global economic slowdown, with moderate recovery in 2004.
BelizeIn this small, essentially private enterprise economy thetourism industry is the number one foreign exchange earner followedby marine products, citrus, cane sugar, bananas, and garments. Thegovernment's expansionary monetary and fiscal policies, initiated inSeptember 1998, led to sturdy GDP growth averaging nearly 6% in1999-2004. Major concerns continue to be the sizable trade deficitand foreign debt. A key short-term objective remains the reductionof poverty with the help of international donors.
BeninThe economy of Benin remains underdeveloped and dependent onsubsistence agriculture, cotton production, and regional trade.Growth in real output has averaged around 5% in the past six years,but rapid population growth has offset much of this increase.Inflation has subsided over the past several years. In order toraise growth still further, Benin plans to attract more foreigninvestment, place more emphasis on tourism, facilitate thedevelopment of new food processing systems and agriculturalproducts, and encourage new information and communicationtechnology. The 2001 privatization policy should continue intelecommunications, water, electricity, and agriculture in spite ofinitial government reluctance. The Paris Club and bilateralcreditors have eased the external debt situation, while pressing formore rapid structural reforms. Benin continues to be hurt byNigerian trade protection that bans imports of a growing list ofproducts from Benin and elsewhere. As a result, smuggling andcriminality along the Benin-Nigeria border has been on the rise.
BermudaBermuda enjoys one of the highest per capita incomes in theworld, nearly equal to that of the US. Its economy is primarilybased on providing financial services for international business andluxury facilities for tourists. The effects of 11 September 2001have had both positive and negative ramifications for Bermuda. Onthe positive side, a number of new reinsurance companies havelocated on the island, contributing to the expansion of an alreadyrobust international business sector. On the negative side,Bermuda's tourism industry - which derives over 80% of its visitorsfrom the US - was severely hit as American tourists chose not totravel. Tourism rebounded somewhat in 2002-04. Most capitalequipment and food must be imported. Bermuda's industrial sector issmall, although construction continues to be important; the averagecost of a house in June 2003 had risen to $976,000. Agriculture islimited, only 20% of the land being arable.
BhutanThe economy, one of the world's smallest and least developed,is based on agriculture and forestry, which provide the mainlivelihood for more than 90% of the population. Agriculture consistslargely of subsistence farming and animal husbandry. Ruggedmountains dominate the terrain and make the building of roads andother infrastructure difficult and expensive. The economy is closelyaligned with India's through strong trade and monetary links anddependence on India's financial assistance. The industrial sector istechnologically backward, with most production of the cottageindustry type. Most development projects, such as road construction,rely on Indian migrant labor. Bhutan's hydropower potential and itsattraction for tourists are key resources. Model education, social,and environment programs are underway with support from multilateraldevelopment organizations. Each economic program takes into accountthe government's desire to protect the country's environment andcultural traditions. For example, the government, in its cautiousexpansion of the tourist sector, encourages visits by upscale,environmentally conscientious tourists. Detailed controls anduncertain policies in areas like industrial licensing, trade, labor,and finance continue to hamper foreign investment.
BoliviaBolivia, long one of the poorest and least developed LatinAmerican countries, reformed its economy after suffering adisastrous economic crisis in the early 1980s. The reforms spurredreal GDP growth, which averaged 4 percent in the 1990s, and povertyrates fell. Economic growth, however, lagged again beginning in 1999because of a global slowdown and homegrown factors such as politicalturmoil, civil unrest, and soaring fiscal deficits, all of whichhurt investor confidence. In 2003, violent protests against thepro-foreign investment economic policies of President SANCHEZ DELOZADA led to his resignation and the cancellation of plans toexport Bolivia's newly discovered natural gas reserves to largenorthern hemisphere markets. Foreign investment dried up ascompanies adopted a wait-and-see attitude regarding new PresidentCarlos MESA's willingness to protect investor rights in the face ofincreased demands by radical groups that the government expropriateforeign-owned assets. Real GDP growth in 2003 and 2004 - helped byincreased demand for natural gas in neighboring Brazil - waspositive, but still below the levels seen during the 1990s. Boliviaremains dependent on foreign aid from multilateral lenders andforeign governments.
Bosnia and HerzegovinaBosnia and Herzegovina ranked next toMacedonia as the poorest republic in the old Yugoslav federation.Although agriculture is almost all in private hands, farms are smalland inefficient, and the republic traditionally is a net importer offood. Industry has been greatly overstaffed, one reflection of thesocialist economic structure of Yugoslavia. TITO had pushed thedevelopment of military industries in the republic with the resultthat Bosnia hosted a number of Yugoslavia's defense plants. Theinterethnic warfare in Bosnia caused production to plummet by 80%from 1992 to 1995 and unemployment to soar. With an uneasy peace inplace, output recovered in 1996-99 at high percentage rates from alow base; but output growth slowed in 2000-02. Part of the lag inoutput was made up in 2003-2004. National-level statistics arelimited and do not capture the large share of black market activity.The konvertibilna marka (convertible mark or BAM)- the nationalcurrency introduced in 1998 - is now pegged to the euro, and theCentral Bank of Bosnia and Herzegovina has dramatically increasedits reserve holdings. Implementation of privatization, however, hasbeen slow, and local entities only reluctantly supportnational-level institutions. Banking reform accelerated in 2001 asall the Communist-era payments bureaus were shut down. A sizeablecurrent account deficit and high unemployment rate remain the twomost serious economic problems. The country receives substantialamounts of reconstruction assistance and humanitarian aid from theinternational community but will have to prepare for an era ofdeclining assistance.
BotswanaBotswana has maintained one of the world's highest economicgrowth rates since independence in 1966. Through fiscal disciplineand sound management, Botswana has transformed itself from one ofthe poorest countries in the world to a middle-income country with aper capita GDP of $9,200 in 2004. Two major investment services rankBotswana as the best credit risk in Africa. Diamond mining hasfueled much of the expansion and currently accounts for more thanone-third of GDP and for 70-80% of export earnings. Tourism,financial services, subsistence farming, and cattle raising areother key sectors. On the downside, the government must deal withhigh rates of unemployment and poverty. Unemployment officially is23.8%, but unofficial estimates place it closer to 40%. HIV/AIDSinfection rates are the second highest in the world and threatenBotswana's impressive economic gains. An expected leveling off indiamond mining production overshadow long-term prospects.
