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, made the BritishVirgin Islands even more attractive to international business.Livestock raising is the most important agricultural activity; poorsoils limit the islands' ability to meet domestic food requirements.Because of traditionally close links with the US Virgin Islands, theBritish Virgin Islands has used the US dollar as its currency since1959.
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 and more than 90% ofgovernment revenues. Per capita GDP is far above most other ThirdWorld countries, and substantial income from overseas investmentsupplements income from domestic production. The government providesfor all medical services and free education through the universitylevel and subsidizes rice and housing. Brunei's leaders areconcerned that steadily increased integration in the world economywill undermine internal social cohesion. Plans for the futureinclude upgrading the labor force, reducing unemployment,strengthening the banking and tourist sectors, and, in general,further widening the economic base beyond oil and gas.
BulgariaBulgaria, a former communist country that entered theEuropean Union on 1 January 2007, has experienced macroeconomicstability and strong growth since a major economic downturn in 1996led to the fall of the then socialist government. As a result, thegovernment became committed to economic reform and responsiblefiscal planning. Minerals, including coal, copper, and zinc, play animportant role in industry. In 1997, macroeconomic stability wasreinforced by the imposition of a fixed exchange rate of the levagainst the German D-mark - the currency is now fixed against theeuro - and the negotiation of an IMF standby agreement. Lowinflation and steady progress on structural reforms improved thebusiness environment; Bulgaria has averaged 5.1% growth since 2000and has 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 periodic drought. Cotton is the main cashcrop and the government has joined with three other cotton producingcountries in the region - Mali, Niger, and Chad - to lobby forimproved access to Western markets. GDP growth has largely beendriven by increases in world cotton prices. Industry remainsdominated by unprofitable government-controlled corporations.Following the CFA franc currency devaluation in January 1994, thegovernment updated its development program in conjunction withinternational agencies; exports and economic growth have increased.The government devolved macroeconomic policy and inflation targetingto the West African regional central bank (BCEAO), but maintainscontrol over fiscal and microeconomic policies, includingimplementing 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. Burkina Faso is eligible for a Millenium ChallengeAccount grant, which would increase investment in the country'shuman capital.
BurmaBurma, a resource-rich country, suffers from pervasivegovernment controls, inefficient economic policies, and ruralpoverty. The junta took steps in the early 1990s to liberalize theeconomy after decades of failure under the "Burmese Way toSocialism," but those efforts stalled, and some of theliberalization measures were rescinded. Lacking monetary or fiscalstability, the economy suffers from serious macroeconomic imbalances- including inflation, multiple official exchange rates thatovervalue the Burmese kyat, and a distorted interest rate regime.Most overseas development assistance ceased after the junta began tosuppress the democracy movement in 1988 and subsequently refused tohonor the results of the 1990 legislative elections. In response tothe government of Burma's attack in May 2003 on AUNG SAN SUU KYI andher convoy, the US imposed new economic sanctions against Burma -including a ban on imports of Burmese products and a ban onprovision of financial services by US persons. A poor investmentclimate further slowed the inflow of foreign exchange. The mostproductive sectors will continue to be in extractive industries,especially oil and gas, mining, and timber. Other areas, such asmanufacturing and services, are struggling with inadequateinfrastructure, unpredictable import/export policies, deterioratinghealth and education systems, and corruption. A major banking crisisin 2003 shuttered the country's 20 private banks and disrupted theeconomy. As of 2006, the largest private banks operate under tightrestrictions limiting the private sector's access to formal credit.Official statistics are inaccurate. Published statistics on foreigntrade are greatly understated because of the size of the blackmarket and unofficial border trade - often estimated to be as largeas the official economy. Burma's trade with Thailand, China, andIndia is rising. Though the Burmese government has good economicrelations with its neighbors, better investment and businessclimates and an improved political situation are needed to promoteforeign investment, exports, and tourism.
BurundiBurundi is a landlocked, resource-poor country with anunderdeveloped manufacturing sector. The economy is predominantlyagricultural with more than 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. An ethnic-based war that lasted for over a decaderesulted in more than 200,000 deaths, forced more than 48,000refugees into Tanzania, and displaced 140,000 others internally.Only one in two children go to school, and approximately one in 10adults has HIV/AIDS. Food, medicine, and electricity remain in shortsupply. Political stability and the end of the civil war haveimproved aid flows and economic activity has increased, butunderlying weaknesses - a high poverty rate, poor education rates, aweak legal system, and low administrative capacity - riskundermining planned economic reforms. Burundi grew about 5 percentin 2006. Delayed disbursements of funds from the World Bank may addto budget pressures in 2007. Burundi will continue to remain heavilydependent on aid from bilateral and multilateral donors.
