Chapter LXVIII: Section 3: , telephone 886 (2) 2709-2000, FAX 886 (2) 2702-7675, (3)

British Virgin Islands:
The economy, one of the most stable and
prosperous in the Caribbean, is highly dependent on tourism, which
generates an estimated 45% of the national income. An estimated
350,000 tourists, mainly from the US, visited the islands in 1997.
In the mid-1980s, the government began offering offshore
registration to companies wishing to incorporate in the islands, and
incorporation fees now generate substantial revenues. An estimated
250,000 companies were on the offshore registry by yearend 1997. The
adoption of a comprehensive insurance law in late 1994, which
provides a blanket of confidentiality with regulated statutory
gateways for investigation of criminal offenses, is expected to make
the British Virgin Islands even more attractive to international
business. Livestock raising is the most important agricultural
activity; poor soils limit the islands' ability to meet domestic
food requirements. Because of traditionally close links with the US
Virgin Islands, the British Virgin Islands has used the dollar as
its currency since 1959.

Brunei:
This small, wealthy economy is a mixture of foreign and
domestic entrepreneurship, government regulation and welfare
measures, and village tradition. Exports of crude oil and natural
gas account for over half of GDP. Per capita GDP is far above most
other Third World countries, and substantial income from overseas
investment supplements income from domestic production. The
government provides for all medical services and subsidizes rice and
housing. Brunei's leaders are concerned that steadily increased
integration in the world economy will undermine internal social
cohesion although it became a more prominent player by serving as
chairman for the 2000 APEC (Asian Pacific Economic Cooperation)
forum. Plans for the future include upgrading the labor force,
reducing unemployment, strengthening the banking and tourist
sectors, and, in general, a further widening of the economic base
beyond oil and gas.

Bulgaria:
Bulgaria, a former communist country struggling to enter
the European market economy, suffered a major economic downturn in
1996 and 1997, with triple digit inflation and GDP contraction of
10.6% and 6.9%. The current government - which took office in May
1997 after pre-term parliamentary elections - stabilized the economy
and promoted growth by implementing a currency board, practicing
sound financial policies, invigorating privatization, and pursuing
structural reforms. Additionally, strong assistance from
international financial institutions - most notably the IMF which
approved a three-year Extended Fund Facility worth approximately
$900 million in September 1998 - played a critical role in turning
the economy around. After several years of tumult, Bulgaria's
economy has stabilized. Its better-than-expected economic
performance in 1999 - despite the impact of the Kosovo conflict, the
1998 Russian financial crisis, and structural reforms - and strong
growth in 2000 portends solid growth over the next few years; this
assumes continued fiscal restraint, additional structural reforms,
aid from abroad, and prosperous times in the EU economy.

Burkina Faso:
One of the poorest countries in the world, landlocked
Burkina Faso has a high population density, few natural resources,
and a fragile soil. About 90% of the population is engaged in
(mainly subsistence) agriculture which is highly vulnerable to
variations in rainfall. Industry remains dominated by unprofitable
government-controlled corporations. Following the African franc
currency devaluation in January 1994 the government updated its
development program in conjunction with international agencies, and
exports and economic growth have increased. Maintenance of its
macroeconomic progress in 2001-02 depends on continued low
inflation, reduction in the trade deficit, and reforms designed to
encourage private investment.

Burma:
Burma has a mixed economy with private activity dominant in
agriculture, light industry, and transport, and with substantial
state-controlled activity, mainly in energy, heavy industry, and the
rice trade. Government policy in the 1990s has aimed at revitalizing
the economy after three decades of tight central planning. Private
activity markedly increased in the early to mid-1990s, but began to
decline in the past several years due to frustrations with the
unfriendly business environment and political pressure from western
nations. Published estimates of Burma's foreign trade are greatly
understated because of the volume of black-market, illicit, and
border trade. A major ongoing problem is the failure to achieve
monetary and fiscal stability. Burma remains a poor Asian country
and living standards for the majority have not improved over the
past decade. Short-term growth will continue to be restrained
because of poor government planning and minimal foreign investment.

Burundi:
Burundi is a landlocked, resource-poor country with an
underdeveloped manufacturing sector. The economy is predominantly
agricultural with roughly 90% of the population dependent on
subsistence agriculture. Its economic health depends on the coffee
crop, which accounts for 80% of foreign exchange earnings. The
ability to pay for imports therefore rests largely on the vagaries
of the climate and the international coffee market. Since October
1993 the nation has suffered from massive ethnic-based violence
which has resulted in the death of perhaps 250,000 persons and the
displacement of about 800,000 others. Only one in four children go
to school, and one in nine adults has HIV/AIDS. Foods, medicines,
and electricity remain in short supply.

Cambodia:
Cambodia's economy slowed dramatically in 1997-98 due to
the regional economic crisis, civil violence, and political
infighting. Foreign investment and tourism fell off. In 1999, the
first full year of peace in 30 years, progress was made on economic
reforms and growth resumed at 4%. GDP growth for 2000 had been
projected to reach 5.5%, but the worst flooding in 70 years severely
damaged agricultural crops, and high oil prices hurt industrial
production, and growth for the year is estimated at only 4%. Tourism
is Cambodia's fastest growing industry, with arrivals up 34% in
2000. The long-term development of the economy after decades of war
remains a daunting challenge. The population lacks education and
productive skills, particularly in the poverty-ridden countryside,
which suffers from an almost total lack of basic infrastructure.
Fear of renewed political instability and corruption within the
government discourage foreign investment and delay foreign aid. On
the brighter side, the government is addressing these issues with
assistance from bilateral and multilateral donors.

Cameroon:
Because of its oil resources and favorable agricultural
conditions, Cameroon has one of the best-endowed primary commodity
economies in sub-Saharan Africa. Still, it faces many of the serious
problems facing other underdeveloped countries, such as a top-heavy
civil service and a generally unfavorable climate for business
enterprise. Since 1990, the government has embarked on various IMF
and World Bank programs designed to spur business investment,
increase efficiency in agriculture, improve trade, and recapitalize
the nation's banks. In June 2000, the government completed an
IMF-sponsored, three-year structural adjustment program; however,
the IMF is pressing for more reforms, including increased budget
transparency and privatization. Higher oil prices in 2000 helped to
offset the country's lower cocoa export revenues. A rebound in the
cocoa market should increase growth to over 5% in 2001.