Bouvet Islandno economic activity; declared a nature reserve
BrazilPossessing large and well-developed agricultural, mining,manufacturing, and service sectors, Brazil's economy outweighs thatof all other South American countries and is expanding its presencein world markets. From 2001-03 real wages fell and Brazil's economygrew, on average, only 2.2% per year, as the country absorbed aseries of domestic and international economic shocks. That Brazilabsorbed these shocks without financial collapse is a tribute to theresiliency of the Brazilian economy and the economic program put inplace by former President CARDOSO and strengthened by President LULADA SILVA. In 2004, Brazil enjoyed more robust growth that yieldedincreases in employment and real wages. The three pillars of theeconomic program are a floating exchange rate, aninflation-targeting regime, and tight fiscal policy, all reinforcedby a series of IMF programs. The currency depreciated sharply in2001 and 2002, which contributed to a dramatic current accountadjustment: in 2003 and 2004, Brazil ran record trade surpluses andrecorded its first current account surpluses since 1992.Productivity gains - particularly in agriculture - also contributedto the surge in exports, and Brazil in 2004 surpassed the previousyear's record export level and again posted a current accountsurplus. While economic management has been good, there remainimportant economic vulnerabilities. The most significant aredebt-related: the government's largely domestic debt increasedsteadily from 1994 to 2003 - straining government finances - beforefalling as a percentage of GDP in 2004, while Brazil's foreign debt(a mix of private and public debt) is large in relation to Brazil'ssmall (but growing) export base. Another challenge is maintainingeconomic growth over a period of time to generate employment andmake the government debt burden more manageable.
British Indian Ocean Territory All economic activity is concentrated on the largest island of Diego Garcia, where joint UK-US defense facilities are located. Construction projects and various services needed to support the military installations are done by military and contract employees from the UK, Mauritius, the Philippines, and the US. There are no industrial or agricultural activities on the islands. When the Ilois return, they plan to reestablish sugarcane production and fishing.
British Virgin IslandsThe economy, one of the most stable andprosperous in the Caribbean, is highly dependent on tourism,generating an estimated 45% of the national income. An estimated350,000 tourists, mainly from the US, visited the islands in 1998.Tourism suffered in 2002 because of the lackluster US economy. Inthe mid-1980s, the government began offering offshore registrationto companies wishing to incorporate in the islands, andincorporation fees now generate substantial revenues. Roughly400,000 companies were on the offshore registry by yearend 2000. Theadoption of a comprehensive insurance law in late 1994, whichprovides a blanket of confidentiality with regulated statutorygateways for investigation of criminal offenses, is expected to makethe British Virgin Islands even more attractive to internationalbusiness. Livestock raising is the most important agriculturalactivity; poor soils limit the islands' ability to meet domesticfood requirements. Because of traditionally close links with the USVirgin Islands, the British Virgin Islands has used the dollar asits currency since 1959.
BruneiThis small, well-to-do economy encompasses a mixture offoreign and domestic entrepreneurship, government regulation,welfare measures, and village tradition. Crude oil and natural gasproduction account for nearly half of GDP. Per capita GDP is farabove most other Third World countries, and substantial income fromoverseas investment supplements income from domestic production. Thegovernment provides for all medical services and free educationthrough the university level and subsidizes rice and housing.Brunei's leaders are concerned that steadily increased integrationin the world economy will undermine internal social cohesion,although it became a more prominent player by serving as chairmanfor the 2000 APEC (Asian Pacific Economic Cooperation) forum. Plansfor the future include upgrading the labor force, reducingunemployment, strengthening the banking and tourist sectors, and, ingeneral, further widening the economic base beyond oil and gas.
BulgariaBulgaria, a former communist country striving to enter theEuropean Union, has experienced macroeconomic stability and stronggrowth since a major economic downturn in 1996 led to the fall ofthe then socialist government. As a result, the government becamecommitted to economic reform and responsible fiscal planning.Minerals, including coal, copper, and zinc play an important role inindustry. In 1997, macroeconomic stability was reinforced by theimposition of a fixed exchange rate of the lev against the GermanD-mark and the negotiation of an IMF standby agreement. Lowinflation and steady progress on structural reforms improved thebusiness environment; Bulgaria has averaged 4% growth since 2000 andhas begun to attract significant amounts of foreign directinvestment. Corruption in the public administration, a weakjudiciary, and the presence of organized crime remain the largestchallenges for Bulgaria.
Burkina FasoOne of the poorest countries in the world, landlockedBurkina Faso has few natural resources and a weak industrial base.About 90% of the population is engaged in subsistence agriculture,which is vulnerable to harsh climatic conditions. Cotton is the keycrop and the government has joined with other cotton producingcountries in the region to lobby for improved access to Westernmarkets. GDP growth has largely been driven by increases in worldcotton prices. Industry remains dominated by unprofitablegovernment-controlled corporations. Following the African franccurrency devaluation in January 1994 the government updated itsdevelopment program in conjunction with international agencies;exports and economic growth have increased. The government devolvedmacroeconomic policy and inflation targeting to the West Africanregional central bank (BCEAO), but maintains control overmicroeconomic policies, including reducing the trade deficit andimplementing reforms to encourage private investment. The bitterinternal crisis in neighboring Cote d'Ivoire continues to hurt tradeand industrial prospects and deepens the need for internationalassistance.
BurmaBurma is a resource-rich country that suffers from governmentcontrols, inefficient economic policies, and abject rural poverty.The junta took steps in the early 1990s to liberalize the economyafter decades of failure under the "Burmese Way to Socialism", butthose efforts have since stalled and some of the liberalizationmeasures have been rescinded. Burma has been unable to achievemonetary or fiscal stability, resulting in an economy that suffersfrom serious macroeconomic imbalances - including inflation andmultiple official exchange rates that overvalue the Burmese kyat. Inaddition, most overseas development assistance ceased after thejunta began to suppress the democracy movement in 1988 andsubsequently ignored the results of the 1990 legislative elections.Economic sanctions against Burma by the United States - including aban on imports of Burmese products and a ban on provision offinancial services by US persons in response to the government ofBurma's attack in May 2003 on AUNG SAN SUU KYI and her convoy -further slowed the inflow of foreign exchange. Official statisticsare inaccurate. Published statistics on foreign trade are greatlyunderstated because of the size of the black market and unofficialborder trade - often estimated to be one to two times the size ofthe official economy. Though the Burmese government has goodeconomic relations with its neighbors, a better investment climateand an improved political situation are needed to promote foreigninvestment, exports, and tourism. In February 2003, a major bankingcrisis hit the country's 20 private banks, shutting them down anddisrupting the economy. As of January 2004, the largest privatebanks remained moribund, leaving the private sector with littleformal access to credit.