CambodiaIn 1999, the first full year of peace in 30 years, thegovernment made progress on economic reforms. The US and Cambodiasigned a Bilateral Textile Agreement, which gave Cambodia aguaranteed quota of US textile imports and established a bonus forimproving working conditions and enforcing Cambodian labor laws andinternational labor standards in the industry. From 2001 to 2004,the economy grew at an average rate of 6.4%, driven largely by anexpansion in the garment sector and tourism. With the January 2005expiration of a WTO Agreement on Textiles and Clothing,Cambodia-based textile producers were forced to compete directlywith lower-priced producing countries such as China and India.Better-than-expected garment sector performance led to about 6%growth per year in 2005-06. Faced with the possibility that itsvibrant garment industry, with more than 200,000 jobs, could be inserious danger, the Cambodian government has committed itself to apolicy of continued support for high labor standards in an attemptto maintain favor with buyers. The tourism industry continues togrow rapidly, with foreign visitors surpassing 1 million for peryear beginning in 2005. In 2005, exploitable oil and natural gasdeposits were found beneath Cambodia's territorial waters,representing a new revenue stream for the government once commercialextraction begins in the coming years. Mining also is attractingsignificant investor interest, particularly in the northeasternparts of the country. The long-term development of the economyremains a daunting challenge. The Cambodian government is workingwith bilateral and multilateral donors, including the World Bank andIMF, to address the country's many pressing needs. The majoreconomic challenge for Cambodia over the next decade will befashioning an economic environment in which the private sector cancreate enough jobs to handle Cambodia's demographic imbalance. Morethan 50% of the population is less than 21 years old. The populationlacks education and productive skills, particularly in thepoverty-ridden countryside, which suffers from an almost total lackof basic infrastructure.
CameroonBecause of its modest oil resources and favorableagricultural conditions, Cameroon has one of the best-endowedprimary commodity economies in sub-Saharan Africa. Still, it facesmany of the serious problems facing other underdeveloped countries,such as a top-heavy civil service and a generally unfavorableclimate for business enterprise. Since 1990, the government hasembarked on various IMF and World Bank programs designed to spurbusiness investment, increase efficiency in agriculture, improvetrade, and recapitalize the nation's banks. In June 2000, thegovernment completed an IMF-sponsored, three-year structuraladjustment program; however, the IMF is pressing for more reforms,including increased budget transparency, privatization, and povertyreduction programs. International oil and cocoa prices have asignificant impact on the economy.
CanadaAs an affluent, high-tech industrial society in the trilliondollar class, Canada resembles the US in its market-orientedeconomic system, pattern of production, and affluent livingstandards. 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. Top-notch fiscal management has produced consecutivebalanced budgets since 1997, although public debate continues overhow to manage the rising cost of the publicly funded healthcaresystem. Exports account for roughly a third of GDP. Canada enjoys asubstantial trade surplus with its principal trading partner, theUS, which absorbs about 85% of Canadian exports. Canada is the US'largest foreign supplier of energy, including oil, gas, uranium, andelectric power.
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 66% of GDP.Although nearly 70% of the population lives in rural areas, theshare of food production in GDP in 2004 was only 12%, of whichfishing accounted for 1.5%. About 82% of food must be imported. Thefishing potential, mostly lobster and tuna, is not fully exploited.Cape Verde annually runs a high trade deficit, financed by foreignaid and remittances from emigrants; remittances supplement GDP bymore than 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. Cape Verde has been exploringEuropean Union membership in recent years.
Cayman IslandsWith no direct taxation, the islands are a thrivingoffshore financial center. More than 68,000 companies wereregistered in the Cayman Islands as of 2003, including almost 500banks, 800 insurers, and 5000 mutual funds. A stock exchange wasopened in 1997. Tourism is also a mainstay, accounting for about 70%of GDP and 75% of foreign currency earnings. The tourist industry isaimed at the luxury market and caters mainly to visitors from NorthAmerica. Total tourist arrivals exceeded 2.1 million in 2003, withabout half from the US. About 90% of the islands' food and consumergoods must be imported. The Caymanians enjoy one of the highestoutputs per capita and one of the highest standards of living in theworld.
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 more than half ofGDP. Timber has accounted for about 16% of export earnings and thediamond industry, for 40%. 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. Distribution of income is extraordinarily unequal.Grants from France and the international community can onlypartially meet humanitarian needs.
ChadChad's primarily agricultural economy will continue to beboosted by major foreign direct investment projects in the oilsector that began in 2000. Over 80% of Chad's population relies onsubsistence farming and livestock raising for its livelihood. Chad'seconomy has long been handicapped by its landlocked position, highenergy costs, and a history of instability. Chad relies on foreignassistance and foreign capital for most public and private sectorinvestment projects. A consortium led by two US companies has beeninvesting $3.7 billion to develop oil reserves - estimated at 1billion barrels - in southern Chad. The nation's total oil reserveshas been estimated to be 2 billion barrels. Oil production came onstream in late 2003. Chad began to export oil in 2004. Cotton,cattle, and gum arabic provide the bulk of Chad's non-oil exportearnings.