Canada:
As an affluent, high-tech industrial society, Canada today
closely resembles the US in its market-oriented economic system,
pattern of production, and high living standards. Since World War
II, the impressive growth of the manufacturing, mining, and service
sectors has transformed the nation from a largely rural economy into
one primarily industrial and urban. Real rates of growth have
averaged nearly 3.0% since 1993. Unemployment is falling and
government budget surpluses are being partially devoted to reducing
the large public sector debt. The 1989 US-Canada Free Trade
Agreement (FTA) and 1994 North American Free Trade Agreement (NAFTA)
(which included Mexico) have touched off a dramatic increase in
trade and economic integration with the US. With its great natural
resources, skilled labor force, and modern capital plant Canada
enjoys solid economic prospects. Two shadows loom, the first being
the continuing constitutional impasse between English- and
French-speaking areas, which has been raising the possibility of a
split in the federation. Another long-term concern is the flow south
to the US of professional persons lured by higher pay, lower taxes,
and the immense high-tech infrastructure.

Cape Verde:
Cape Verde's low per capita GDP reflects a poor natural
resource base, including serious water shortages exacerbated by
cycles of long-term drought. The economy is service-oriented, with
commerce, transport, and public services accounting for almost 70%
of GDP. Although nearly 70% of the population lives in rural areas,
the share of agriculture in GDP in 1998 was only 13%, of which
fishing accounts for 1.5%. About 90% of food must be imported. The
fishing potential, mostly lobster and tuna, is not fully exploited.
Cape Verde annually runs a high trade deficit, financed by foreign
aid and remittances from emigrants; remittances constitute a
supplement to GDP of more than 20%. Economic reforms, launched by
the new democratic government in 1991, are aimed at developing the
private sector and attracting foreign investment to diversify the
economy. Prospects for 2001 depend heavily on the maintenance of aid
flows, remittances, and the momentum of the government's development
program.

Cayman Islands:
With no direct taxation, the islands are a thriving
offshore financial center. More than 40,000 companies were
registered in the Cayman Islands as of 1997, including almost 600
banks and trust companies; banking assets exceed $500 billion. A
stock exchange was opened in 1997. Tourism is also a mainstay,
accounting for about 70% of GDP and 75% of foreign currency
earnings. The tourist industry is aimed at the luxury market and
caters mainly to visitors from North America. Total tourist arrivals
exceeded 1.2 million visitors in 1997. About 90% of the islands'
food and consumer goods must be imported. The Caymanians enjoy one
of the highest outputs per capita and one of the highest standards
of living in the world.

Central African Republic:
Subsistence agriculture, together with
forestry, remains the backbone of the economy of the Central African
Republic (CAR), with more than 70% of the population living in
outlying areas. The agricultural sector generates half of GDP.
Timber has accounted for about 16% of export earnings and the
diamond industry for nearly 54%. Important constraints to economic
development include the CAR's landlocked position, a poor
transportation system, a largely unskilled work force, and a legacy
of misdirected macroeconomic policies. The 50% devaluation of the
currencies of 14 Francophone African nations on 12 January 1994 had
mixed effects on the CAR's economy. Diamond, timber, coffee, and
cotton exports increased, leading an estimated rise of GDP of 7% in
1994 and nearly 5% in 1995. Military rebellions and social unrest in
1996 were accompanied by widespread destruction of property and a
drop in GDP of 2%. The IMF approved an Extended Structure Adjustment
Facility in 1998 and the World Bank extended further credits in 1999
and approved a $10 million loan in early 2001. The government has
set targets of 3.5% GDP growth in 2001 and 2002. As of January 2001,
many civil servants were owed as much as 30 months pay, leading them
to go on strike and further damaging the economy.

Chad:
Landlocked Chad's economic development suffers from its
geographic remoteness, drought, lack of infrastructure, and
political turmoil. About 85% of the population depends on
agriculture, including the herding of livestock. Of Africa's
Francophone countries, Chad benefited least from the 50% devaluation
of their currencies in January 1994. Financial aid from the World
Bank, the African Development Fund, and other sources is directed
largely at the improvement of agriculture, especially livestock
production. The World Bank's decision to back the Doba oil field
development and the Chad-Cameroon pipeline will add Chad to the
group of already booming West African oil exporters. However, the
rank and file may not benefit much from the oil development projects.

Chile:
Chile has a market-oriented economy characterized by a high
level of foreign trade. During the early 1990s, Chile's reputation
as a role model for economic reform was strengthened when the
democratic government of Patricio AYLWIN - which took over from the
military in 1990 - deepened the economic reform initiated by the
military government. Growth in real GDP averaged 8% during 1991-97,
but fell to half that level in 1998 because of tight monetary
policies implemented to keep the current account deficit in check
and lower export earnings - the latter a product of the global
financial crisis. A severe drought exacerbated the recession in
1999, reducing crop yields and causing hydroelectric shortfalls and
electricity rationing, and Chile experienced negative economic
growth for the first time in more than 15 years. Despite the effects
of the recession, Chile maintained its reputation for strong
financial institutions and sound policy that have given it the
strongest sovereign bond rating in South America. By the end of
1999, exports and economic activity had begun to recover, and growth
rebounded to 5.5% in 2000. Unemployment remains stubbornly high,
however, putting pressure on President LAGOS to improve living
standards. Meanwhile, Chile has launched free trade negotiations
with the US.

