Chapter CV: Section 3: , Taipei, Taiwan, telephone: 886 (2) 2162-2000, FAX (41)

Saint Lucia
Changes in the EU import preference regime and the
increased competition from Latin American bananas have made economic
diversification increasingly important in Saint Lucia. The island
nation has been able to attract foreign business and investment,
especially in its offshore banking and tourism industries. The
manufacturing sector is the most diverse in the Eastern Caribbean
area, and the government is trying to revitalize the banana
industry. Economic fundamentals remain solid.

Saint Pierre and Miquelon
The inhabitants have traditionally earned
their livelihood by fishing and by servicing fishing fleets
operating off the coast of Newfoundland. The economy has been
declining, however, because of disputes with Canada over fishing
quotas and a steady decline in the number of ships stopping at Saint
Pierre. In 1992, an arbitration panel awarded the islands an
exclusive economic zone of 12,348 sq km to settle a longstanding
territorial dispute with Canada, although it represents only 25% of
what France had sought. The islands are heavily subsidized by France
to the great betterment of living standards. The government hopes an
expansion of tourism will boost economic prospects. Recent test
drilling for oil may pave the way for development of the energy
sector.

Saint Vincent and the Grenadines
Economic growth in this
lower-middle-income country hinges upon seasonal variations in the
agricultural and tourism sectors. Tropical storms wiped out
substantial portions of crops in 1994, 1995, and 2002, and tourism
in the Eastern Caribbean has suffered low arrivals following 11
September 2001. Saint Vincent is home to a small offshore banking
sector and has moved to adopt international regulatory standards.
Saint Vincent is also a large producer of marijuana and is being
used as a transshipment point for illegal narcotics from South
America.

Samoa
The economy of Samoa has traditionally been dependent on
development aid, family remittances from overseas, and agriculture
and fishing. The country is vulnerable to devastating storms.
Agriculture employs two-thirds of the labor force, and furnishes 90%
of exports, featuring coconut cream, coconut oil, and copra. The
manufacturing sector mainly processes agricultural products. The
decline of fish stocks in the area is a continuing problem. Tourism
is an expanding sector, accounting for 25% of GDP; about 88,000
tourists visited the islands in 2001. The Samoan Government has
called for deregulation of the financial sector, encouragement of
investment, and continued fiscal discipline, meantime protecting the
environment. Observers point to the flexibility of the labor market
as a basic strength for future economic advances. Foreign reserves
are in a relatively healthy state, the external debt is stable, and
inflation is low.

San Marino
The tourist sector contributes over 50% of GDP. In 2000
more than 3 million tourists visited San Marino. The key industries
are banking, wearing apparel, electronics, and ceramics. Main
agricultural products are wine and cheeses. The per capita level of
output and standard of living are comparable to those of the most
prosperous regions of Italy, which supplies much of its food.

Sao Tome and Principe
This small poor island economy has become
increasingly dependent on cocoa since independence 29 years ago.
Cocoa production has substantially declined in recent years because
of drought and mismanagement, but strengthening prices helped boost
export earnings in 2003. Sao Tome has to import all fuels, most
manufactured goods, consumer goods, and a substantial amount of
food. Over the years, it has been unable to service its external
debt and has had to depend on concessional aid and debt
rescheduling. Sao Tome benefited from $200 million in debt relief in
December 2000 under the Highly Indebted Poor Countries (HIPC)
program. Sao Tome's success in implementing structural reforms has
been rewarded by international donors, who pledged increased
assistance in 2001. Considerable potential exists for development of
a tourist industry, and the government has taken steps to expand
facilities in recent years. The government also has attempted to
reduce price controls and subsidies. Sao Tome is optimistic about
the development of petroleum resources in its territorial waters in
the oil-rich Gulf of Guinea; production could begin as early as 2004.

Saudi Arabia
This is an oil-based economy with strong government
controls over major economic activities. Saudi Arabia has the
largest reserves of petroleum in the world (25% of the proved
reserves), ranks as the largest exporter of petroleum, and plays a
leading role in OPEC. The petroleum sector accounts for roughly 75%
of budget revenues, 45% of GDP, and 90% of export earnings. About
40% of GDP comes from the private sector. Roughly five and a half
million foreign workers play an important role in the Saudi economy,
for example, in the oil and service sectors. The government in 1999
announced plans to begin privatizing the electricity companies,
which follows the ongoing privatization of the telecommunications
company. The government is encouraging private sector growth to
lessen the kingdom's dependence on oil and increase employment
opportunities for the swelling Saudi population. Priorities for
government spending in the short term include additional funds for
education and for the water and sewage systems. Economic reforms
proceed cautiously because of deep-rooted political and social
conservatism.

Senegal
In January 1994, Senegal undertook a bold and ambitious
economic reform program with the support of the international donor
community. This reform began with a 50% devaluation of Senegal's
currency, the CFA franc, which was linked at a fixed rate to the
French franc. Government price controls and subsidies have been
steadily dismantled. After seeing its economy contract by 2.1% in
1993, Senegal made an important turnaround, thanks to the reform
program, with real growth in GDP averaging 5% annually during
1995-2003. Annual inflation had been pushed down to the low single
digits. As a member of the West African Economic and Monetary Union
(WAEMU), Senegal is working toward greater regional integration with
a unified external tariff. Senegal also realized full Internet
connectivity in 1996, creating a miniboom in information
technology-based services. Private activity now accounts for 82% of
GDP. On the negative side, Senegal faces deep-seated urban problems
of chronic unemployment, trade union militancy, juvenile
delinquency, and drug addiction.