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 about 5% per year in 2004-06,while Chile maintained a low rate of inflation. GDP growth benefitedfrom high copper prices, solid export earnings (particularlyforestry, fishing, and mining), and stepped-up foreign directinvestment. Unemployment has exhibited a downward trend over thepast year, but remains fairly high. Chile deepened its longstandingcommitment to trade liberalization with the signing of a free tradeagreement with the US, which took effect on 1 January 2004. Chilesigned a free trade agreement with China in November 2005, and italready has several trade deals signed with other nations and blocs,including the European Union, Mercosur, South Korea, and Mexico.Record-high copper prices helped to strengthen the peso to a 6 1/2-yearhigh, as of December 2006, and added investment in the mining sectorwill boost GDP in 2007.
China China's economy during the last quarter century has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy. Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment. China has generally implemented reforms in a gradualist or piecemeal fashion, including the sale of equity in China's largest state banks to foreign investors and refinements in foreign exchange and bond markets in 2005. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis, China in 2006 stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income and 130 million Chinese fall below international poverty lines. Economic development has generally been more rapid in coastal provinces than in the interior, and there are large disparities in per capita income between regions. The government has struggled to: (a) sustain adequate job 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) contain environmental damage and social strife related to the economy's rapid transformation. From 100 to 150 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time, low-paying jobs. 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. China has benefited from a huge expansion in computer Internet use, with more than 100 million users at the end of 2005. Foreign investment remains a strong element in China's remarkable expansion in world trade and has been an important factor in the growth of urban jobs. In July 2005, China revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. In 2006 China had the largest current account surplus - nearly $180 billion - in the world. More power generating capacity came on line in 2006 as large scale investments were completed. Thirteen years in construction at a cost of $24 billion, the immense Three Gorges Dam across the Yangtze River was essentially completed in 2006 and will revolutionize electrification and flood control in the area. The 11th Five-Year Program (2006-10), approved by the National People's Congress in March 2006, calls for a 20% reduction in energy consumption per unit of GDP by 2010 and an estimated 45% increase in GDP by 2010. The plan states that conserving resources and protecting the environment are basic goals, but it lacks details on the policies and reforms necessary to achieve these goals.
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 experienced positive growth over thepast three years despite a serious armed conflict. The economycontinues to improve in part because of austere government budgets,focused efforts to reduce public debt levels, an export-orientedgrowth strategy, an improved security situation in the country, andhigh commodity prices. Ongoing economic problems facing PresidentURIBE range from reforming the pension system to reducing highunemployment, and to achieving congressional passage of a fiscaltransfers reform. New exploration is needed to offset declining oilproduction. International and domestic financial analysts note withconcern the growing central government deficit, which hovers at 5%of GDP. However, the government's economic policy and democraticsecurity strategy have engendered a growing sense of confidence inthe economy, particularly within the business sector.
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 violence, famine, and disease.Foreign businesses curtailed operations due to uncertainty about theoutcome of the conflict, lack of infrastructure, and the difficultoperating environment. Conditions improved in late 2002 with thewithdrawal of a large portion of the invading foreign troops. Thetransitional government has reopened relations with internationalfinancial institutions and international donors, and PresidentKABILA has begun implementing reforms. Much economic activity liesoutside the GDP data. Economic stability improved in 2003-06,although an uncertain legal framework, corruption, and a lack ofopenness in government policy continues to hamper growth. In2005-06, renewed activity in the mining sector, the source of mostexports, boosted Kinshasa's fiscal position and GDP growth. Businessand economic prospects are expected to improve once a new governmentis installed after elections.
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 through oil-backed loans that have contributedto a growing debt burden and chronic revenue shortfalls. Economicreform efforts have been undertaken with the support ofinternational organizations, notably the World Bank and the IMF.However, the reform program came to a halt in June 1997 when civilwar erupted. Denis SASSOU-NGUESSO, who returned to power when thewar ended in October 1997, publicly expressed interest in movingforward on economic reforms and privatization and in renewingcooperation with international financial institutions. Economicprogress was badly hurt by slumping oil prices and the resumption ofarmed conflict in December 1998, which worsened the republic'sbudget deficit. The current administration presides over an uneasyinternal peace and faces difficult economic challenges ofstimulating recovery and reducing poverty. Recovery of oil priceshas boosted the economy's GDP and near-term prospects. In March2006, the World Bank and the International Monetary Fund (IMF)approved Heavily Indebted Poor Countries (HIPC) treatment for Congo.