China:
In late 1978 the Chinese leadership began moving the economy
from a sluggish Soviet-style centrally planned economy to a more
market-oriented system. Whereas the system operates within a
political framework of strict Communist control, the economic
influence of non-state managers and enterprises has been steadily
increasing. The authorities have switched to a system of household
responsibility in agriculture in place of the old collectivization,
increased the authority of local officials and plant managers in
industry, permitted a wide variety of small-scale enterprise in
services and light manufacturing, and opened the economy to
increased foreign trade and investment. The result has been a
quadrupling of GDP since 1978. In 2000, with its 1.26 billion people
but a GDP of just $3,600 per capita, China stood as the second
largest economy in the world after the US (measured on a purchasing
power parity basis). Agricultural output doubled in the 1980s, and
industry also posted major gains, especially in coastal areas near
Hong Kong and opposite Taiwan, where foreign investment helped spur
output of both domestic and export goods. On the darker side, the
leadership has often experienced in its hybrid system the worst
results of socialism (bureaucracy and lassitude) and of capitalism
(windfall gains and stepped-up inflation). Beijing thus has
periodically backtracked, retightening central controls at
intervals. The government has struggled to (a) collect revenues due
from provinces, businesses, and individuals; (b) reduce corruption
and other economic crimes; and (c) keep afloat the large state-owned
enterprises many of which had been shielded from competition by
subsides and had been losing the ability to pay full wages and
pensions. From 80 to 120 million surplus rural workers are adrift
between the villages and the cities, many subsisting through
part-time low-paying jobs. Popular resistance, changes in central
policy, and loss of authority by rural cadres have weakened China's
population control program, which is essential to maintaining growth
in living standards. Another long-term threat to continued rapid
economic growth is the deterioration in the environment, notably air
pollution, soil erosion, and the steady fall of the water table
especially in the north. China continues to lose arable land because
of erosion and economic development. Weakness in the global economy
in 2001 could hamper growth in exports. Beijing will intensify
efforts to stimulate growth through spending on infrastructure--such
as water control and power grids--and poverty relief and through
rural tax reform aimed at eliminating arbitrary local levies on
farmers.

Christmas Island:
Phosphate mining had been the only significant
economic activity, but in December 1987 the Australian Government
closed the mine. In 1991, the mine was reopened by union workers.
With the support of the government, Australian-based Casinos Austria
International Ltd. built a $34 million casino on Christmas Island,
which opened in 1993. As of yearend 1999, gaming facilities at the
casino were temporarily closed but were expected to reopen in early
2000. Another economic prospect is the possible location of a
space-launching site on the island.

Clipperton Island:
Although 115 species of fish have been identified
in the territorial waters of Clipperton Island, the only economic
activity is tuna fishing.

Cocos (Keeling) Islands:
Grown throughout the islands, coconuts are
the sole cash crop. Copra and fresh coconuts are the major export
earners. Small local gardens and fishing contribute to the food
supply, but additional food and most other necessities must be
imported from Australia.

Colombia:
Colombia is poised for muted growth in the next several
years, marking continued recovery from the severe 1999 recession
when GDP fell by about 4%. President PASTRANA's well-respected
economic team is working to keep the economy on track, maintaining
low interest rates, for example. In accordance with its IMF loan
agreement, the administration also is taking steps to improve the
public sector's fiscal health. However, many challenges to improved
prosperity remain. Unemployment was stuck at a record 20% in 2000,
contributing to the extreme inequality in income distribution. Two
of Colombia's leading exports, oil and coffee, face an uncertain
future; new exploration is needed to offset declining oil
production, while coffee harvests and prices are depressed. The lack
of public security is a key concern for investors, making progress
in the government's peace negotiations with insurgent groups an
important driver of economic performance. Colombia is looking for
continued support from the international community to boost economic
and peace prospects.

Comoros:
One of the world's poorest countries, Comoros is made up of
three islands that have inadequate transportation links, a young and
rapidly increasing population, and few natural resources. The low
educational level of the labor force contributes to a subsistence
level of economic activity, high unemployment, and a heavy
dependence on foreign grants and technical assistance. Agriculture,
including fishing, hunting, and forestry, is the leading sector of
the economy. It 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, the main staple, accounts
for the bulk of imports. The government is struggling to upgrade
education and technical training, to privatize commercial and
industrial enterprises, to improve health services, to diversify
exports, to promote tourism, and to reduce the high population
growth rate. Continued foreign support is essential if the goal of
4% annual GDP growth is to be met. Remittances from 150,000 Comorans
abroad help supplement GDP.

Congo, Democratic Republic of the:
The economy of the Democratic
Republic of the Congo - a nation endowed with vast potential wealth
- has declined drastically since the mid-1980s. The new government
instituted a tight fiscal policy that initially curbed inflation and
currency depreciation, but these small gains were quickly reversed
when the foreign-backed rebellion in the eastern part of the country
began in August 1998. The war has dramatically reduced national
output and government revenue and has increased external debt.
Foreign businesses have curtailed operations due to uncertainty
about the outcome of the conflict and because of increased
government harassment and restrictions. The war has intensified the
impact of such basic problems as an uncertain legal framework,
corruption, raging inflation, and lack of openness in government
economic policy and financial operations. A number of IMF and World
Bank missions have met with the government to help it develop a
coherent economic plan but associated reforms are on hold.

Congo, Republic of the:
The economy is a mixture of village
agriculture and handicrafts, an industrial sector based largely on
oil, support services, and a government characterized by budget
problems and overstaffing. Oil has supplanted forestry as the
mainstay of the economy, providing a major share of government
revenues and exports. In the early 1980s, rapidly rising oil
revenues enabled the government to finance large-scale development
projects with GDP growth averaging 5% annually, one of the highest
rates in Africa. Moreover, the government has mortgaged a
substantial portion of its oil earnings, contributing to the
government's shortage of revenues. The 12 January 1994 devaluation
of Franc Zone currencies by 50% resulted in inflation of 61% in
1994, but inflation has subsided since. Economic reform efforts
continued with the support of international organizations, notably
the World Bank and the IMF. The reform program came to a halt in
June 1997 when civil war erupted. Denis SASSOU-NGUESSO, who returned
to power when the war ended in October 1997, publicly expressed
interest in moving forward on economic reforms and privatization and
in renewing cooperation with international financial institutions.
However, economic progress was badly hurt by slumping oil prices and
the resumption of armed conflict in December 1998, which worsened
the Republic of the Congo's budget deficit. Even with the IMF's
renewed confidence and high world oil prices, Congo is unlikely to
realize growth of more than 5% in 2001-02. With the return to
fragile peace, the IMF approved a $14 million credit in November
2000 to aid post-conflict reconstruction.