Serbia and Montenegro
MILOSEVIC-era mismanagement of the economy, an
extended period of economic sanctions, and the damage to
Yugoslavia's infrastructure and industry during the NATO airstrikes
in 1999 have left the economy only half the size it was in 1990.
After the ousting of former Federal Yugoslav President MILOSEVIC in
October 2000, the Democratic Opposition of Serbia (DOS) coalition
government implemented stabilization measures and embarked on an
aggressive market reform program. After renewing its membership in
the IMF in December 2000, Yugoslavia continued to reintegrate into
the international community by rejoining the World Bank (IBRD) and
the European Bank for Reconstruction and Development (EBRD). A World
Bank-European Commission sponsored Donors' Conference held in June
2001 raised $1.3 billion for economic restructuring. An agreement
rescheduling the country's $4.5 billion Paris Club government debts
was concluded in November 2001; it wrote off 66% of the debt. The
smaller republic of Montenegro severed its economy from federal
control and from Serbia during the MILOSEVIC era and continues to
maintain its own central bank, uses the euro instead of the Yugoslav
dinar as official currency, collects customs tariffs, and manages
its own budget. Kosovo, while technically still part of the Federal
Republic of Yugoslavia (now Serbia and Montenegro) according to
United Nations Security Council Resolution 1244, is largely
autonomous under United Nations Interim Administration Mission in
Kosovo (UNMIK) and is greatly dependent on the international
community and the diaspora for financial and technical assistance.
The euro and the Yugoslav dinar are official currencies, and UNMIK
collects taxes and manages the budget. The complexity of Serbia and
Montenegro political relationships, slow progress in privatization,
legal uncertainty over property rights, and scarcity of
foreign-investment are holding back Serbia and Montenegro's economy.
Arrangements with the IMF, especially requirements for fiscal
discipline, are an important element in policy formation. Severe
unemployment remains a key political economic problem.

Seychelles
Since independence in 1976, per capita output in this
Indian Ocean archipelago has expanded to roughly seven times the old
near-subsistence level. Growth has been led by the tourist sector,
which employs about 30% of the labor force and provides more than
70% of hard currency earnings, and by tuna fishing. In recent years
the government has encouraged foreign investment in order to upgrade
hotels and other services. At the same time, the government has
moved to reduce the dependence on tourism by promoting the
development of farming, fishing, and small-scale manufacturing. A
sharp drop illustrated the vulnerability of the tourist sector in
1991-92 due largely to the Gulf war, and once again following the 11
September 2001 terrorist attacks on the US. Other issues facing the
government are the curbing of the budget deficit, including the
containment of social welfare costs, and further privatization of
public enterprises. Growth slowed in 1998-2002, due to sluggish
tourist and tuna sectors. Also, tight controls on exchange rates and
the scarcity of foreign exchange have impaired short-term economic
prospects. The black market value of the Seychelles rupee is half
the official exchange rate; without a devaluation of the currency
the tourist sector should remain sluggish as vacationers seek
cheaper destinations such as Comoros, Mauritius, and Madagascar.

Sierra Leone
Sierra Leone is an extremely poor African nation with
tremendous inequality in income distribution. It does have
substantial mineral, agricultural, and fishery resources. However,
the economic and social infrastructure is not well developed, and
serious social disorders continue to hamper economic development,
following a 11-year civil war. About two-thirds of the working-age
population engages in subsistence agriculture. Manufacturing
consists mainly of the processing of raw materials and of light
manufacturing for the domestic market. Plans continue to reopen
bauxite and rutile mines shut down during the conflict. The major
source of hard currency consists of the mining of diamonds. The fate
of the economy depends upon the maintenance of domestic peace and
the continued receipt of substantial aid from abroad, which is
essential to offset the severe trade imbalance and to supplement
government revenues.

Singapore
Singapore, a highly developed and successful free market
economy, enjoys a remarkably open and corruption-free environment,
stable prices, and a high per capita GDP. The economy depends
heavily on exports, particularly in electronics and manufacturing.
It was hard hit in 2001-03 by the global recession and the slump in
the technology sector. The government hopes to establish a new
growth path that will be less vulnerable to the external business
cycle but is unlikely to abandon efforts to establish Singapore as
Southeast Asia's financial and high-tech hub. Fiscal stimulus, low
interest rates, and global economic recovery should lead to much
improved growth in 2004.

Slovakia
Slovakia has mastered much of the difficult transition from
a centrally planned economy to a modern market economy. The DZURINDA
government made excellent progress during 2001-03 in macroeconomic
stabilization and structural reform. Major privatizations are nearly
complete, the banking sector is almost completely in foreign hands,
and foreign investment has picked up. Slovakia's economy exceeded
expectations in 2001-03, despite the general European slowdown.
Unemployment, at an unacceptable 15% in 2003, remains the economy's
Achilles heel. The government faces other strong challenges in 2004,
especially cutting the budget deficit, containing inflation, and
strengthening the health care system.

Slovenia
Slovenia, with its historical ties to Western Europe,
enjoys a GDP per capita substantially higher than that of the other
transitioning economies of Central Europe. In March 2004, Slovenia
became the first transition country to graduate from borrower status
to donor partner at the World Bank. Privatization of the economy
proceeded at an accelerated pace in 2002-03, and the budget deficit
dropped from 3.0% of GDP in 2002 to 1.6% in 2003. Despite the
economic slowdown in Europe in 2001-03, Slovenia maintained 3%
growth. Structural reforms to improve the business environment allow
for greater foreign participation in Slovenia's economy and help to
lower unemployment. Further measures to curb inflation are also
needed. Corruption and the high degree of coordination between
government, business, and central bank policy are issues of concern
in the run-up to Slovenia's scheduled 1 May 2004 accession to the
European Union.