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, employingabout 70% of the working population, provides the economic base withmajor exports made up of copra and citrus fruit. Black pearls arethe Cook Island's leading export. Manufacturing activities arelimited to fruit processing, clothing, and handicrafts. Tradedeficits are offset by remittances from emigrants and by foreignaid, overwhelmingly from New Zealand. In the 1980s and 1990s, thecountry lived beyond its means, maintaining a bloated public serviceand accumulating a large foreign debt. Subsequent reforms, includingthe sale of state assets, the strengthening of economic management,the encouragement of tourism, and a debt restructuring agreement,have rekindled investment and growth.
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. The government continues tograpple with its large internal and external deficits and sizableinternal debt. The reduction of inflation remains a difficultproblem because of rising import prices, labor market rigidities,and fiscal deficits. The country also needs to reform its tax systemand its pattern of public expenditure. The current administrationhas made it a priority to pass the necessary reforms to implementthe US-Central American Free Trade Agreement (CAFTA). CAFTAimplementation would result in 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. Growth was negative in 2000-03 because of the difficultyof meeting the conditions of international donors, continued lowprices of key exports, foreign divestment and civil war. Politicalturmoil has continued to damage the economy since 2004, with arising risk premium associated with doing business in the country,foreign investment shriveling, transportation costs increasing,French businesses fleeing, and criminal elements that traffic inweapons and diamonds gaining ground. The government will continue tosurvive financially off of the sale of cocoa, which represents 90%of foreign exchange earnings, but the government will probably losebetween 10% and 20% of its cocoa harvest to northern rebels whosmuggle the cocoa they control to neighboring countries where cocoaprices are higher. The government remains hopeful that ongoingexploration of Cote d'Ivoire's offshore oil reserves will result insignificant production that could boost daily crude output fromroughly 33,000 barrels per day (b/d) to more than 200,000 b/d by theend of the decade.
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 17%, with structural factorsslowing its decline. While macroeconomic stabilization has largelybeen achieved, structural reforms lag because of deep resistance onthe part of the public and lack of strong support from politicians.Growth, while impressive at about 3% to 4% for the last severalyears, has been stimulated, in part, through high fiscal deficitsand rapid credit growth. The EU accession process should acceleratefiscal and structural reform.
CubaThe government continues to balance the need for economicloosening against a desire for firm political control. It has rolledback limited reforms undertaken in the 1990s to increase enterpriseefficiency and alleviate serious shortages of food, consumer goods,and services. The average Cuban's standard of living remains at alower level than before the downturn of the 1990s, which was causedby the loss of Soviet aid and domestic inefficiencies. In 2006, highmetals prices continued to boost Cuban earnings from nickel andcobalt production. Havana continued to invest in the country'senergy sector to mitigate electrical blackouts that have plagued thecountry since 2004.
CyprusThe Republic of Cyprus has a market economy dominated by theservice sector, which accounts for 76% of GDP. Tourism and financialservices are the most important sectors; erratic growth rates overthe past decade reflect the economy's reliance on tourism, whichoften fluctuates with political instability in the region andeconomic conditions in Western Europe. Nevertheless, the economygrew a healthy 3.7% per year in 2004 and 2005, well above the EUaverage. Cyprus joined the European Exchange Rate Mechanism (ERM2)in May 2005. The government has initiated an aggressive austerityprogram, which has cut the budget deficit to below 3% but continuedfiscal discipline is necessary if Cyprus is to meet its goal ofadopting the euro on 1 January 2008. As in the area administered byTurkish Cypriots, water shortages are a perennial problem; a fewdesalination plants are now on line. After 10 years of drought, thecountry received substantial rainfall from 2001-03 alleviatingimmediate concerns. The Turkish Cypriot economy has roughlyone-third of the per capita GDP of the south, and economic growthtends to be volatile, given north Cyprus's relative isolation,bloated public sector, reliance on the Turkish lira, and smallmarket size. The Turkish Cypriot economy grew 15.4% in 2004, fueledby growth in the construction and education sectors, as well asincreased employment of Turkish Cypriots in the Republic of Cyprus.The Turkish Cypriots are heavily dependent on transfers from theTurkish Government. Under the 2003-06 economic protocol, Ankaraplanned to provide around $700 million to the "TRNC." Agricultureand services, together, employ more than half of the work force.
Czech RepublicThe Czech Republic is one of the most stable andprosperous of the post-Communist states of Central and EasternEurope. Growth in 2000-05 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. The current account deficithas declined to around 3% of GDP as demand for Czech products in theEuropean Union has increased. Inflation is under control. Recentaccession to the EU gives further impetus and direction tostructural reform. In early 2004 the government passed increases inthe Value Added Tax (VAT) and tightened eligibility for socialbenefits with the intention to bring the public finance gap down to4% of GDP by 2006, but more difficult pension and healthcare reformswill have to wait until after the next elections. Privatization ofthe state-owned telecommunications firm Cesky Telecom took place in2005. Intensified restructuring among large enterprises,improvements in the financial sector, and effective use of availableEU funds should strengthen output growth.