BurundiBurundi is a landlocked, resource-poor country with anunderdeveloped manufacturing sector. The economy is predominantlyagricultural with roughly 90% of the population dependent onsubsistence agriculture. Economic growth depends on coffee and teaexports, which account for 90% of foreign exchange earnings. Theability to pay for imports, therefore, rests primarily on weatherconditions and international coffee and tea prices. The Tutsiminority, 14% of the population, dominates the government and thecoffee trade at the expense of the Hutu majority, 85% of thepopulation. Since October 1993 an ethnic-based war has resulted inmore than 200,000 deaths, forced 450,000 refugees into Tanzania, anddisplaced 140,000 others internally. Doubts about the prospects forsustainable peace continue to impede development. Only one in twochildren go to school, and approximately one in ten adults hasHIV/AIDS. Food, medicine, and electricity remain in short supply.
CambodiaCambodia's economy slowed dramatically in 1997 and 1998 dueto the regional economic crisis, civil violence, and politicalinfighting, and foreign investment and tourism decreased. In 1999,the first full year of peace in 30 years, the government madeprogress on economic reforms. Growth resumed and remained about 5%from 2000 to 2004. Economic growth has been largely driven byexpansion in the garment sector and tourism, but is expected to fallin 2005 as growth in the garment sector stalls. Clothing exportswere fostered by a US-Cambodian Bilateral Textile Agreement signedin 1999 which gave Cambodia a guaranteed quota of US textile importsand established a bonus for improving working conditions andenforcing Cambodian labor laws and international labor standards inthe industry. With the January 2005 expiration of a WTO Agreement onTextiles and Clothing, Cambodia-based textile producers are indirect competition with lower priced producing countries such asChina and India. Faced with the possibility that over the next fiveyears Cambodia may lose orders and some of the 250,000 well-paidjobs the industry provides, Cambodia has committed itself to apolicy of continued support for high labor standards in an attemptto maintain favor with buyers. Tourism growth remains strong, witharrivals up 15% in 2004. The long-term development of the economyafter decades of war remains a daunting challenge. The populationlacks education and productive skills, particularly in thepoverty-ridden countryside, which suffers from an almost total lackof basic infrastructure. Fully 75% of the population remains engagedin subsistence farming. Fear of renewed political instability and adysfunctional legal system coupled with extensive governmentcorruption discourage foreign investment. The Cambodian governmentcontinues to work with bilateral and multilateral donors to addressthe country's many pressing needs. In December 2004, official donorspledged $504 million in aid for 2005 on the condition that theCambodian government begins taking steps to address rampantcorruption. The next donor pledging session is scheduled forDecember 2005. The major economic challenge for Cambodia over thenext decade will be fashioning an economic environment in which theprivate sector can create enough jobs to handle Cambodia'sdemographic imbalance. More than 50% of the population is 20 yearsor younger.
CameroonBecause of its oil resources and favorable agriculturalconditions, Cameroon has one of the best-endowed primary commodityeconomies in sub-Saharan Africa. Still, it faces many of the seriousproblems facing other underdeveloped countries, such as a top-heavycivil service and a generally unfavorable climate for businessenterprise. Since 1990, the government has embarked on various IMFand World Bank programs designed to spur business investment,increase efficiency in agriculture, improve trade, and recapitalizethe nation's banks. In June 2000, the government completed anIMF-sponsored, three-year structural adjustment program; however,the IMF is pressing for more reforms, including increased budgettransparency, privatization, and poverty reduction programs.International oil and cocoa prices have considerable impact on theeconomy.
CanadaAs an affluent, high-tech industrial society, newly enteredin the trillion dollar class, Canada closely resembles the US in itsmarket-oriented economic system, pattern of production, and affluentliving standards. Since World War II, the impressive growth of themanufacturing, mining, and service sectors has transformed thenation from a largely rural economy into one primarily industrialand urban. The 1989 US-Canada Free Trade Agreement (FTA) and the1994 North American Free Trade Agreement (NAFTA) (which includesMexico) touched off a dramatic increase in trade and economicintegration with the US. Given its great natural resources, skilledlabor force, and modern capital plant Canada enjoys solid economicprospects. Solid fiscal management has produced a long-term budgetsurplus which is substantially reducing the national debt, althoughpublic debate continues over how to manage the rising cost of thepublicly funded healthcare system. Exports account for roughly athird of GDP. Canada enjoys a substantial trade surplus with itsprincipal trading partner, the United States, which absorbs morethan 85% of Canadian exports.
Cape VerdeThis island economy suffers from a poor natural resourcebase, including serious water shortages exacerbated by cycles oflong-term drought. The economy is service-oriented, with commerce,transport, tourism, and public services accounting for 72% of GDP.Although nearly 70% of the population lives in rural areas, theshare of agriculture in GDP in 2004 was only 12%, of which fishingaccounted for 1.5%. About 82% of food must be imported. The fishingpotential, mostly lobster and tuna, is not fully exploited. CapeVerde annually runs a high trade deficit, financed by foreign aidand remittances from emigrants; remittances supplement GDP by morethan 20%. Economic reforms are aimed at developing the privatesector and attracting foreign investment to diversify the economy.Future prospects depend heavily on the maintenance of aid flows, theencouragement of tourism, remittances, and the momentum of thegovernment's development program.
Cayman IslandsWith no direct taxation, the islands are a thrivingoffshore financial center. More than 40,000 companies wereregistered in the Cayman Islands as of 1998, including almost 600banks and trust companies; banking assets exceed $500 billion. Astock exchange was opened in 1997. Tourism is also a mainstay,accounting for about 70% of GDP and 75% of foreign currencyearnings. The tourist industry is aimed at the luxury market andcaters mainly to visitors from North America. Total tourist arrivalsexceeded 1.2 million in 1997, with 600,000 from the US. About 90% ofthe islands' food and consumer goods must be imported. TheCaymanians enjoy one of the highest outputs per capita and one ofthe highest standards of living in the world.
Central African RepublicSubsistence agriculture, together withforestry, remains the backbone of the economy of the Central AfricanRepublic (CAR), with more than 70% of the population living inoutlying areas. The agricultural sector generates half of GDP.Timber has accounted for about 16% of export earnings and thediamond industry, for 54%. Important constraints to economicdevelopment include the CAR's landlocked position, a poortransportation system, a largely unskilled work force, and a legacyof misdirected macroeconomic policies. Factional fighting betweenthe government and its opponents remains a drag on economicrevitalization, with GDP growth at only 0.5% in 2004. Distributionof income is extraordinarily unequal. Grants from France and theinternational community can only partially meet humanitarian needs.