Solomon Islands
The bulk of the population depends on agriculture,
fishing, and forestry for at least part of their livelihood. Most
manufactured goods and petroleum products must be imported. The
islands are rich in undeveloped mineral resources such as lead,
zinc, nickel, and gold. However, severe ethnic violence, the closing
of key business enterprises, and an empty government treasury have
led to serious economic disarray, indeed near collapse. Tanker
deliveries of crucial fuel supplies (including those for electrical
generation) have become sporadic due to the government's inability
to pay and attacks against ships. Telecommunications are threatened
by the nonpayment of bills and by the lack of technical and
maintenance staff many of whom have left the country. The
disintegration of law and order left the economy in tatters by
mid-2003, and on 24 July 2003 more than 2000 Australian soldiers
entered the Solomon Islands to restore order and to facilitate the
restoration of basic services.

Somalia
Somalia's economic fortunes are being driven by its deep
political divisions. The northern area has declared its independence
as "Somaliland"; the central area, Puntland, is a self-declared
autonomous state; and the remaining southern portion is riddled with
the struggles of rival factions. Economic life continues, in part
because much activity is local and relatively easily protected.
Agriculture is the most important sector, with livestock normally
accounting for about 40% of GDP and about 65% of export earnings,
but Saudi Arabia's recent ban on Somali livestock, because of Rift
Valley Fever concerns, has severely hampered the sector. Nomads and
semi-nomads, who are dependent upon livestock for their livelihood,
make up a large portion of the population. Livestock, hides, fish,
charcoal, and bananas are Somalia's principal exports, while sugar,
sorghum, corn, qat, and machined goods are the principal imports.
Somalia's small industrial sector, based on the processing of
agricultural products, has largely been looted and sold as scrap
metal. Despite the seeming anarchy, Somalia's service sector has
managed to survive and grow. Telecommunication firms provide
wireless services in most major cities and offer the lowest
international call rates on the continent. In the absence of a
formal banking sector, money exchange services have sprouted
throughout the country, handling between $200 million and $500
million in remittances annually. Mogadishu's main market offers a
variety of goods from food to the newest electronic gadgets. Hotels
continue to operate, and militias provide security. The ongoing
civil disturbances and clan rivalries, however, have interfered with
any broad-based economic development and international aid
arrangements. In 2002 Somalia's overdue financial obligations to the
IMF continued to grow. Statistics on Somalia's GDP, growth, per
capita income, and inflation should be viewed skeptically.

South Africa
South Africa is a middle-income, emerging market with
an abundant supply of natural resources; well-developed financial,
legal, communications, energy, and transport sectors; a stock
exchange that ranks among the 10 largest in the world; and a modern
infrastructure supporting an efficient distribution of goods to
major urban centers throughout the region. However, growth has not
been strong enough to lower South Africa's high unemployment rate;
and daunting economic problems remain from the apartheid era,
especially poverty and lack of economic empowerment among the
disadvantaged groups. High crime and HIV/AIDS infection rates also
deter investment. South African economic policy is fiscally
conservative, but pragmatic, focusing on targeting inflation and
liberalizing trade as means to increase job growth and household
income.

South Georgia and the South Sandwich Islands
Some fishing takes
place in adjacent waters. Fees from fishing licenses and related
activities traditionally account for around 90% of South Georgia's
revenue (about $5.6 million in 2004). There is a potential source of
income from harvesting finfish and krill. The islands receive income
from postage stamps produced in the UK, sale of fishing licenses,
and harbor and landing fees from tourist vessels. Tourism from
specialized cruise ships is increasing rapidly. Annual tourist
volume hovers around 3,000 arrivals.

Southern Ocean
Fisheries in 2000-01 (1 July to 30 June) landed
112,934 metric tons, of which 87% was krill and 11% Patagonian
toothfish. International agreements were adopted in late 1999 to
reduce illegal, unreported, and unregulated fishing, which in the
2000-01 season landed, by one estimate, 8,376 metric tons of
Patagonian and antarctic toothfish. In the 2000-01 antarctic summer
12,248 tourists, most of them seaborne, visited the Southern Ocean
and Antarctica, compared to 14,762 the previous year.

Spain
Spain's mixed capitalist economy supports a GDP that on a per
capita basis is 80% that of the four leading West European
economies. The center-right government of former President AZNAR
successfully worked to gain admission to the first group of
countries launching the European single currency (the euro) on 1
January 1999. The AZNAR administration continued to advocate
liberalization, privatization, and deregulation of the economy and
introduced some tax reforms to that end. Unemployment fell steadily
under the AZNAR administration but remains high at 11.7%. Growth of
2.4% in 2003 was satisfactory given the background of a faltering
European economy. Incoming President RODRIGUEZ ZAPATERO, whose party
won the election three days after the Madrid train bombings in
March, plans to reduce government intervention in business, combat
tax fraud, and support innovation, research and development, but
also intends to reintroduce labor market regulations that had been
scrapped by the AZNAR government. Adjusting to the monetary and
other economic policies of an integrated Europe - and reducing
unemployment - will pose challenges to Spain over the next few years.

Spratly Islands
Economic activity is limited to commercial fishing.
The proximity to nearby oil- and gas-producing sedimentary basins
suggests the potential for oil and gas deposits, but the region is
largely unexplored; there are no reliable estimates of potential
reserves; commercial exploitation has yet to be developed.