Cook Islands:
Like many other South Pacific island nations, the Cook
Islands' economic development is hindered by the isolation of the
country from foreign markets, the limited size of domestic markets,
lack of natural resources, periodic devastation from natural
disasters, and inadequate infrastructure. Agriculture provides the
economic base with major exports made up of copra and citrus fruit.
Manufacturing activities are limited to fruit processing, clothing,
and handicrafts. Trade deficits are made up for by remittances from
emigrants and by foreign aid, overwhelmingly from New Zealand. In
the 1980s and 1990s, the country lived beyond its means, maintaining
a bloated public service and accumulating a large foreign debt.
Subsequent reforms, including the 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 Islands:
no economic activity

Costa Rica:
Costa Rica's basically stable economy depends on
tourism, agriculture, and electronics exports. Poverty has been
substantially reduced over the past 15 years, and a strong social
safety net has been put into place. Foreign investors remain
attracted by the country's political stability and high education
levels, and tourism continues to bring in foreign exchange. However,
traditional export sectors have not kept pace. Low coffee prices and
an overabundance of bananas have hurt the agricultural sector. The
government continues to grapple with its large deficit and massive
internal debt and with the need to modernize the state-owned
electricity and telecommunications sector.

Cote d'Ivoire:
Cote d'Ivoire is among the world's largest producers
and exporters of coffee, cocoa beans, and palm oil. Consequently,
the economy is highly sensitive to fluctuations in international
prices for these products and to weather conditions. Despite
government attempts to diversify the economy, it is still largely
dependent on agriculture and related activities, which engage
roughly 68% of the population. After several years of lagging
performance, the Ivorian economy began a comeback in 1994, due to
the 50% devaluation of the CFA franc and improved prices for cocoa
and coffee, growth in nontraditional primary exports such as
pineapples and rubber, limited trade and banking liberalization,
offshore oil and gas discoveries, and generous external financing
and debt rescheduling by multilateral lenders and France. Moreover,
government adherence to donor-mandated reforms led to a jump in
growth to 5% annually in 1996-99. Growth was negative in 2000
because of the difficulty of meeting the conditions of international
donors, continued low prices of key exports, and post-coup
instability. In 2001-02, a moderate rebound in the cocoa market
could boost growth back above 3%; however, political instability
could impede growth again.

Croatia:
Before the dissolution of Yugoslavia, the Republic of
Croatia, after Slovenia, was the most prosperous and industrialized
area, with a per capita output perhaps one-third above the Yugoslav
average. Croatia faces considerable economic problems stemming from:
the legacy of longtime communist mismanagement of the economy;
damage during the internecine fighting to bridges, factories, power
lines, buildings, and houses; the large refugee and displaced
population, both Croatian and Bosnian; and the disruption of
economic ties. Stepped-up Western aid and investment, especially in
the tourist and oil industries, would help bolster the economy. The
economy emerged from its mild recession in 2000 with tourism the
main factor. Massive unemployment remains a key negative element.
The government's failure to press the economic reforms needed to
spur growth is largely the result of coalition politics and public
resistance, particularly from the trade unions, to measures that
would cut jobs, wages, or social benefits.

Cuba:
The government, the primary player in the economy, has
undertaken limited reforms in recent years to stem excess liquidity,
increase enterprise efficiency, and alleviate serious shortages of
food, consumer goods, and services, but prioritizing of political
control makes extensive reforms unlikely. Living standards for the
average Cuban, without access to dollars, remain at a depressed
level compared with 1990. The liberalized farmers' markets
introduced in 1994, sell above-quota production at market prices,
expand legal consumption alternatives, and reduce black market
prices. Income taxes and increased regulations introduced since 1996
have sharply reduced the number of legally self-employed from a high
of 208,000 in January 1996. Havana announced in 1995 that GDP
declined by 35% during 1989-93 as a result of lost Soviet aid and
domestic inefficiencies. The slide in GDP came to a halt in 1994
when Cuba reported growth in GDP of 0.7%. Cuba reported that GDP
increased by 2.5% in 1995 and 7.8% in 1996, before slowing down in
1997 and 1998 to 2.5% and 1.2% respectively. Growth recovered with a
6.2% increase in GDP in 1999 and a 5.6% increase in 2000. Much of
Cuba's recovery can be attributed to tourism revenues and foreign
investment. Growth in 2001 should continue at the same level as the
government balances the need for economic loosening against its
concern for firm political control.

Cyprus:
Economic affairs are affected by the division of the
country. The Greek Cypriot economy is prosperous but highly
susceptible to external shocks. Erratic growth rates in the 1990s
reflect the economy's vulnerability to swings in tourist arrivals,
caused by political instability on the island and fluctuations in
economic conditions in Western Europe. Economic policy is focused on
meeting the criteria for admission to the EU. As in the Turkish
sector, water shortage is a growing problem, and several
desalination plants are planned. The Turkish Cypriot economy has
about one-fifth the population and one-third the per capita GDP of
the south. Because it is recognized only by Turkey, it has had much
difficulty arranging foreign financing, and foreign firms have
hesitated to invest there. It remains heavily dependent on
agriculture and government service, which together employ about half
of the work force. Moreover, the small, vulnerable economy has
suffered because the Turkish lira is legal tender. To compensate for
the economy's weakness, Turkey provides direct and indirect aid to
tourism, education, industry, etc.