ChadChad's primarily agricultural economy will continue to beboosted by major oilfield and pipeline projects that began in 2000.Over 80% of Chad's population relies on subsistence farming andlivestock raising for its livelihood. Cotton, cattle, and gum arabicprovide the bulk of Chad's export earnings; Chad began to export oilin 2004. Chad's economy has long been handicapped by its landlockedposition, high energy costs, and a history of instability. Chadrelies on foreign assistance and foreign capital for most public andprivate sector investment projects. A consortium led by two UScompanies has been investing $3.7 billion to develop oil reservesestimated at 1 billion barrels in southern Chad. Oil production cameon stream in late 2003.
ChileChile has a market-oriented economy characterized by a highlevel of foreign trade. During the early 1990s, Chile's reputationas a role model for economic reform was strengthened when thedemocratic government of Patricio AYLWIN - which took over from themilitary in 1990 - deepened the economic reform initiated by themilitary government. Growth in real GDP averaged 8% during 1991-97,but fell to half that level in 1998 because of tight monetarypolicies implemented to keep the current account deficit in checkand because of lower export earnings - the latter a product of theglobal financial crisis. A severe drought exacerbated the recessionin 1999, reducing crop yields and causing hydroelectric shortfallsand electricity rationing, and Chile experienced negative economicgrowth for the first time in more than 15 years. Despite the effectsof the recession, Chile maintained its reputation for strongfinancial institutions and sound policy that have given it thestrongest sovereign bond rating in South America. By the end of1999, exports and economic activity had begun to recover, and growthrebounded to 4.2% in 2000. Growth fell back to 3.1% in 2001 and 2.1%in 2002, largely due to lackluster global growth and the devaluationof the Argentine peso. Chile's economy began a slow recovery in2003, growing 3.2% and accelerated to 5.8% in 2004. GDP growthbenefited from high copper prices, solid export earnings(particularly forestry, fishing, and mining), and stepped-up foreigndirect investment. Unemployment, however, remains stubbornly high.Chile deepened its longstanding commitment to trade liberalizationwith the signing of a free trade agreement with the US, which tookeffect on 1 January 2004.
China In late 1978 the Chinese leadership began moving the economy from a sluggish, inefficient, Soviet-style centrally planned economy to a more market-oriented system. Whereas the system operates within a political framework of strict Communist control, the economic influence of non-state organizations and individual citizens has been steadily increasing. The authorities switched to a system of household and village responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprises in services and light manufacturing, and opened the economy to increased foreign trade and investment. The result has been a quadrupling of GDP since 1978. Measured on a purchasing power parity (PPP) basis, China in 2004 stood as the second-largest economy in the world after the US, although in per capita terms the country is still poor. Agriculture and industry have posted major gains especially in coastal areas near Hong Kong and opposite Taiwan and in Shanghai, where foreign investment has helped spur output of both domestic and export goods. The leadership, however, often has experienced - as a result of its hybrid system - the worst results of socialism (bureaucracy and lassitude) and of capitalism (growing income disparities and rising unemployment). China thus has periodically backtracked, retightening central controls at intervals. The government has struggled to (a) sustain adequate jobs growth for tens of millions of workers laid off from state-owned enterprises, migrants, and new entrants to the work force; (b) reduce corruption and other economic crimes; and (c) keep afloat the large state-owned enterprises, many of which had been shielded from competition by subsidies and had been losing the ability to pay full wages and pensions. From 100 to 150 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time, low-paying jobs. Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China's population control program, which is essential to maintaining long-term growth in living standards. At the same time, one demographic consequence of the "one child" policy is that China is now one of the most rapidly aging countries in the world. Another long-term threat to growth is the deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table especially in the north. China continues to lose arable land because of erosion and economic development. As part of its effort to gradually slow the rapid economic growth seen in 2004, Beijing says it will reduce somewhat its spending on infrastructure in 2005, while continuing to focus on poverty relief and through rural tax reform. Accession to the World Trade Organization helps strengthen its ability to maintain strong growth rates but at the same time puts additional pressure on the hybrid system of strong political controls and growing market influences. China has benefited from a huge expansion in computer Internet use, with 94 million users at the end of 2004. Foreign investment remains a strong element in China's remarkable economic growth. Shortages of electric power and raw materials may affect industrial output in 2005. More power generating capacity is scheduled to come on line in 2006. In its rivalry with India as an economic power, China has a lead in the absorption of technology, the rising prominence in world trade, and the alleviation of poverty; India has one important advantage in its relative mastery of the English language, but the number of competent Chinese English-speakers is growing rapidly.
Christmas IslandPhosphate mining had been the only significanteconomic activity, but in December 1987 the Australian Governmentclosed the mine. In 1991, the mine was reopened. With the support ofthe government, a $34 million casino opened in 1993. The casinoclosed in 1998. The Australian Government in 2001 agreed to supportthe creation of a commercial space-launching site on the island,projected to begin operations in the near future
Clipperton IslandAlthough 115 species of fish have been identifiedin the territorial waters of Clipperton Island, the only economicactivity is tuna fishing.
Cocos (Keeling) IslandsGrown throughout the islands, coconuts arethe sole cash crop. Small local gardens and fishing contribute tothe food supply, but additional food and most other necessities mustbe imported from Australia. There is a small tourist industry.
ColombiaColombia's economy has been on a recovery trend during thepast two years despite a serious armed conflict. The economycontinues to improve thanks to austere government budgets, focusedefforts to reduce public debt levels, and an export-oriented growthfocus. Ongoing economic problems facing President URIBE range fromreforming the pension system to reducing high unemployment. Newexploration is needed to offset declining oil production. On thepositive side, several international financial institutions havepraised the economic reforms introduced by URIBE, which includemeasures designed to reduce the public-sector deficit below 2.5% ofGDP. The government's economic policy and democratic securitystrategy have engendered a growing sense of confidence in theeconomy, particularly within the business sector. Coffee prices haverecovered from previous lows as the Colombian coffee industrypursues greater market shares in developed countries such as theUnited States.
ComorosOne of the world's poorest countries, Comoros is made up ofthree islands that have inadequate transportation links, a young andrapidly increasing population, and few natural resources. The loweducational level of the labor force contributes to a subsistencelevel of economic activity, high unemployment, and a heavydependence on foreign grants and technical assistance. Agriculture,including fishing, hunting, and forestry, contributes 40% to GDP,employs 80% of the labor force, and provides most of the exports.The country is not self-sufficient in food production; rice, themain staple, accounts for the bulk of imports. The government -which is hampered by internal political disputes - is struggling toupgrade education and technical training, privatize commercial andindustrial enterprises, improve health services, diversify exports,promote tourism, and reduce the high population growth rate.Increased foreign support is essential if the goal of 4% annual GDPgrowth is to be met. Remittances from 150,000 Comorans abroad helpsupplement GDP.