Sri Lanka
In 1977, Colombo abandoned statist economic policies and
its import substitution trade policy for market-oriented policies
and export-oriented trade. Sri Lanka's most dynamic sectors now are
food processing, textiles and apparel, food and beverages,
telecommunications, and insurance and banking. In 2003, plantation
crops made up only 15% of exports (compared with 93% in 1970), while
textiles and garments accounted for 63%. GDP grew at an average
annual rate of 5.5% in the early 1990s until a drought and a
deteriorating security situation lowered growth to 3.8% in 1996. The
economy rebounded in 1997-2000 with average growth of 5.3%, but 2001
saw the first contraction in the country's history, -1.4%, due to a
combination of power shortages, severe budgetary problems, the
global slowdown, and continuing civil strife. Growth recovered to
4.0% in 2002 and 5.2% in 2003. About 800,000 Sri Lankans work
abroad, 90% in the Middle East. They send home about $1 billion a
year. The struggle by the Tamil Tigers of the north and east for a
largely independent homeland continues to cast a shadow over the
economy.

Sudan
Sudan has turned around a struggling economy with sound
economic policies and infrastructure investments, yet it still faces
formidable economic problems, starting from its low level of per
capita output and extending to its devastating civil stife. From
1997 to date, Sudan has been implementing IMF macroeconomic reforms.
In 1999, Sudan began exporting crude oil and in the last quarter of
1999 recorded its first trade surplus, which, along with monetary
policy, has stabilized the exchange rate. Increased oil production,
revived light industry, and expanded export processing zones helped
sustain GDP growth at 6.1% in 2003 and 7% in 2004. Agriculture
production remains Sudan's most important sector, employing 80% of
the work force and contributing 39% of GDP, but most farms remain
rain-fed and susceptible to drought. Chronic instability - including
the long-standing civil war between the Muslim north and the
Christian/pagan south, the ethnic purges in Darfur, adverse weather,
and weak world agricultural prices - ensure that much of the
population will remain at or below the poverty line for years.

Suriname
The economy is dominated by the bauxite industry, which
accounts for more than 15% of GDP and 70% of export earnings.
Suriname's economic prospects for the medium term will depend on
renewed commitment to responsible monetary and fiscal policies and
to the introduction of structural reforms to liberalize markets and
promote competition. The government of Ronald VENETIAAN has begun an
austerity program, raised taxes, and attempted to control spending.
However, in 2002, President VENETIAAN agreed to a large pay raise
for civil servants, which threatens his earlier gains in stabilizing
the economy. The Dutch Government has agreed to restart the aid
flow, which will allow Suriname to access international development
financing. The short-term economic outlook depends on the
government's ability to control inflation and on the development of
projects in the bauxite and gold mining sectors.

Svalbard
Coal mining is the major economic activity on Svalbard. The
treaty of 9 February 1920 gives the 41 signatories equal rights to
exploit mineral deposits, subject to Norwegian regulation. Although
US, UK, Dutch, and Swedish coal companies have mined in the past,
the only companies still mining are Norwegian and Russian. The
settlements on Svalbard are essentially company towns. The Norwegian
state-owned coal company employs nearly 60% of the Norwegian
population on the island, runs many of the local services, and
provides most of the local infrastructure. There is also some
hunting of seal, reindeer, and fox.

Swaziland
In this small, landlocked economy, subsistence agriculture
occupies more than 80% of the population. The manufacturing sector
has diversified since the mid-1980s. Sugar and wood pulp remain
important foreign exchange earners. Mining has declined in
importance in recent years with only coal and quarry stone mines
remaining active. Surrounded by South Africa, except for a short
border with Mozambique, Swaziland is heavily dependent on South
Africa from which it receives about nine-tenths of its imports and
to which it sends nearly three-quarters of its exports. Customs
duties from the Southern African Customs Union and worker
remittances from South Africa substantially supplement domestically
earned income. The government is trying to improve the atmosphere
for foreign investment. Overgrazing, soil depletion, drought, and
sometimes floods persist as problems for the future. More than
one-fourth of the population needed emergency food aid in 2002
because of drought, and more than one-third of the adult population
was infected by HIV/AIDS.

Sweden
Aided by peace and neutrality for the whole 20th century,
Sweden has achieved an enviable standard of living under a mixed
system of high-tech capitalism and extensive welfare benefits. It
has a modern distribution system, excellent internal and external
communications, and a skilled labor force. Timber, hydropower, and
iron ore constitute the resource base of an economy heavily oriented
toward foreign trade. Privately owned firms account for about 90% of
industrial output, of which the engineering sector accounts for 50%
of output and exports. Agriculture accounts for only 2% of GDP and
2% of the jobs. The government's commitment to fiscal discipline
resulted in a substantial budgetary surplus in 2001, which was cut
by more than half in 2002, due to the global economic slowdown,
declining revenue, and increased spending. The Swedish central bank
(the Riksbank) is focusing on price stability with its inflation
target of 2%. Growth remained sluggish in 2003. On September 14,
2003, Swedish voters turned down entry into the euro system,
concerned about the impact on democracy and sovereignty.

Switzerland
Switzerland is a prosperous and stable modern market
economy with low unemployment, a highly skilled labor force, and a
per capita GDP larger than that of the big Western European
economies. The Swiss in recent years have brought their economic
practices largely into conformity with the EU's to enhance their
international competitiveness. Switzerland remains a safe haven for
investors, because it has maintained a degree of bank secrecy and
has kept up the franc's long-term external value. Reflecting the
anemic economic conditions of Europe, GDP growth dropped in 2001 to
about 0.8%, to 0.2% in 2002, and to -0.3% in 2003.