Czech Republic:
Basically one of the most stable and prosperous of
the post-Communist states, the Czech Republic has been recovering
from recession since mid-1999. The economy grew about 2.5% in 2000
and should achieve somewhat higher growth in 2001. Growth is led by
exports to the EU, especially Germany, and foreign investment, while
domestic demand is reviving. Uncomfortably high fiscal and current
account deficits could be future problems. Unemployment is down to
8.7% as job creation continues in the rebounding economy; inflation
is up to 3.8% but still moderate. The EU put the Czech Republic just
behind Poland and Hungary in preparations for accession, which will
give further impetus and direction to structural reform. Moves to
complete banking, telecommunications and energy privatization will
add to foreign investment, while intensified restructuring among
large enterprises and banks and improvements in the financial sector
should strengthen output growth.

Denmark:
This thoroughly modern market economy features high-tech
agriculture, up-to-date small-scale and corporate industry,
extensive government welfare measures, comfortable living standards,
and high dependence on foreign trade. Denmark is a net exporter of
food and energy and has a comfortable balance of payments surplus.
The center-left coalition government has reduced the formerly high
unemployment rate and attained a budget surplus as well as followed
the previous government's policies of maintaining low inflation and
a stable currency. The coalition has lowered marginal income tax
rates and raised environmental taxes thus maintaining overall tax
revenues. Problems of bottlenecks, and longer term demographic
changes reducing the labor force, are being addressed through labor
market reforms. The government has been successful in meeting, and
even exceeding, the economic convergence criteria for participating
in the third phase (a common European currency) of the European
Monetary Union (EMU), but Denmark, in a September 2000 referendum,
reconfirmed its decision not to join the 11 other EU members in the
euro. Even so, the Danish currency remains pegged to the euro.

Djibouti:
The economy is based on service activities connected with
the country's strategic location and status as a free trade zone in
northeast Africa. Two-thirds of the inhabitants live in the capital
city, the remainder being mostly nomadic herders. Scanty rainfall
limits crop production to fruits and vegetables, and most food must
be imported. Djibouti provides services as both a transit port for
the region and an international transshipment and refueling center.
It has few natural resources and little industry. The nation is,
therefore, heavily dependent on foreign assistance to help support
its balance of payments and to finance development projects. An
unemployment rate of 40% to 50% continues to be a major problem.
Inflation is not a concern, however, because of the fixed tie of the
franc to the US dollar. Per capita consumption dropped an estimated
35% over the last seven years because of recession, civil war, and a
high population growth rate (including immigrants and refugees).
Faced with a multitude of economic difficulties, the government has
fallen in arrears on long-term external debt and has been struggling
to meet the stipulations of foreign aid donors. The year 2001 will
see only small growth as port activity should decrease now that
Ethiopia has more trade route options.

Dominica:
The economy depends on agriculture and is highly
vulnerable to climatic conditions, notably tropical storms.
Agriculture, primarily bananas, accounts for 21% of GDP and employs
40% of the labor force. Development of the tourist industry remains
difficult because of the rugged coastline, lack of beaches, and the
lack of an international airport. Hurricane Luis devastated the
country's banana crop in September 1995; tropical storms had wiped
out one-quarter of the crop in 1994 as well. The subsequent recovery
has been fueled by increases in construction, soap production, and
tourist arrivals. The government is attempting to develop an
offshore financial industry in order to diversify the island's
production base.

Dominican Republic:
The Dominican economy experienced dramatic
growth over the last decade, even though the economy was hit hard by
Hurricane Georges in 1998. Although the country has long been viewed
primarily as an exporter of sugar, coffee, and tobacco, in recent
years the service sector has overtaken agriculture as the economy's
largest employer, due to growth in tourism and free trade zones. The
country suffers from marked income inequality; the poorest half of
the population receives less than one-fifth of GNP, while the
richest ten percent enjoy 40% of national income. In December 2000,
the new MEJIA administration passed broad new tax legislation which
it hopes will provide enough revenue to offset rising oil prices and
to service foreign debt.

Ecuador:
Ecuador has substantial oil resources and rich agricultural
areas. Because the country exports primary products such as oil,
bananas, and shrimp, fluctuations in world market prices can have a
substantial domestic impact. Ecuador joined the World Trade
Organization in 1996, but has failed to comply with many of its
accession commitments. In recent years, growth has been uneven due
to ill-conceived fiscal stabilization measures. The aftermath of El
Nino and depressed oil market of 1997-98 drove Ecuador's economy
into a free-fall in 1999. The beginning of 1999 saw the banking
sector collapse, which helped precipitate an unprecedented default
on external loans later that year. Continued economic instability
drove a 70% depreciation of the currency throughout 1999, which
eventually forced a desperate government to "dollarize" the currency
regime in 2000. The move stabilized the currency, but did not stave
off the ouster of the government. The new president, Gustavo NOBOA
has yet to complete negotiations for a long sought IMF accord. He
will find it difficult to push through the reforms necessary to make
"dollarization" work in the long run.

Egypt:
A series of IMF arrangements - along with massive external
debt relief resulting from Egypt's participation in the Gulf war
coalition - helped Egypt improve its macroeconomic performance
during the 1990s. Sound fiscal and monetary policies through the
mid-1990s helped to tame inflation, slash budget deficits, and build
up foreign reserves, while structural reforms such as privatization
and new business legislation prompted increased foreign investment.
By mid-1998, however, the pace of structural reform slackened, and
lower combined hard currency earnings resulted in pressure on the
Egyptian pound and sporadic US dollar shortages. External payments
were not in crisis, but Cairo's attempts to curb demand for foreign
exchange convinced some investors and currency traders that
government financial operations lacked transparency and
coordination. Monetary pressures have since eased, however, with the
1999-2000 higher oil prices, a rebound in tourism, and a series of
mini-devaluations of the pound. The development of a gas export
market is a major plus factor in future growth.

El Salvador:
El Salvador is a struggling Central American economy
which has been suffering from a weak tax collection system, factory
closings, the aftermaths of Hurricane Mitch of 1998 and the
devastating earthquakes of early 2001, and weak world coffee prices.
On the bright side, in recent years inflation has fallen to single
digit levels, and total exports have grown substantially. The trade
deficit has been offset by remittances (an estimated $1.6 billion in
2000) from Salvadorans living abroad and by external aid. As of 1
January 2001, the US dollar was made legal tender alongside the
colon.