Congo, Democratic Republic of theThe economy of the DemocraticRepublic of the Congo - a nation endowed with vast potential wealth- has declined drastically since the mid-1980s. The war, which beganin August 1998, dramatically reduced national output and governmentrevenue, increased external debt, and resulted in the deaths ofperhaps 3.5 million people from war, famine, and disease. Foreignbusinesses curtailed operations due to uncertainty about the outcomeof the conflict, lack of infrastructure, and the difficult operatingenvironment. Conditions improved in late 2002 with the withdrawal ofa large portion of the invading foreign troops. Several IMF andWorld Bank missions have met with the government to help it developa coherent economic plan, and President KABILA has begunimplementing reforms. Much economic activity lies outside the GDPdata. Economic stability, aided by international donors, improved in2003-04, although an uncertain legal framework, corruption, and alack of openness in government policy continues to hamper growth. In2005, renewed activity in the mining sector, the source of mostexports, could boost Kinshasa's fiscal position and GDP growth.
Congo, Republic of theThe economy is a mixture of villageagriculture and handicrafts, an industrial sector based largely onoil, support services, and a government characterized by budgetproblems and overstaffing. Oil has supplanted forestry as themainstay of the economy, providing a major share of governmentrevenues and exports. In the early 1980s, rapidly rising oilrevenues enabled the government to finance large-scale developmentprojects with GDP growth averaging 5% annually, one of the highestrates in Africa. The government has mortgaged a substantial portionof its oil earnings, contributing to a shortage of revenues. The 12January 1994 devaluation of Franc Zone currencies by 50% resulted ininflation of 61% in 1994, but inflation has subsided since. Economicreform efforts continued with the support of internationalorganizations, notably the World Bank and the IMF. The reformprogram came to a halt in June 1997 when civil war erupted. DenisSASSOU-NGUESSO, who returned to power when the war ended in October1997, publicly expressed interest in moving forward on economicreforms and privatization and in renewing cooperation withinternational financial institutions. However, economic progress wasbadly hurt by slumping oil prices and the resumption of armedconflict in December 1998, which worsened the republic's budgetdeficit. The current administration presides over an uneasy internalpeace and faces difficult economic challenges of stimulatingrecovery and reducing poverty.
Cook IslandsLike many other South Pacific island nations, the CookIslands' economic development is hindered by the isolation of thecountry from foreign markets, the limited size of domestic markets,lack of natural resources, periodic devastation from naturaldisasters, and inadequate infrastructure. Agriculture provides theeconomic base with major exports made up of copra and citrus fruit.Manufacturing activities are limited to fruit processing, clothing,and handicrafts. Trade deficits are offset by remittances fromemigrants and by foreign aid, overwhelmingly from New Zealand. Inthe 1980s and 1990s, the country lived beyond its means, maintaininga bloated public service and accumulating a large foreign debt.Subsequent reforms, including the sale of state assets, thestrengthening of economic management, the encouragement of tourism,and a debt restructuring agreement, have rekindled investment andgrowth.
Coral Sea Islandsno economic activity
Costa RicaCosta Rica's basically stable economy depends on tourism,agriculture, and electronics exports. Poverty has been substantiallyreduced over the past 15 years, and a strong social safety net hasbeen put into place. Foreign investors remain attracted by thecountry's political stability and high education levels, and tourismcontinues to bring in foreign exchange. Low prices for coffee andbananas have hurt the agricultural sector. The government continuesto grapple with its large deficit and massive internal debt. Thereduction of inflation remains a difficult problem because of risesin the price of imports, labor market rigidities, and fiscaldeficits. The country also needs to reform its tax system and itspattern of public expenditure. Costa Rica recently concludednegotiations to participate in the US-Central American Free TradeAgreement, which, if ratified by the Costa Rican Legislature, wouldresult in economic reforms and an improved investment climate.
Cote d'IvoireCote d'Ivoire is among the world's largest producersand exporters of coffee, cocoa beans, and palm oil. Consequently,the economy is highly sensitive to fluctuations in internationalprices for these products and weather conditions. Despite governmentattempts to diversify the economy, it is still heavily dependent onagriculture and related activities, engaging roughly 68% of thepopulation. After several years of lagging performance, the Ivorianeconomy began a comeback in 1994, due to the 50% devaluation of theCFA franc and improved prices for cocoa and coffee, growth innontraditional primary exports such as pineapples and rubber,limited trade and banking liberalization, offshore oil and gasdiscoveries, and generous external financing and debt reschedulingby multilateral lenders and France. Moreover, government adherenceto donor-mandated reforms led to a jump to 5% annual growth during1996-99. Growth was negative in 2000-03 because of the difficulty ofmeeting the conditions of international donors, continued low pricesof key exports, and severe civil war. In November 2004 the situationdeteriorated when President GBAGBO's troops attacked and killed nineFrench peacekeeping forces, and the UN imposed an arms embargo.Political uncertainty has clouded the economic outlook for 2005,with fear among Ivorians spreading, foreign investment shriveling,businessmen fleeing, travel within the country falling, and criminalelements that traffic in weapons and diamonds gaining ground.
CroatiaBefore the dissolution of Yugoslavia, the Republic ofCroatia, after Slovenia, was the most prosperous and industrializedarea, with a per capita output perhaps one-third above the Yugoslavaverage. The economy emerged from a mild recession in 2000 withtourism, banking, and public investments leading the way.Unemployment remains high, at about 14 percent, with structuralfactors slowing its decline. While macroeconomic stabilization haslargely been achieved, structural reforms lag because of deepresistance on the part of the public and lack of strong support frompoliticians. Growth, while impressively about 4% for the lastseveral years, has been achieved through high fiscal and currentaccount deficits. The government is gradually reducing a heavy backlog of civil cases, many involving land tenure. The EU accessionprocess should accelerate fiscal and structural reform.
CubaThe government continues to balance the need for economicloosening against a desire for firm political control. It hasundertaken limited reforms to increase enterprise efficiency andalleviate serious shortages of food, consumer goods, and services. Amajor feature of the economy is the dichotomy between relativelyefficient export enclaves and inefficient domestic sectors. Theaverage Cuban's standard of living remains at a lower level thanbefore the depression of the 1990s, which was caused by the loss ofSoviet aid and domestic inefficiencies. The government in 2004strengthened its controls over dollars coming into the economy fromtourism, remittances, and trade.