DenmarkThe Danish economy is undergoing strong expansion fueled byprivate consumption growth, low unemployment, rising real wages, anda strong increase in house prices. This thoroughly modern marketeconomy features high-tech agriculture, up-to-date small-scale andcorporate industry, extensive government welfare measures,comfortable living standards, a stable currency, and high dependenceon foreign trade. Denmark is a net exporter of food and energy andenjoys a comfortable balance of payments surplus. Governmentobjectives include streamlining the bureaucracy and furtherprivatization of state assets. The government has been successful inmeeting, and even exceeding, the economic convergence criteria forparticipating in the third phase (a common European currency) of theEuropean Economic and Monetary Union (EMU), but Denmark has decidednot to join 12 other EU members in the euro. Nonetheless, the Danishkrone remains pegged to the euro. Economic growth gained momentum in2004 and the upturn continued through 2006. Because of high GDP percapita, welfare benefits, a low Gini index, and political stability,the Danish people enjoy living standards topped by no other nation.A major long-term issue will be the sharp decline in the ratio ofworkers 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. Tourism has increased as thegovernment seeks to promote Dominica as an "ecotourism" destination.Development of the tourism industry remains difficult, however,because of the rugged coastline, lack of beaches, and the absence ofan international airport. The government began a comprehensiverestructuring of the economy in 2003 - including elimination ofprice controls, privatization of the state banana company, and taxincreases - to address Dominica's economic crisis and to meet IMFtargets. In order to diversify the island's production base, thegovernment is attempting to develop an offshore financial sector andis planning to construct an oil refinery on the eastern part of theisland.
Dominican RepublicThe Dominican Republic is a Caribbeanrepresentative democracy that enjoyed strong GDP growth until 2003.Although the country has long been viewed primarily as an exporterof sugar, coffee, and tobacco, in recent years the service sectorhas overtaken agriculture as the economy's largest employer due togrowth in tourism and free trade zones. Growth turned negative in2003 with reduced tourism, a major bank fraud, and limited growth inthe US economy (the source of about 80% of export revenues), butrecovered in 2004-06. With the help of strict fiscal targets agreedin the 2004 renegotiation of an IMF standby loan, PresidentFERNANDEZ has stabilized the country's financial situation. Althoughthe economy continues to grow at a respectable rate, highunemployment and inflation remain important challenges. The countrysuffers from marked income inequality; the poorest half of thepopulation receives less than one-fifth of GNP, while the richest10% enjoys nearly 40% of national income. The Dominican Republic'sdevelopment prospects improved with the ratification of the CentralAmerica-Dominican Republic Free Trade Agreement (CAFTA-DR) inSeptember 2005.
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 the endof 2005, all refugees either returned or resettled in Indonesia. Thecountry faces great challenges in continuing the rebuilding ofinfrastructure, strengthening the infant civil administration, andgenerating jobs for young people entering the work force. Thedevelopment of oil and gas resources in nearby waters has begun tosupplement government revenues ahead of schedule and aboveexpectations - the result of high petroleum prices - but thetechnology-intensive industry does little to create jobs for theunemployed, because there are no production facilities in Timor andthe gas is piped to Australia. The parliament in June 2005unanimously approved the creation of a Petroleum Fund to serve as arepository for all petroleum revenues and preserve the value of EastTimor's petroleum wealth for future generations.
EcuadorEcuador has substantial petroleum resources, which haveaccounted for 40% of the country's export earnings and one-third 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. However, the government under Alfredo PALACIO has reversedeconomic reforms that reduced Ecuador's vulnerability to petroleumprice swings and financial crises, allowing the central governmentgreater access to oil windfalls and disbursing surplus retirementfunds.
EgyptOccupying the northeast corner of the African continent, Egyptis bisected by the highly fertile Nile valley, where most economicactivity takes place. In the last 30 years, the government hasreformed the highly centralized economy it inherited from PresidentNASSER. In 2005, Prime Minister Ahmed NAZIF reduced personal andcorporate tax rates, reduced energy subsidies, and privatizedseveral enterprises. The stock market boomed, and GDP grew about 5%per year in 2005-06. Despite these achievements, the government hasfailed to raise living standards for the average Egyptian, and hashad to continue providing subsidies for basic necessities. Thesubsidies have contributed to a growing budget deficit - more than10% of GDP each year - and represent a significant drain on theeconomy. Foreign direct investment remains low. To achieve higherGDP growth the NAZIF government will need to continue its aggressivepursuit of reform, especially in the energy sector. Egypt's exportsectors - particularly natural gas - have bright prospects.