Equatorial Guinea:
The discovery and exploitation of large oil
reserves have contributed to dramatic economic growth in recent
years. Forestry, farming, and fishing are also major components of
GDP. Subsistence farming predominates. Although pre-independence
Equatorial Guinea counted on cocoa production for hard currency
earnings, the deterioration of the rural economy under successive
brutal regimes has diminished potential for agriculture-led growth.
A number of aid programs sponsored by the World Bank and the IMF
have been cut off since 1993 because of the government's gross
corruption and mismanagement. Businesses, for the most part, are
owned by government officials and their family members. Undeveloped
natural resources include titanium, iron ore, manganese, uranium,
and alluvial gold. The country responded favorably to the
devaluation of the CFA franc in January 1994. Boosts in production
and high world oil prices stimulated growth in 2000, with oil
accounting for 90% of greatly increased exports.

Eritrea:
With independence from Ethiopia on 24 May 1993, Eritrea
faced the economic problems of a small, desperately poor country.
The economy is largely based on subsistence agriculture, with 80% of
the population involved in farming and herding. The small industrial
sector consists mainly of light industries with outmoded
technologies. Domestic output (GDP) is substantially augmented by
worker remittances from abroad. Government revenues come from custom
duties and taxes on income and sales. Road construction is a top
domestic priority. In the long term, Eritrea may benefit from the
development of offshore oil, offshore fishing, and tourism.
Eritrea's economic future depends on its ability to master
fundamental social and economic problems, e.g., by reducing
illiteracy, promoting job creation, expanding technical training,
attracting foreign investment, and streamlining the bureaucracy.
Eritrea's agriculture over the last two years was severely weakened
by war and drought, and many farmlands must wait to be demined.
Another major difficulty is the ports, which prior to the war were
Ethiopia's preferred outlets but since have seen trade dry up.

Estonia:
In 2000, Estonia rebounded from the Russian financial
crisis by scaling back its budget and reorienting trade away from
Russian markets into EU member states. After GDP shrank 1.1% in
1999, the economy made a strong recovery in 2000, with growth
estimated at 6.4% - the highest in Central and Eastern Europe.
Estonia joined the World Trade Organization in November 1999 - the
second Baltic state to join - and continues its EU accession talks.
For 2001, Estonians predict GDP to grow around 6%, inflation of
between 4.2%-5.3%, and a balanced budget. Substantial gains were
made in completing privatization of Estonia's few remaining large,
state-owned companies in 2000, and this momentum is expected to
continue in 2001. Estonia hopes to join the EU during the next round
of enlargement tentatively set for 2004.

Ethiopia:
Ethiopia's economy is based on agriculture, which accounts
for half of GDP, 90% of exports, and 80% of total employment. The
agricultural sector suffers from frequent periods of drought and
poor cultivation practices, and as many as 4.6 million people need
food assistance annually. Coffee is critical to the Ethiopian
economy, and Ethiopia earned $267 million in 1999 by exporting
105,000 metric tons. According to current estimates, coffee
contributes 10% of Ethiopia's GDP. More than 15 million people (25%
of the population) derive their livelihood from the coffee sector.
Other exports include live animals, hides, gold, and qat. In
December 1999, Ethiopia signed a $1.4 billion joint venture deal to
develop a huge natural gas field in the Somali Regional State. The
war with Eritrea forced the government to spend scarce resources on
the military and to scale back ambitious development plans. Foreign
investment has declined significantly. Government taxes imposed in
late 1999 to raise money for the war depressed an already weak
economy. The war forced the government to improve roads and other
parts of the previously neglected infrastructure, but only certain
regions of the nation benefited. Recovery from the war is mostly
contingent on natural factors. A drought has continued into the end
of 2000 and food relief is expected to be needed through mid-2001 at
least. Ethiopia may receive Highly Indebted Poor Countries (HIPC)
debt relief by the end of the year.

Europa Island:
no economic activity

Falkland Islands (Islas Malvinas):
The economy was formerly based on
agriculture, mainly sheep farming, but today fishing contributes the
bulk of economic activity. In 1987 the government began selling
fishing licenses to foreign trawlers operating within the Falklands
exclusive fishing zone. These license fees total more than $40
million per year, which goes to support the island's health,
education, and welfare system. Squid accounts for 75% of the fish
taken. Dairy farming supports domestic consumption; crops furnish
winter fodder. Exports feature shipments of high-grade wool to the
UK and the sale of postage stamps and coins. To encourage tourism,
the Falkland Islands Development Corporation has built three lodges
for visitors attracted by the abundant wildlife and trout fishing.
The islands are now self-financing except for defense. The British
Geological Survey announced a 200-mile oil exploration zone around
the islands in 1993, and early seismic surveys suggest substantial
reserves capable of producing 500,000 barrels per day; to date no
exploitable site has been identified. An agreement between Argentina
and the UK in 1995 seeks to defuse licensing and sovereignty
conflicts that would dampen foreign interest in exploiting potential
oil reserves.

Faroe Islands:
The Faroese economy has had a strong performance
since 1994, mostly as a result of increasing fish landings and high
and stable export prices. Unemployment is falling and there are
signs of labor shortages in several sectors. The positive economic
development has helped the Faroese Home Rule Government produce
increasing budget surpluses which in turn help to reduce the large
public debt, most of it owed to Denmark. However, the total
dependence on fishing makes the Faroese economy extremely
vulnerable, and the present fishing efforts appear in excess of what
is required to ensure a sustainable level of fishing in the long
term. Oil finds close to the Faroese area give hope for deposits in
the immediate Faroese area, which may eventually lay the basis for a
more diversified economy and thus less dependence on Denmark and
Danish economic assistance. Aided by a substantial annual subsidy
(15% of GDP) from Denmark, the Faroese have a standard of living not
far below the Danes and other Scandinavians.