CyprusThe Greek Cypriot economy is prosperous but highlysusceptible to external shocks. The service sector, mainly tourismand financial services, dominates the economy; erratic growth ratesover the past decade reflect the economy's reliance on tourism,which often fluctuates with political instability in the region andeconomic conditions in Western Europe. Economic policy is focused onmeeting the criteria to join the European Exchange Rate Mechanism(ERM2) within the next two years although sluggish tourism and poorfiscal management have resulted in growing budget deficits since2001. As in the Turkish sector, water shortages are a perennialproblem; a few desalination plants are now on-line. After 10 yearsof drought, the country received substantial rainfall from 2001-03,alleviating immediate concerns. The Turkish Cypriot economy hasroughly one-third of the per capita GDP of the south, and economicgrowth tends to be volatile, given north Cyprus's relativeisolation, bloated public sector, reliance on the Turkish lira, andsmall market size. The Turkish Cypriot economy grew 2.6% in 2004,fueled by growth in the construction and education sectors as wellas increased employment of Turkish Cypriots in the Republic ofCyprus. The Turkish Cypriots are heavily dependent on transfers fromthe Turkish government. Ankara provides around $300 million a yeardirectly into the "TRNC" budget and regularly provides additionalfinancing for large infrastructure projects. Agriculture andgovernment service, together employ almost half of the work force,and the potential for tourism is promising, especially with theeasing of border restrictions with the Greek Cypriots in April 2003.
Czech RepublicThe Czech Republic is one of the most stable andprosperous of the post-Communist states of Central and EasternEurope. Growth in 2000-04 was supported by exports to the EU,primarily to Germany, and a strong recovery of foreign and domesticinvestment. Domestic demand is playing an ever more important rolein underpinning growth as interest rates drop and the availabilityof credit cards and mortgages increases. Current account deficits ofaround 5% of GDP are beginning to decline as demand for Czechproducts in the European Union increases. Inflation is undercontrol. Recent accession to the EU gives further impetus anddirection to structural reform. In early 2004 the government passedincreases in the Value Added Tax (VAT) and tightened eligibility forsocial benefits with the intention to bring the public finance gapdown to 4% of GDP by 2006, but more difficult pension and healthcarereforms will have to wait until after the next elections.Privatization of the state-owned telecommunications firm CeskyTelecom is scheduled to take place in 2005. Intensifiedrestructuring among large enterprises, improvements in the financialsector, and effective use of available EU funds should strengthenoutput growth.
DenmarkThis thoroughly modern market economy features high-techagriculture, up-to-date small-scale and corporate industry,extensive government welfare measures, comfortable living standards,a stable currency, and high dependence on foreign trade. Denmark isa net exporter of food and energy and enjoys a comfortable balanceof payments surplus. Government objectives include streamlining thebureaucracy and further privatization of state assets. Thegovernment has been successful in meeting, and even exceeding, theeconomic convergence criteria for participating in the third phase(a common European currency) of the European Economic and MonetaryUnion (EMU), but Denmark has decided not to join 12 other EU membersin the euro; even so, the Danish krone remains pegged to the euro.Growth in 2004 was sluggish, yet above the scanty 0.3% of 2003.Because of high GDP per capita, welfare benefits, a low Gini index,and political stability, the Danish people enjoy living standardstopped by no other nation. A major long-term issue will be the sharpdecline in the ratio of workers to retirees.
DhekeliaEconomic activity is limited to providing services to themilitary and their families located in Dhekelia. All food andmanufactured goods must be imported.
DjiboutiThe economy is based on service activities connected withthe country's strategic location and status as a free trade zone innortheast Africa. Two-thirds of the inhabitants live in the capitalcity, the remainder are mostly nomadic herders. Scanty rainfalllimits crop production to fruits and vegetables, and most food mustbe imported. Djibouti provides services as both a transit port forthe region and an international transshipment and refueling center.Djibouti has few natural resources and little industry. The nationis, therefore, heavily dependent on foreign assistance to helpsupport its balance of payments and to finance development projects.An unemployment rate of at least 50% continues to be a majorproblem. While inflation is not a concern, due to the fixed tie ofthe Djiboutian franc to the US dollar, the artificially high valueof the Djiboutian franc adversely affects Djibouti's balance ofpayments. Per capita consumption dropped an estimated 35% over thelast seven years because of recession, civil war, and a highpopulation growth rate (including immigrants and refugees). Facedwith a multitude of economic difficulties, the government has fallenin arrears on long-term external debt and has been struggling tomeet the stipulations of foreign aid donors.
DominicaThe Dominican economy depends on agriculture, primarilybananas, and remains highly vulnerable to climatic conditions andinternational economic developments. Production of bananas droppedprecipitously in 2003, a major reason for the 1% decline in GDP.Tourism increased in 2003 as the government sought to promoteDominica as an "ecotourism" destination. Development of the tourismindustry remains difficult, however, because of the ruggedcoastline, lack of beaches, and the absence of an internationalairport. The government began a comprehensive restructuring of theeconomy in 2003 - including elimination of price controls,privatization of the state banana company, and tax increases - toaddress Dominica's economic crisis and to meet IMF targets. In orderto diversify the island's production base the government isattempting to develop an offshore financial sector and is planningto construct an oil refinery on the eastern part of the island.
Dominican RepublicThe Dominican Republic is a Caribbeanrepresentative democracy which enjoyed GDP growth of more than 7% in1998-2000. Growth subsequently plummeted as part of the globaleconomic slowdown. Although the country has long been viewedprimarily as an exporter of sugar, coffee, and tobacco, in recentyears the service sector has overtaken agriculture as the economy'slargest employer, due to growth in tourism and free trade zones. Thecountry suffers from marked income inequality; the poorest half ofthe population receives less than one-fifth of GNP, while therichest 10% enjoys nearly 40% of national income. Growth turnednegative in 2003 with reduced tourism, a major bank fraud, andlimited growth in the US economy (the source of about 85% of exportrevenues), but recovered slightly in 2004. Resumption of a badlyneeded IMF loan, slowed due to government repurchase of electricalpower plants, is basic to the restoration of social and economicstability. Newly elected President FERNANDEZ in mid-2004 promisedbelt-tightening reform. His administration has passed tax reform andis working to meet preconditions for a $600 IMF standby arrangementto ease the country's fiscal situation.
East TimorIn late 1999, about 70% of the economic infrastructure ofEast Timor was laid waste by Indonesian troops and anti-independencemilitias, and 300,000 people fled westward. Over the next threeyears, however, a massive international program, manned by 5,000peacekeepers (8,000 at peak) and 1,300 police officers, led tosubstantial reconstruction in both urban and rural areas. By 2003,all but about 30,000 of the refugees had returned. Growth was heldback in 2003 by extensive drought and the gradual winding down ofthe international presence. The country faces great challenges incontinuing the rebuilding of infrastructure, strengthening theinfant civil administration, and generating jobs for young peopleentering the workforce. One promising long-term project is theplanned development of oil and gas resources in nearby waters, whichhave begun to supplement government revenues ahead of schedule.