El SalvadorThe smallest country in Central America, El Salvador hasthe third largest economy, but growth has been minimal in recentyears. Hoping to stimulate the sluggish economy, the government isstriving to open new export markets, encourage foreign investment,and modernize the tax and healthcare systems. Implementation in 2006of the Central America-Dominican Republic Free Trade Agreement,which El Salvador was the first to ratify, has strenthened analready positive export trend. The trade deficit has been offset byannual remittances from Salvadorans living abroad - equivalent tomore than 15% of GDP - and external aid. With the adoption of the USdollar as its currency in 2001, El Salvador has lost control overmonetary policy and must concentrate on maintaining a disciplinedfiscal policy. The current government has pursued economicdiversification, with some success in promoting textile production,international port services, and tourism. It is committed to openingthe economy to trade and investment, and has embarked on a wave ofprivatizations extending to telecom, electricity distribution,banking, and pension funds.
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 trying to agree on a"shadow" fiscal management program with the World Bank and IMF.Businesses, for the most part, are owned by government officials andtheir family members. Undeveloped natural resources includetitanium, iron ore, manganese, uranium, and alluvial gold. Growthremained strong in 2006, led by oil. Equatorial Guinea now has thethird highest per capita income in the world, after Luxembourg andBermuda.
EritreaSince independence from Ethiopia in 1993, Eritrea has facedthe economic problems of a small, desperately poor country. Like theeconomies of many African nations, the economy is largely based onsubsistence agriculture, with 80% of the population involved infarming and herding. The Ethiopian-Eritrea war in 1998-2000 severelyhurt Eritrea's economy. GDP growth fell to zero in 1999 and to-12.1% in 2000. The May 2000 Ethiopian offensive into northernEritrea caused some $600 million in property damage and loss,including losses of $225 million in livestock and 55,000 homes. Theattack prevented planting of crops in Eritrea's most productiveregion, causing food production to drop by 62%. Even during the war,Eritrea developed its transportation infrastructure, asphalting newroads, improving its ports, and repairing war-damaged roads andbridges. Since the war ended, the government has maintained a firmgrip on the economy, expanding the use of the military andparty-owned businesses to complete Eritrea's development agenda.Erratic rainfall and the delayed demobilization of agriculturalistsfrom the military kept cereal production well below normal, holdingdown growth in 2002-06. Eritrea's economic future depends upon itsability to master social problems such as illiteracy, unemployment,and low skills, as well as the willingness to open its economy toprivate enterprise so that the diaspora's money and expertise canfoster economic 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 is essentially in balance, and public debt is low.
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, and in December 2005 theInternational Monetary Fund voted to forgive Ethiopia's debt to thebody. Under Ethiopia's land tenure system, the government owns allland and provides long-term leases to the tenants; the systemcontinues to hamper growth in the industrial sector as entrepreneursare unable to use land as collateral for loans. Drought struck againlate in 2002, leading to a 2% decline in GDP in 2003. Normal weatherpatterns helped agricultural and GDP growth recover in 2004-06.
Europa Islandno economic activity
European UnionInternally, 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 among memberstates (from $8,000 to $61,000) and historic national animosities,the European Union faces difficulties in devising and enforcingcommon policies. For example, since 2003 Germany and France haveflouted the member states' treaty obligation to prevent theirnational budgets from running more than a 3% deficit. In 2004 and2007, the EU admitted 10 and two countries, respectively, that are,in general, less advanced technologically and economically than theother 15. Twelve established EU member states introduced the euro astheir common currency on 1 January 1999, but the UK, Sweden, andDenmark chose not to participate. Of the 12 most recent memberstates, only Slovenia has adopted the euro (1 January 2007); theremaining eleven are legally required to adopt the currency uponmeeting EU's fiscal and monetary convergence criteria.
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 Falkland Islands' 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 have helped 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 (about 15% of GDP) fromDenmark, the Faroese have a standard of living not far below theDanes and other Scandinavians.
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, remittances fromFijians working abroad, and a growing tourist industry - with300,000 to 400,000 tourists annually - are the major sources offoreign exchange. Fiji's sugar has special access to European Unionmarkets, but will be harmed by the EU's decision to cut sugarsubsidies. Sugar processing makes up one-third of industrialactivity but is not efficient. Fiji's tourism industry was damagedby the 2006 coup and is facing an uncertain recovery time. Long-termproblems include low investment, uncertain land ownership rights,and the government's ability to manage its budget. Overseasremittances from Fijians working in Kuwait and Iraq have increasedsignificantly.
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; exports equal two-fifthsof GDP. Finland excels in high-tech exports, e.g., mobile phones.Except for timber and several minerals, Finland depends on importsof raw materials, energy, and some components for manufacturedgoods. Because of the climate, agricultural development is limitedto maintaining self-sufficiency in basic products. Forestry, animportant export earner, provides a secondary occupation for therural population. High unemployment remains a persistent problem.