Syria
Syria's predominantly statist economy lately has been growing
more slowly than its 2.4% annual population growth rate. Recent
legislation allows private banks to operate in Syria, although a
private banking sector will take years and further government
cooperation to develop. Factors, including the war between the
US-led coalition and Iraq, probably drove real annual GDP growth
levels back below 1% in 2003 following growth of 3.5% in 2001 and
4.5% in 2002. A long-run economic constraint is the pressure on
water supplies caused by rapid population growth, industrial
expansion, and increased water pollution.

Taiwan
Taiwan has a dynamic capitalist economy with gradually
decreasing guidance of investment and foreign trade by government
authorities. In keeping with this trend, some large government-owned
banks and industrial firms are being privatized. Exports have
provided the primary impetus for industrialization. The trade
surplus is substantial, and foreign reserves are the world's third
largest. Agriculture contributes 2% to GDP, down from 32% in 1952.
While Taiwan is a major investor throughout Southeast Asia, China
has become the largest destination for investment and has overtaken
the US to become Taiwan's largest export market. Because of its
conservative financial approach and its entrepreneurial strengths,
Taiwan suffered little compared with many of its neighbors from the
Asian financial crisis in 1998. The global economic downturn,
combined with problems in policy coordination by the administration
and bad debts in the banking system, pushed Taiwan into recession in
2001, the first year of negative growth ever recorded. Unemployment
also reached record levels. Output recovered moderately in 2002 in
the face of continued global slowdown, fragile consumer confidence,
and bad bank loans. Growing economic ties with China are a dominant
long-term factor. Exports to China - mainly parts and equipment for
the assembly of goods for export to developed countries - drove
Taiwan's economic recovery in 2002. Although the SARS epidemic,
Typhoon Maemi, corporate scandals, and a drop in consumer spending
caused GDP growth to contract to 3.2% in 2003, increasingly strong
export performance kept Taiwan's economy on track, and the
government expects Taiwan's economy to grow 4.1% in 2004.

Tajikistan
Tajikistan has the lowest per capita GDP among the 15
former Soviet republics. Only 5% to 6% of the land area is arable.
Cotton is the most important crop. Mineral resources, varied but
limited in amount, include silver, gold, uranium, and tungsten.
Industry consists only of a large aluminum plant, hydropower
facilities, and small obsolete factories mostly in light industry
and food processing. The civil war (1992-97) severely damaged the
already weak economic infrastructure and caused a sharp decline in
industrial and agricultural production. Even though 60% of its
people continue to live in abject poverty, Tajikistan has
experienced steady economic growth since 1997. Continued
privatization of medium and large state-owned enterprises will
further increase productivity. Tajikistan's economic situation,
however, remains fragile due to uneven implementation of structural
reforms, weak governance, widespread unemployment, and the external
debt burden. A debt restructuring agreement was reached with Russia
in December 2002, including an interest rate of 4%, a 3-year grace
period, and a US $49.8 million credit to the Central Bank of
Tajikistan.

Tanzania
Tanzania is one of the poorest countries in the world. The
economy depends heavily on agriculture, which accounts for about
half of GDP, provides 85% of exports, and employs 80% of the work
force. Topography and climatic conditions, however, limit cultivated
crops to only 4% of the land area. Industry traditionally featured
the processing of agricultural products and light consumer goods.
The World Bank, the International Monetary Fund, and bilateral
donors have provided funds to rehabilitate Tanzania's out-of-date
economic infrastructure and to alleviate poverty. Growth in
1991-2002 featured a pickup in industrial production and a
substantial increase in output of minerals, led by gold. Oil and gas
exploration and development played an important role in this growth.
Recent banking reforms have helped increase private sector growth
and investment. Continued donor assistance and solid macroeconomic
policies supported real GDP growth of more than 5.2% in 2004.

Thailand
Thailand has a free-enterprise economy and welcomes foreign
investment. Exports feature textiles and footwear, fishery products,
rice, rubber, jewelry, automobiles, computers and electrical
appliances. Thailand has recovered from the 1997-98 Asian Financial
Crisis and was one of East Asia's best performers in 2002. Increased
consumption and investment spending and strong export growth pushed
GDP growth up to 6.3% in 2003 despite a sluggish global economy. The
highly popular government has pushed an expansionist policy,
including major support of village economic development.

Togo
This small sub-Saharan economy is heavily dependent on both
commercial and subsistence agriculture, which provides employment
for 65% of the labor force. Some basic foodstuffs must still be
imported. Cocoa, coffee, and cotton generate about 40% of export
earnings, with cotton being the most important cash crop. Togo is
the world's fourth-largest producer of phosphate, but production
fell an estimated 22% in 2002 due to power shortages and the cost of
developing new deposits. The government's decade-long effort,
supported by the World Bank and the IMF, to implement economic
reform measures, encourage foreign investment, and bring revenues in
line with expenditures has moved slowly. Progress depends on
following through on privatization, increased openness in government
financial operations, progress toward legislative elections, and
continued support from foreign donors.

Tokelau
Tokelau's small size (three villages), isolation, and lack
of resources greatly restrain economic development and confine
agriculture to the subsistence level. The people rely heavily on aid
from New Zealand - about $4 million annually - to maintain public
services, with annual aid being substantially greater than GDP. The
principal sources of revenue come from sales of copra, postage
stamps, souvenir coins, and handicrafts. Money is also remitted to
families from relatives in New Zealand.