EcuadorEcuador has substantial petroleum resources, which haveaccounted for 40% of the country's export earnings and one-fourth ofcentral government budget revenues in recent years. Consequently,fluctuations in world market prices can have a substantial domesticimpact. In the late 1990s, Ecuador suffered its worst economiccrisis, with natural disasters and sharp declines in world petroleumprices driving Ecuador's economy into free fall in 1999. Real GDPcontracted by more than 6%, with poverty worsening significantly.The banking system also collapsed, and Ecuador defaulted on itsexternal debt later that year. The currency depreciated by some 70%in 1999, and, on the brink of hyperinflation, the MAHAUD governmentannounced it would dollarize the economy. A coup, however, oustedMAHAUD from office in January 2000, and after a short-lived juntafailed to garner military support, Vice President Gustavo NOBOA tookover the presidency. In March 2000, Congress approved a series ofstructural reforms that also provided the framework for the adoptionof the US dollar as legal tender. Dollarization stabilized theeconomy, and growth returned to its pre-crisis levels in the yearsthat followed. Under the administration of Lucio GUTIERREZ - January2003 to April 2005 - Ecuador benefited from higher world petroleumprices, but the government has made little progress on economicreforms necessary to reduce Ecuador's vulnerability to petroleumprice swings and financial crises.
EgyptLack of substantial progress on economic reform since the mid1990s has limited foreign direct investment in Egypt and kept annualGDP growth in the range of 2%-3% in 2001-03. However, in 2004 Egyptimplemented several measures to boost foreign direct investment. InSeptember 2004, Egypt pushed through custom reforms, proposed incomeand corporate tax reforms, reduced energy subsidies, and privatizedseveral enterprises. The budget deficit rose to an estimated 8% ofGDP in 2004 compared to 6.1% of GDP the previous year, in part as aresult of these reforms. Monetary pressures on an overvaluedEgyptian pound led the government to float the currency in January2003, leading to a sharp drop in its value and consequentinflationary pressure. In 2004, the Central Bank implementedmeasures to improve currency liquidity. Egypt reached record tourismlevels, despite the Taba and Nuweiba bombings in September 2004. Thedevelopment of an export market for natural gas is a bright spot forfuture growth prospects, but improvement in the capital-intensivehydrocarbons sector does little to reduce Egypt's persistentunemployment.
El SalvadorGDP per capita is roughly half that of Brazil,Argentina, and Chile, and the distribution of income is highlyunequal. The government is striving to open new export markets,encourage foreign investment, modernize the tax and healthcaresystems, and stimulate the sluggish economy. Implementation of theCentral America-Dominican Republic Free Trade Agreement, ratified byEl Salvador in 2004, is viewed as a key policy to help achieve theseobjectives. The trade deficit has been offset by annual remittancesfrom Salvadorans living abroad - 16% of GDP in 2004 - and externalaid. With the adoption of the US dollar as its currency, El Salvadorhas lost control over monetary policy and must concentrate onmaintaining a disciplined fiscal policy.
Equatorial GuineaThe discovery and exploitation of large oilreserves have contributed to dramatic economic growth in recentyears. Forestry, farming, and fishing are also major components ofGDP. Subsistence farming predominates. Although pre-independenceEquatorial Guinea counted on cocoa production for hard currencyearnings, the neglect of the rural economy under successive regimeshas diminished potential for agriculture-led growth (the governmenthas stated its intention to reinvest some oil revenue intoagriculture). A number of aid programs sponsored by the World Bankand the IMF have been cut off since 1993 because of corruption andmismanagement. No longer eligible for concessional financing becauseof large oil revenues, the government has been unsuccessfully tryingto agree on a "shadow" fiscal management program with the World Bankand IMF. Businesses, for the most part, are owned by governmentofficials and their family members. Undeveloped natural resourcesinclude titanium, iron ore, manganese, uranium, and alluvial gold.Growth presumably remained strong in 2004, led by oil.
EritreaSince independence from Ethiopia on 24 May 1993, Eritrea hasfaced the economic problems of a small, desperately poor country.Like the economies of many African nations, the economy is largelybased on subsistence agriculture, with 80% of the populationinvolved in farming and herding. The Ethiopian-Eritrea war in1998-2000 severely hurt Eritrea's economy. GDP growth fell to zeroin 1999 and to -12.1% in 2000. The May 2000 Ethiopian offensive intonorthern Eritrea caused some $600 million in property damage andloss, including losses of $225 million in livestock and 55,000homes. The attack prevented planting of crops in Eritrea's mostproductive region, causing food production to drop by 62%. Evenduring the war, Eritrea developed its transportation infrastructure,asphalting new roads, improving its ports, and repairing war damagedroads and bridges. Since the war ended, the government hasmaintained a firm grip on the economy, expanding the use of themilitary and party-owned businesses to complete Eritrea'sdevelopment agenda. Erratic rainfall and the delayed demobilizationof agriculturalists from the military kept cereal production wellbelow normal, holding down growth in 2002-04. Eritrea's economicfuture depends upon its ability to master social problems such asilliteracy, unemployment, and low skills, and to open its economy toprivate enterprise so the diaspora's money and expertise can fostereconomic growth.
EstoniaEstonia, as a new member of the World Trade Organization andthe European Union, has transitioned effectively to a modern marketeconomy with strong ties to the West, including the pegging of itscurrency to the euro. The economy benefits from strong electronicsand telecommunications sectors and is greatly influenced bydevelopments in Finland, Sweden, and Germany, three major tradingpartners. The current account deficit remains high; however, thestate budget enjoyed a surplus of $130 million in 2003.
EthiopiaEthiopia's poverty-stricken economy is based onagriculture, accounting for half of GDP, 60% of exports, and 80% oftotal employment. The agricultural sector suffers from frequentdrought and poor cultivation practices. Coffee is critical to theEthiopian economy with exports of some $156 million in 2002, buthistorically low prices have seen many farmers switching to qat tosupplement income. The war with Eritrea in 1998-2000 and recurrentdrought have buffeted the economy, in particular coffee production.In November 2001, Ethiopia qualified for debt relief from the HighlyIndebted Poor Countries (HIPC) initiative. Under Ethiopia's landtenure system, the government owns all land and provides long-termleases to the tenants; the system continues to hamper growth in theindustrial sector as entrepreneurs are unable to use land ascollateral for loans. Drought struck again late in 2002, leading toa 2% decline in GDP in 2003. Normal weather patterns late in 2003helped agricultural and GDP growth recover in 2004.