FranceFrance is in the midst of transition from a well-to-do moderneconomy 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 in 2006 focused on introducing measures thatattempt to boost employment through increased labor marketflexibility; however, the population has remained opposed to laborreforms, hampering the government's ability to revitalize theeconomy. The tax burden remains one of the highest in Europe (nearly50% of GDP in 2005). The lingering economic slowdown and inflexiblebudget items probably pushed the budget deficit above the eurozone's3%-of-GDP limit in 2006; unemployment hovers near 9%.
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.
GabonGabon enjoys a per capita income four times that of most ofsub-Saharan African nations. This has supported a sharp decline inextreme poverty; yet, because of high income inequality, a largeproportion of the population remains poor. Gabon depended on timberand manganese until oil was discovered offshore in the early 1970s.The oil sector now accounts for 50% of GDP. Gabon continues to facefluctuating prices for its oil, timber, and manganese exports.Despite the abundance of natural wealth, poor fiscal managementhobbles the economy. Devaluation of its currency by 50% in January1994 sparked a one-time inflationary surge, to 35%; the rate droppedto 6% in 1996. The IMF provided a one-year standby arrangement in1994-95, a three-year Enhanced Financing Facility (EFF) at nearcommercial rates beginning in late 1995, and stand-by credit of $119million in October 2000. Those agreements mandated progress inprivatization and fiscal discipline. France provided additionalfinancial support in January 1997 after Gabon met IMF targets formid-1996. In 1997, an IMF mission to Gabon criticized the governmentfor overspending on off-budget items, overborrowing from the centralbank, and slipping on its schedule for privatization andadministrative reform. The rebound of oil prices in 1999-2000 helpedgrowth, but drops in production hampered Gabon from fully realizingpotential gains. In December 2000, Gabon signed a new agreement withthe Paris Club to reschedule its official debt. A follow-upbilateral repayment agreement with the US was signed in December2001. Gabon signed a 14-month Stand-By Arrangement with the IMF inMay 2004, and received Paris Club debt rescheduling later that year.Short-term progress depends on an upbeat world economy and fiscaland other adjustments in line with IMF policies.
Gambia, TheThe Gambia has no confirmed mineral or natural resourcedeposits and has a limited agricultural base. About 75% of thepopulation depends on crops and livestock for its livelihood.Small-scale manufacturing activity features the processing ofpeanuts, fish, and hides. Reexport trade normally constitutes amajor segment of economic activity, but a 1999 government-imposedpreshipment inspection plan, and instability of the Gambian dalasi(currency) have drawn some of the reexport trade away from TheGambia. The Gambia's natural beauty and proximity to Europe has madeit one of the larger markets for tourism in West Africa. Thegovernment's 1998 seizure of the private peanut firm Alimentaeliminated the largest purchaser of Gambian groundnuts. Despite anannounced program to begin privatizing key parastatals, no planshave been made public that would indicate that the governmentintends to follow through on its promises. Unemployment andunderemployment rates remain extremely high; short-run economicprogress depends on sustained bilateral and multilateral aid, onresponsible government economic management, on continued technicalassistance from the IMF and bilateral donors, and on expected growthin the construction sector.
Gaza StripHigh population density, limited land access, and strictinternal and external security controls have kept economicconditions in the Gaza Strip - the smaller of the two areas underthe Palestinian Authority (PA)- even more degraded than in the WestBank. The beginning of the second intifadah in September 2000sparked an economic downturn, largely the result of Israeli closurepolicies; these policies, which were imposed to address securityconcerns in Israel, disrupted labor and trade access to and from theGaza Strip. In 2001, and even more severely in 2003, Israelimilitary measures in PA areas resulted in the destruction ofcapital, the disruption of administrative structures, and widespreadbusiness closures. The Israeli withdrawal from the Gaza Strip inSeptember 2005 offered some medium-term opportunities for economicgrowth, which have not yet been realized due to Israeli militaryactivities in the Gaza Strip in 2006, continued crossings closures,and the international community's financial embargo of the PA afterHAMAS took office in March 2006.
GeorgiaGeorgia's main economic activities include the cultivationof agricultural products such as grapes, citrus fruits, andhazelnuts; mining of manganese and copper; and output of a smallindustrial sector producing alcoholic and nonalcoholic beverages,metals, machinery, and chemicals. The country imports the bulk ofits energy needs, including natural gas and oil products. It hassizeable but underdeveloped hydropower capacity. Despite the severedamage the economy has suffered due to civil strife, Georgia, withthe help of the IMF and World Bank, has made substantial economicgains since 2000, achieving positive GDP growth and curtailinginflation. Georgia had suffered from a chronic failure to collecttax revenues; however, the new government is making progress and hasreformed the tax code, improved tax administration, increased taxenforcement, and cracked down on corruption. In addition, thereinvigorated privatization process has met with success,supplementing government expenditures on infrastructure, defense,and poverty reduction. Despite customs and financial (tax)enforcement improvements, smuggling is a drain on the economy.Georgia also suffers from energy shortages due to aging and badlymaintained infrastructure, as well as poor management. Due toconcerted reform efforts, collection rates have improvedconsiderably to roughly 60%, both in T'bilisi and throughout theregions. Continued reform in the management of state-owned powerentities is essential to successful privatization and onwardsustainability in this sector. The country is pinning its hopes forlong-term growth on its role as a transit state for pipelines andtrade. The construction on the Baku-T'bilisi-Ceyhan oil pipeline andthe Baku-T'bilisi-Erzerum gas pipeline have brought much-neededinvestment and job opportunities. Nevertheless, high energy priceshave compounded the pressure on the country's inefficient energysector. Restructuring the sector and finding energy supplyalternatives to Russia remain major challenges.