Tonga
Tonga, a small, open, South Pacific island economy, has a
narrow export base in agricultural goods. Squash, coconuts, bananas,
and vanilla beans are the main crops, and agricultural exports make
up two-thirds of total exports. The country must import a high
proportion of its food, mainly from New Zealand. Tourism is the
second-largest source of hard currency earnings following
remittances. The country remains dependent on external aid and
remittances from Tongan communities overseas to offset its trade
deficit. The government is emphasizing the development of the
private sector, especially the encouragement of investment, and is
committing increased funds for health and education. Tonga has a
reasonably sound basic infrastructure and well-developed social
services. High unemployment among the young and the continuing
upturn in inflation are major issues facing the government.

Trinidad and Tobago
Trinidad and Tobago, the leading Caribbean
producer of oil and gas, has earned a reputation as an excellent
investment site for international businesses. Tourism is a growing
sector, although not proportionately as important as in many other
Caribbean islands. The economy benefits from low inflation and a
growing trade surplus. Prospects for growth in 2004 are good as
prices for oil, petrochemicals, and liquified natural gas are
expected to remain high, and foreign direct investment continues to
grow to support expanded capacity in the energy sector. The
government is coping with a rise in violent crime.

Tromelin Island
no economic activity

Tunisia
Tunisia has a diverse economy, with important agricultural,
mining, energy, tourism, and manufacturing sectors. Governmental
control of economic affairs while still heavy has gradually lessened
over the past decade with increasing privatization, simplification
of the tax structure, and a prudent approach to debt. Real growth,
averaging 5% for the latter half of the last decade, slowed to a
15-year low of 1.9% in 2002 because of agricultural drought, slow
investment, and lackluster tourism. Better rains in 2003, however,
pushed GDP growth up to an estimated 6 percent, and tourism also
recovered after the end of combat operations in Iraq. GDP growth
remained at 6% in 2004. Tunisia has agreed to gradually remove
barriers to trade with the European Union over the next decade.
Broader privatization, further liberalization of the investment code
to increase foreign investment, improvements in government
efficiency, and reduction of the trade deficit are among the
challenges for the future.

Turkey
Turkey's dynamic economy is a complex mix of modern industry
and commerce along with a traditional agriculture sector that in
2001 still accounted for 40% of employment. It has a strong and
rapidly growing private sector, yet the state still plays a major
role in basic industry, banking, transport, and communication. The
largest industrial sector is textiles and clothing, which accounts
for one-third of industrial employment; it faces stiff competition
in international markets with the end of the global quota system.
However, other sectors, notably the automotive and electonics
industries, are rising in importance within Turkey's export mix. In
recent years the economic situation has been marked by erratic
economic growth and serious imbalances. Real GNP growth has exceeded
6% in many years, but this strong expansion has been interrupted by
sharp declines in output in 1994, 1999, and 2001. Meanwhile, the
public sector fiscal deficit has regularly exceeded 10% of GDP - due
in large part to the huge burden of interest payments, which
accounted for more than 40% of central government spending in 2003.
Inflation, in recent years in the high double-digit range, fell to
11.3% in 2004. Perhaps because of these problems, foreign direct
investment in Turkey remains low - less than $1 billion annually.
Results in 2002-04 improved, because of strong financial support
from the IMF and tighter fiscal policy. A major political and
economic issue over the next decade is whether or not Turkey will
become a member of the EU.

Turkmenistan
Turkmenistan is largely desert country with intensive
agriculture in irrigated oases and large gas and oil resources.
One-half of its irrigated land is planted in cotton, making it at
one time the world's tenth-largest producer. Poor harvests in recent
years have led to a nearly 46% decline in cotton exports. With an
authoritarian ex-Communist regime in power and a tribally based
social structure, Turkmenistan has taken a cautious approach to
economic reform, hoping to use gas and cotton sales to sustain its
inefficient economy. Privatization goals remain limited. In
1998-2003, Turkmenistan suffered from the continued lack of adequate
export routes for natural gas and from obligations on extensive
short-term external debt. At the same time, however, total exports
rose by 38% in 2003, largely because of higher international oil and
gas prices. Overall prospects in the near future are discouraging
because of widespread internal poverty, the burden of foreign debt,
and the unwillingness of the government to adopt market-oriented
reforms. However, Turkmenistan's cooperation with the international
community in transporting humanitarian aid to Afghanistan may
foreshadow a change in the atmosphere for foreign investment, aid,
and technological support. Turkmenistan's economic statistics are
state secrets, and GDP and other figures are subject to wide margins
of error. In particular, the 20% rate of GDP growth is a guess.

Turks and Caicos Islands
The Turks and Caicos economy is based on
tourism, fishing, and offshore financial services. Most capital
goods and food for domestic consumption are imported. The US is the
leading source of tourists, accounting for more than half of the
93,000 visitors in the late 1990s. Major sources of government
revenue include fees from offshore financial activities and customs
receipts. Tourism fell by 6% in 2002.