Europa Islandno economic activity
European UnionDomestically, the European Union attempts to lowertrade barriers, adopt a common currency, and move toward convergenceof living standards. Internationally, the EU aims to bolsterEurope's trade position and its political and economic power.Because of the great differences in per capita income (from $10,000to $28,000) and historic national animosities, the EuropeanCommunity faces difficulties in devising and enforcing commonpolicies. For example, both Germany and France since 2003 haveflouted the member states' treaty obligation to prevent theirnational budgets from running more than a 3% deficit. In 2004, theEU admitted 10 central and eastern European countries that are, ingeneral, less advanced technologically and economically than theexisting 15. Twelve EU member states introduced the euro as theircommon currency on 1 January 1999. The UK, Sweden, and Denmark donot now participate; the 10 new member states may choose to adoptthe euro when they meet the EU's fiscal and monetary criteria andthe member states so agree.
Falkland Islands (Islas Malvinas) The economy was formerly based on agriculture, mainly sheep farming, but today fishing contributes the bulk of economic activity. In 1987 the government began selling fishing licenses to foreign trawlers operating within the Falklands exclusive fishing zone. These license fees total more than $40 million per year, which goes to support the island's health, education, and welfare system. Squid accounts for 75% of the fish taken. Dairy farming supports domestic consumption; crops furnish winter fodder. Exports feature shipments of high-grade wool to the UK and the sale of postage stamps and coins. The islands are now self-financing except for defense. The British Geological Survey announced a 200-mile oil exploration zone around the islands in 1993, and early seismic surveys suggest substantial reserves capable of producing 500,000 barrels per day; to date no exploitable site has been identified. An agreement between Argentina and the UK in 1995 seeks to defuse licensing and sovereignty conflicts that would dampen foreign interest in exploiting potential oil reserves. Tourism, especially eco-tourism, is increasing rapidly, with about 30,000 visitors in 2001. Another large source of income is interest paid on money the government has in the bank. The British military presence also provides a sizeable economic boost.
Faroe IslandsThe Faroese economy has had a strong performance since1994, mostly as a result of increasing fish landings and high andstable export prices. Unemployment is minimal and there are signs oflabor shortages in several sectors. The positive economicdevelopment has helped the Faroese Home Rule Government produceincreasing budget surpluses, which in turn has helped to reduce thelarge public debt, most of it owed to Denmark. However, the totaldependence on fishing makes the Faroese economy extremelyvulnerable, and the present fishing efforts appear in excess of whatis a sustainable level of fishing in the long term. Oil finds closeto the Faroese area give hope for deposits in the immediate Faroesearea, which may eventually lay the basis for a more diversifiedeconomy and thus lessen dependence on Danish economic assistance.Aided by a substantial annual subsidy (15% of GDP) from Denmark, theFaroese have a standard of living not far below the Danes and otherScandinavians.
FijiFiji, endowed with forest, mineral, and fish resources, is oneof the most developed of the Pacific island economies, though stillwith a large subsistence sector. Sugar exports and a growing touristindustry - with 300,000 to 400,000 tourists annually - are the majorsources of foreign exchange. Sugar processing makes up one-third ofindustrial activity, but is inefficient. Long-term problems includelow investment, uncertain land ownership rights, and thegovernment's ability to manage its budget. Yet short-run economicprospects are good, provided tensions do not again erupt betweenindigenous Fijians and Indo-Fijians. Overseas remittances fromFijians working in Kuwait and Iraq have increased significantly.
FinlandFinland has a highly industrialized, largely free-marketeconomy, with per capita output roughly that of the UK, France,Germany, and Italy. Its key economic sector is manufacturing -principally the wood, metals, engineering, telecommunications, andelectronics industries. Trade is important, with exports equalingtwo-fifths of GDP. Finland excels in high-tech exports, e.g., mobilephones. Except for timber and several minerals, Finland depends onimports of raw materials, energy, and some components formanufactured goods. Because of the climate, agricultural developmentis limited to maintaining self-sufficiency in basic products.Forestry, an important export earner, provides a secondaryoccupation for the rural population. Rapidly increasing integrationwith Western Europe - Finland was one of the 12 countries joiningthe European Economic and Monetary Union (EMU) - will dominate theeconomic picture over the next several years. Growth in 2003 washeld back by the global slowdown but picked up in 2004. Highunemployment remains a persistent problem.
FranceFrance is in the midst of transition, from a well-to-domodern economy that has featured extensive government ownership andintervention to one that relies more on market mechanisms. Thegovernment has partially or fully privatized many large companies,banks, and insurers. It retains controlling stakes in severalleading firms, including Air France, France Telecom, Renault, andThales, and is dominant in some sectors, particularly power, publictransport, and defense industries. The telecommunications sector isgradually being opened to competition. France's leaders remaincommitted to a capitalism in which they maintain social equity bymeans of laws, tax policies, and social spending that reduce incomedisparity and the impact of free markets on public health andwelfare. The government has lowered income taxes and introducedmeasures to boost employment and reform the pension system. Inaddition, it is focusing on the problems of the high cost of laborand labor market inflexibility resulting from the 35-hour workweekand restrictions on lay-offs. The tax burden remains one of thehighest in Europe (43.8% of GDP in 2003). The lingering economicslowdown and inflexible budget items have pushed the budget deficitabove the eurozone's 3%-of-GDP limit. Finance Minister Herve GAYMARDhas promised that the 2005 deficit will fall below 3%.
French GuianaThe economy is tied closely to the much larger Frencheconomy through subsidies and imports. Besides the French spacecenter at Kourou (which accounts for 25% of GDP), fishing andforestry are the most important economic activities. Forest andwoodland cover 90% of the country. The large reserves of tropicalhardwoods, not fully exploited, support an expanding sawmillindustry that provides sawn logs for export. Cultivation of crops islimited to the coastal area, where the population is largelyconcentrated; rice and manioc are the major crops. French Guiana isheavily dependent on imports of food and energy. Unemployment is aserious problem, particularly among younger workers.
French PolynesiaSince 1962, when France stationed militarypersonnel in the region, French Polynesia has changed from asubsistence agricultural economy to one in which a high proportionof the work force is either employed by the military or supports thetourist industry. With the halt of French nuclear testing in 1996,the military contribution to the economy fell sharply. Tourismaccounts for about one-fourth of GDP and is a primary source of hardcurrency earnings. Other sources of income are pearl farming anddeep-sea commercial fishing. The small manufacturing sectorprimarily processes agricultural products. The territory benefitssubstantially from development agreements with France aimedprincipally at creating new businesses and strengthening socialservices.
French Southern and Antarctic LandsEconomic 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.