GermanyGermany's affluent and technologically powerful economy -the fifth largest in the world - has become one of the slowestgrowing economies in the euro zone. A quick turnaround is not in theoffing in the foreseeable future; however, stronger growth this yearhas improved employment considerably. Growth in 2001-03 fell shortof 1%, rising to 1.7% in 2004, falling back to 0.9% in 2005, andincreasing to 2.2% in 2006. Unemployment fell to 7.1% in October2006, based on the Internation Labor Organization's measurement. Themodernization and integration of the eastern German economycontinues to be a costly long-term process, with annual transfersfrom west to east amounting to roughly $70 billion. Germany's agingpopulation, combined with high chronic unemployment, has pushedsocial security outlays to a level exceeding contributions fromworkers. Structural rigidities in the labor market - includingstrict regulations on laying off workers and the setting of wages ona national basis - and a lack of competition in the sevice sectorshave made slow growth a chronic problem. Corporate restructuring andgrowing capital markets are setting the foundations that could helpGermany meet the long-term challenges of European economicintegration and globalization; however, the current government hasfailed to pass meaningful economic reform that would improve growthprospects. Higher government revenues from the cyclical upturn in2006 reduced Germany's budget deficit to within the EU's 3% debtlimit.
GhanaWell endowed with natural resources, Ghana has roughly twicethe per capita output of the poorest countries in West Africa. Evenso, Ghana remains heavily dependent on international financial andtechnical assistance. Gold, timber, and cocoa production are majorsources of foreign exchange. The domestic economy continues torevolve around subsistence agriculture, which accounts for 34% ofGDP and employs 60% of the work force, mainly small landholders.Ghana opted for debt relief under the Heavily Indebted Poor Country(HIPC) program in 2002, but was included in a G-8 debt reliefprogram decided upon at the Gleneagles Summit in July 2005.Priorities under its current $38 million Poverty Reduction andGrowth Facility (PRGF) include tighter monetary and fiscal policies,accelerated privatization, and improvement of social services.Receipts from the gold sector helped sustain GDP growth in 2006along with record high prices for Ghana's largest cocoa crop todate. Ghana received a Millennium Challenge Corporation (MCC) grantin 2006, which aims to assist in transforming Ghana's agriculturalexport sector.
GibraltarSelf-sufficient Gibraltar benefits from an extensiveshipping trade, offshore banking, and its position as aninternational conference center. The British military presence hasbeen sharply reduced and now contributes about 7% to the localeconomy, compared with 60% in 1984. The financial sector, tourism(almost 5 million visitors in 1998), shipping services fees, andduties on consumer goods also generate revenue. The financialsector, the shipping sector, and tourism each contribute 25%-30% ofGDP. Telecommunications accounts for another 10%. In recent years,Gibraltar has seen major structural change from a public to aprivate sector economy, but changes in government spending stillhave a major impact on the level of employment.
Glorioso Islandsno economic activity
GreeceGreece has a capitalist economy with the public sectoraccounting for about 40% of GDP and with per capita GDP at least 75%of the leading euro-zone economies. Tourism provides 15% of GDP.Immigrants make up nearly one-fifth of the work force, mainly inmenial jobs. Greece is a major beneficiary of EU aid, equal to about3.3% of annual GDP. The Greek economy grew by nearly 4.0% per yearbetween 2003 and 2006, largely because of an investment boom andinfrastructure upgrades for the 2004 Athens Olympic Games. Greecehas not met the EU's Growth and Stability Pact budget deficitcriteria of 3% of GDP since 2000. Public debt, inflation, andunemployment are above the euro-zone average. To overcome thesechallenges, the Greek Government is expected to continue cuttinggovernment spending, reducing the size of the public sector, andreforming the labor and pension systems, despite vocal oppositionfrom the country's powerful labor unions and the general public.
GreenlandThe economy remains critically dependent on exports offish and substantial support from the Danish Government, whichsupplies about half of government revenues. The public sector,including publicly-owned enterprises and the municipalities, playsthe dominant role in the economy. Despite several interestinghydrocarbon and mineral exploration activities, it will take anumber of years before production can materialize. Tourism is theonly sector offering any near-term potential, and even this islimited due to a short season and high costs.