Fiji:
Fiji, endowed with forest, mineral, and fish resources, is one
of the most developed of the Pacific island economies, though still
with a large subsistence sector. Sugar exports and a growing tourist
industry are the major sources of foreign exchange. Sugar processing
makes up one-third of industrial activity. Roughly 300,000 tourists
visit each year, including thousands of Americans following the
start of regularly scheduled non-stop air service from Los Angeles.
Fiji's growth slowed in 1997 because the sugar industry suffered
from low world prices and rent disputes between farmers and
landowners. Drought in 1998 further damaged the sugar industry, but
its recovery in 1999 contributed to robust GDP growth. Long-term
problems include low investment and uncertain property rights. The
political turmoil in Fiji has had a severe impact with the economy
shrinking by 8% in 1999 and over 7,000 people losing their jobs. The
interim government's 2001 budget is an attempt to attract foreign
investment and restart economic activity. The government's ability
to manage the budget and fulfill predictions of 4% growth for 2001
will depend on a return to stability, a regaining of investor
confidence, and the absence of international sanctions (which could
cripple Fiji's sugar and textile industry).

Finland:
Finland has a highly industrialized, largely free-market
economy, 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, and
electronics industries. Trade is important, with exports equaling
more than one-third of GDP. Except for timber and several minerals,
Finland depends on imports of raw materials, energy, and some
components for manufactured goods. Because of the climate,
agricultural development is limited to maintaining self-sufficiency
in basic products. Forestry, an important export earner, provides a
secondary occupation for the rural population. Rapidly increasing
integration with Western Europe - Finland was one of the 11
countries joining the euro monetary system (EMU) on 1 January 1999 -
will dominate the economic picture over the next several years.
Growth in 2001 will be bolstered by strong private consumption, yet
may be 1 or 2 points lower than in 2000, largely because of a
weakening in export demand.

France:
France is in the midst of transition, from an economy that
featured extensive government ownership and intervention to one that
relies more on market mechanisms. The government remains dominant in
some sectors, particularly power, public transport, and defense
industries, but it has been relaxing its control since the
mid-1980s. The Socialist-led government has sold off part of its
holdings in France Telecom, Air France, Thales, Thomson Multimedia,
and the European Aerospace and Defense Company (EADS). The
telecommunications sector is gradually being opened to competition.
France's leaders remain committed to a capitalism in which they
maintain social equity by means of laws, tax policies, and social
spending that reduce income disparity and the impact of free markets
on public health and welfare. The government has done little to cut
generous unemployment and retirement benefits which impose a heavy
tax burden and discourage hiring. It has also shied from measures
that would dramatically increase the use of stock options and
retirement investment plans; such measures would boost the stock
market and fast-growing IT firms as well as ease the burden on the
pension system, but would disproportionately benefit the rich. In
addition to the tax burden, the reduction of the work week to
35-hours has drawn criticism for lowering the competitiveness of
French companies.

French Guiana:
The economy is tied closely to that of France through
subsidies and imports. Besides the French space center at Kourou,
fishing and forestry are the most important economic activities. The
large reserves of tropical hardwoods, not fully exploited, support
an expanding sawmill industry which provides sawn logs for export.
Cultivation of crops is limited to the coastal area, where the
population is largely concentrated; rice and manioc are the major
crops. French Guiana is heavily dependent on imports of food and
energy. Unemployment is a serious problem, particularly among
younger workers.

French Polynesia:
Since 1962, when France stationed military
personnel in the region, French Polynesia has changed from a
subsistence economy to one in which a high proportion of the work
force is either employed by the military or supports the tourist
industry. Tourism accounts for about one-fourth of GDP and is a
primary source of hard currency earnings. The small manufacturing
sector primarily processes agricultural products. The territory
benefited from a five-year (1994-98) development agreement with
France aimed principally at creating new jobs.

French Southern and Antarctic Lands:
Economic activity is limited to
servicing meteorological and geophysical research stations and
French and other fishing fleets. The fish catches landed on Iles
Kerguelen by foreign ships are exported to France and Reunion.

Gabon:
Gabon enjoys a per capita income four times that of most
nations of sub-Saharan Africa. This has supported a sharp decline in
extreme poverty; yet because of high income inequality a large
proportion of the population remains poor. Gabon depended on timber
and manganese until oil was discovered offshore in the early 1970s.
The oil sector now accounts for 50% of GDP. Gabon continues to face
fluctuating prices for its oil, timber, manganese, and uranium
exports. Despite the abundance of natural wealth, the economy is
hobbled by poor fiscal management. In 1992, the fiscal deficit
widened to 2.4% of GDP, and Gabon failed to settle arrears on its
bilateral debt, leading to a cancellation of rescheduling agreements
with official and private creditors. Devaluation of its Francophone
currency by 50% on 12 January 1994 sparked a one-time inflationary
surge, to 35%; the rate dropped to 6% in 1996. The IMF provided a
one-year standby arrangement in 1994-95, a three-year Enhanced
Financing Facility (EFF) at near commercial rates beginning in late
1995, and stand-by credit of $119 million in October 2000. Those
agreements mandate progress in privatization and fiscal discipline.
France provided additional financial support in January 1997 after
Gabon had met IMF targets for mid-1996. In 1997, an IMF mission to
Gabon criticized the government for overspending on off-budget
items, overborrowing from the central bank, and slipping on its
schedule for privatization and administrative reform. The rebound of
oil prices in 1999-2000 helped growth, but drops in production
hampered Gabon from fully realizing potential gains. An expected
decline in oil output may lead to contraction in GDP in 2001-02.

Gambia, The:
The Gambia has no important mineral or other natural
resources and has a limited agricultural base. About 75% of the
population depends on crops and livestock for its livelihood.
Small-scale manufacturing activity features the processing of
peanuts, fish, and hides. Reexport trade normally constitutes a
major segment of economic activity, but a 1999 government-imposed
preshipment inspection plan, instability of the Gambian dalasi, and
the stable political situation in Senegal have drawn some of the
reexport trade away from Banjul. The government's 1998 seizure of
the private peanut firm Alimenta eliminated the largest purchaser of
Gambian groundnuts; the following two marketing seasons have seen
significantly lower prices and sales. A decline in tourism from 1999
to 2000 has also held back growth. Unemployment and underemployment
rates are extremely high. Shortrun economic progress remains highly
dependent on sustained bilateral and multilateral aid, on
responsible government economic management as forwarded by IMF
technical help and advice, and on expected growth in the
construction sector.