Tuvalu
Tuvalu consists of a densely populated, scattered group of
nine coral atolls with poor soil. The country has no known mineral
resources and few exports. Subsistence farming and fishing are the
primary economic activities. Fewer than 1,000 tourists, on average,
visit Tuvalu annually. Government revenues largely come from the
sale of stamps and coins and worker remittances. About 1,000
Tuvaluans work in Nauru in the phosphate mining industry. Nauru has
begun repatriating Tuvaluans, however, as phosphate resources
decline. Substantial income is received annually from an
international trust fund established in 1987 by Australia, NZ, and
the UK and supported also by Japan and South Korea. Thanks to wise
investments and conservative withdrawals, this Fund has grown from
an initial $17 million to over $35 million in 1999. The US
government is also a major revenue source for Tuvalu, because of
payments from a 1988 treaty on fisheries. In an effort to reduce its
dependence on foreign aid, the government is pursuing public sector
reforms, including privatization of some government functions and
personnel cuts of up to 7%. In 1998, Tuvalu began deriving revenue
from use of its area code for "900" lines and in 2000, from the
lease of its ".tv" Internet domain name. Royalties from these new
technology sources could increase substantially over the next
decade. With merchandise exports only a fraction of merchandise
imports, continued reliance must be placed on fishing and
telecommunications license fees, remittances from overseas workers,
official transfers, and investment income from overseas assets.

Uganda
Uganda has substantial natural resources, including fertile
soils, regular rainfall, and sizable mineral deposits of copper and
cobalt. Agriculture is the most important sector of the economy,
employing over 80% of the work force. Coffee accounts for the bulk
of export revenues. Since 1986, the government - with the support of
foreign countries and international agencies - has acted to
rehabilitate and stabilize the economy by undertaking currency
reform, raising producer prices on export crops, increasing prices
of petroleum products, and improving civil service wages. The policy
changes are especially aimed at dampening inflation and boosting
production and export earnings. During 1990-2001, the economy turned
in a solid performance based on continued investment in the
rehabilitation of infrastructure, improved incentives for production
and exports, reduced inflation, gradually improved domestic
security, and the return of exiled Indian-Ugandan entrepreneurs.
Corruption within the government and slippage in the government's
determination to press reforms raise doubts about the continuation
of strong growth. In 2000, Uganda qualified for enhanced Highly
Indebted Poor Countries (HIPC) debt relief worth $1.3 billion and
Paris Club debt relief worth $145 million. These amounts combined
with the original HIPC debt relief added up to about $2 billion.
Growth for 2001-02 was solid despite continued decline in the price
of coffee, Uganda's principal export. Solid growth in 2003 reflected
an upturn in Uganda's export markets.

Ukraine
After Russia, the Ukrainian republic was far and away the
most important economic component of the former Soviet Union,
producing about four times the output of the next-ranking republic.
Its fertile black soil generated more than one-fourth of Soviet
agricultural output, and its farms provided substantial quantities
of meat, milk, grain, and vegetables to other republics. Likewise,
its diversified heavy industry supplied the unique equipment (for
example, large diameter pipes) and raw materials to industrial and
mining sites (vertical drilling apparatus) in other regions of the
former USSR. Ukraine depends on imports of energy, especially
natural gas, to meet some 85% of its annual energy requirements.
Shortly after independence in December 1991, the Ukrainian
Government liberalized most prices and erected a legal framework for
privatization, but widespread resistance to reform within the
government and the legislature soon stalled reform efforts and led
to some backtracking. Output by 1999 had fallen to less than 40% of
the 1991 level. Loose monetary policies pushed inflation to
hyperinflationary levels in late 1993. Ukraine's dependence on
Russia for energy supplies and the lack of significant structural
reform have made the Ukrainian economy vulnerable to external
shocks. President KUCHMA had pledged to reduce the number of
government agencies, streamline the regulatory process, create a
legal environment to encourage entrepreneurs, and enact a
comprehensive tax overhaul. Reforms in the more politically
sensitive areas of structural reform and land privatization are
still lagging. Outside institutions - particularly the IMF - have
encouraged Ukraine to quicken the pace and scope of reforms. GDP in
2000 showed strong export-based growth of 6% - the first growth
since independence - and industrial production grew 12.9%. The
economy continued to expand in 2001 as real GDP rose 9% and
industrial output grew by over 14%. Growth of 4.6% in 2002 was more
moderate, in part a reflection of faltering growth in the developed
world. In general, growth has been undergirded by strong domestic
demand, low inflation, and solid consumer and investor confidence.
Growth was a sturdy 9.3% in 2003 and a remarkable 12% in 2004,
despite a loss of momentum in needed economic reforms.

United Arab Emirates
The UAE has an open economy with a high per
capita income and a sizable annual trade surplus. Its wealth is
based on oil and gas output (about 33% of GDP), and the fortunes of
the economy fluctuate with the prices of those commodities. Since
1973, the UAE has undergone a profound transformation from an
impoverished region of small desert principalities to a modern state
with a high standard of living. At present levels of production, oil
and gas reserves should last for more than 100 years. The government
has increased spending on job creation and infrastructure expansion
and is opening up its utilities to greater private sector
involvement.

United Kingdom
The UK, a leading trading power and financial center,
is one of the quartet of trillion dollar economies of Western
Europe. Over the past two decades the government has greatly reduced
public ownership and contained the growth of social welfare
programs. Agriculture is intensive, highly mechanized, and efficient
by European standards, producing about 60% of food needs with only
1% of the labor force. The UK has large coal, natural gas, and oil
reserves; primary energy production accounts for 10% of GDP, one of
the highest shares of any industrial nation. Services, particularly
banking, insurance, and business services, account by far for the
largest proportion of GDP while industry continues to decline in
importance. GDP growth slipped in 2001-03 as the global downturn,
the high value of the pound, and the bursting of the "new economy"
bubble hurt manufacturing and exports. Still, the economy is one of
the strongest in Europe; inflation, interest rates, and unemployment
remain low. The relatively good economic performance has complicated
the BLAIR government's efforts to make a case for Britain to join
the European Economic and Monetary Union (EMU). Critics point out,
however, that the economy is doing well outside of EMU, and they
point to public opinion polls that continue to show a majority of
Britons opposed to the euro. Meantime, the government has been
speeding up the improvement of education, transport, and health
services, at a cost in higher taxes. The war in March-April 2003
between a US-led coalition and Iraq, together with the subsequent
problems of restoring the economy and the polity, involve a heavy
commitment of British military forces.