Gaza Strip:
Economic output in the Gaza Strip - which comes under
the responsibility of the Palestinian Authority since the Cairo
Agreement of May 1994 - declined perhaps one-third between 1992 and
1996. The downturn was largely the result of Israeli closure
policies - the imposition of generalized border closures in response
to security incidents in Israel - which disrupted previously
established labor and commodity market relationships between Israel
and the WBGS (West Bank and Gaza Strip). The most serious negative
social effect of this downturn was the emergence of high
unemployment; unemployment in the WBGS during the 1980s was
generally under 5%; by 1995 it had risen to over 20%. Since 1997
Israel's use of comprehensive closures has decreased and, in 1998,
Israel implemented new policies to reduce the impact of closures and
other security procedures on the movement of Palestinian goods and
labor. These changes fueled an almost three-year long economic
recovery in the West Bank and Gaza Strip; real GDP grew by 5% in
1998 and 6% in 1999. Recovery was upended in the last quarter of
2000 with the outbreak of Palestinian violence, which triggered
tight Israeli closures of Palestinian self-rule areas and a severe
disruption of trade and labor movements.

Georgia:
Georgia's economy has traditionally revolved around Black
Sea tourism; cultivation of citrus fruits, tea, and grapes; mining
of manganese and copper; and output of a small industrial sector
producing wine, metals, machinery, chemicals, and textiles. The
country imports the bulk of its energy needs, including natural gas
and oil products. Its only sizable internal energy resource is
hydropower. Despite the severe damage the economy has suffered due
to civil strife, Georgia, with the help of the IMF and World Bank,
has made substantial economic gains since 1995, increasing GDP
growth and slashing inflation. The Georgian economy continues to
experience large budget deficits due to a failure to collect tax
revenues. Georgia also still suffers from energy shortages; it
privatized the distribution network in 1998, and deliveries are
steadily improving. The country is pinning its hopes for long-term
recovery on the development of an international transportation
corridor through the key Black Sea ports of P'ot'i and Bat'umi. The
growing trade deficit, continuing problems with tax evasion and
corruption, and political uncertainties cloud the short-term
economic picture.

Germany:
Germany possesses the world's third most technologically
powerful economy after the US and Japan, but structural market
rigidities - including the substantial non-wage costs of hiring new
workers - have made unemployment a long-term, not just a cyclical,
problem. Germany's aging population, combined with high
unemployment, has pushed social security outlays to a level
exceeding contributions from workers. The modernization and
integration of the eastern German economy remains a costly long-term
problem, with annual transfers from western Germany amounting to
roughly $70 billion. Growth picked up to 3% in 2000, largely due to
recovering global demand; newly passed business and income tax cuts
are expected to keep growth strong in 2001. Corporate restructuring
and growing capital markets are transforming the German economy to
meet the challenges of European economic integration and
globalization in general.

Ghana:
Well endowed with natural resources, Ghana has twice the per
capita output of the poorer countries in West Africa. Even so, Ghana
remains heavily dependent on international financial and technical
assistance. Gold, timber, and cocoa production are major sources of
foreign exchange. The domestic economy continues to revolve around
subsistence agriculture, which accounts for 36% of GDP and employs
60% of the work force, mainly small landholders. In 1995-97, Ghana
made mixed progress under a three-year structural adjustment program
in cooperation with the IMF. On the minus side, public sector wage
increases and regional peacekeeping commitments have led to
continued inflationary deficit financing, depreciation of the cedi,
and rising public discontent with Ghana's austerity measures.
Political uncertainty and a depressed cocoa market led to
disappointing growth in 2000. A rebound in the cocoa market should
push growth over 4% in 2001-02.

Gibraltar:
Gibraltar benefits from an extensive shipping trade,
offshore banking, and its position as an international conference
center. The British military presence has been sharply reduced and
now contributes about 11% to the local economy. The financial sector
accounts for 20% of GDP; tourism (almost 6 million visitors in
1998), shipping services fees, and duties on consumer goods also
generate revenue. In recent years, Gibraltar has seen major
structural change from a public to a private sector economy, but
changes in government spending still have a major impact on the
level of employment.

Glorioso Islands:
no economic activity

Greece:
Greece has a mixed capitalist economy with the public sector
accounting for about half of GDP. Tourism is a key industry,
providing a large portion of GDP and foreign exchange earnings.
Greece is a major beneficiary of EU aid, equal to about 4% of GDP.
The economy has improved steadily over the last few years, as the
government has tightened policy in the run-up to Greece's entry into
the EU's Economic and Monetary Union (EMU) on 1 January 2001. In
particular, Greece has cut its budget deficit to below 1% of GDP and
tightened monetary policy, with the result that inflation fell from
20% in 1990 to 3.1% in 2000. Major challenges remaining include the
reduction of unemployment and further restructuring of the economy,
including the privatization of some leading state enterprises.
Growth, 3.8% in 2000, may fall off to 3%-3.5% in 2001.

Greenland:
The economy remains critically dependent on exports of
fish and substantial support from the Danish Government, which
supplies about half of government revenues. The public sector,
including publicly owned enterprises and the municipalities, plays
the dominant role in the economy. Despite several interesting
hydrocarbon and minerals exploration activities, it will take
several years before production can materialize. Tourism is the only
sector offering any near-term potential, and even this is limited
due to a short season and high costs.

Grenada:
In this island economy progress in fiscal reforms and
prudent macroeconomic management have kept annual growth steady
since 1998. The increase in economic activity has been led by
construction and trade. Tourist facilities are being expanded;
tourism is the leading foreign exchange earner. Major short-term
concerns are the rising fiscal deficit and the deterioration in the
external account balance. Grenada shares a common central bank and a
common currency with seven other members of the Organization of
Eastern Caribbean States (OECS).