United States
The US has the largest and most technologically
powerful economy in the world, with a per capita GDP of $37,800. In
this market-oriented economy, private individuals and business firms
make most of the decisions, and the federal and state governments
buy needed goods and services predominantly in the private
marketplace. US business firms enjoy considerably greater
flexibility than their counterparts in Western Europe and Japan in
decisions to expand capital plant, to lay off surplus workers, and
to develop new products. At the same time, they face higher barriers
to entry in their rivals' home markets than the barriers to entry of
foreign firms in US markets. US firms are at or near the forefront
in technological advances, especially in computers and in medical,
aerospace, and military equipment; their advantage has narrowed
since the end of World War II. The onrush of technology largely
explains the gradual development of a "two-tier labor market" in
which those at the bottom lack the education and the
professional/technical skills of those at the top and, more and
more, fail to get comparable pay raises, health insurance coverage,
and other benefits. Since 1975, practically all the gains in
household income have gone to the top 20% of households. The years
1994-2000 witnessed solid increases in real output, low inflation
rates, and a drop in unemployment to below 5%. The year 2001 saw the
end of boom psychology and performance, with output increasing only
0.3% and unemployment and business failures rising substantially.
The response to the terrorist attacks of 11 September 2001 showed
the remarkable resilience of the economy. Moderate recovery took
place in 2002 with the GDP growth rate rising to 2.4%. A major
short-term problem in first half 2002 was a sharp decline in the
stock market, fueled in part by the exposure of dubious accounting
practices in some major corporations. The war in March/April 2003
between a US-led coalition and Iraq shifted resources to the
military. In 2003, growth in output and productivity and the
recovery of the stock market to above 10,000 for the Dow Jones
Industrial Average were promising signs. Unemployment stayed at the
6% level, however, and began to decline only at the end of the year.
Long-term problems include inadequate investment in economic
infrastructure, rapidly rising medical and pension costs of an aging
population, sizable trade and budget deficits, and stagnation of
family income in the lower economic groups.

Uruguay
Uruguay's well-to-do economy is characterized by an
export-oriented agricultural sector, a well-educated workforce, and
high levels of social spending. After averaging growth of 5%
annually during 1996-98, in 1999-2002 the economy suffered a major
downturn, stemming largely from the spillover effects of the
economic problems of its large neighbors, Argentina and Brazil. For
instance, in 2001-02 massive withdrawals by Argentina of dollars
deposited in Uruguayan banks led to a plunge in the Uruguyan peso
and a massive rise in unemployment. Total GDP in these four years
dropped by nearly 20%, with 2002 the worst year due to the serious
banking crisis. Unemployment rose to nearly 20% in 2002, inflation
surged, and the burden of external debt doubled. Cooperation with
the IMF and the US has limited the damage. The debt swap with
private creditors carried out in 2003, which extended the maturity
dates on nearly half of Uruguay's $11.3 billion in public debt,
substantially alleviated the country's amortization burden in the
coming years and restored public confidence. The economy is expected
to resume growth in 2004 (perhaps 4% or more) as a result of high
commodity prices for Uruguayan exports, the weakness of the dollar
against the euro, growth in the region, low international interest
rates, and greater export competitiveness. On the negative side, in
December 2003 the electorate voted to repeal the law permitting a
cautious liberalization of the energy industry.

Uzbekistan
Uzbekistan is a dry, landlocked country of which 11%
consists of intensely cultivated, irrigated river valleys. More than
60% of its population lives in densely populated rural communities.
Uzbekistan is now the world's second-largest cotton exporter, a
large producer of gold and oil, and a regionally significant
producer of chemicals and machinery. Following independence in
December 1991, the government sought to prop up its Soviet-style
command economy with subsidies and tight controls on production and
prices. Uzbekistan responded to the negative external conditions
generated by the Asian and Russian financial crises by emphasizing
import substitute industrialization and by tightening export and
currency controls within its already largely closed economy. The
government, while aware of the need to improve the investment
climate, sponsors measures that often increase, not decrease, the
government's control over business decisions. A sharp increase in
the inequality of income distribution has hurt the lower ranks of
society since independence. In 2003, the government accepted the
obligations of Article VIII under the International Monetary Fund
(IMF), providing for full currency convertibility. However, strict
currency controls and tightening of borders have lessened the
effects of convertibility and have also lead to some shortages which
have further stifled economic activity.

Vanuatu
This South Pacific island economy is based primarily on
small-scale agriculture, which provides a living for 65% of the
population. Fishing, offshore financial services, and tourism, with
about 50,000 visitors in 1997, are other mainstays of the economy.
Mineral deposits are negligible; the country has no known petroleum
deposits. A small light industry sector caters to the local market.
Tax revenues come mainly from import duties. Economic development is
hindered by dependence on relatively few commodity exports,
vulnerability to natural disasters, and long distances from main
markets and between constituent islands. A severe earthquake in
November 1999 followed by a tsunami, caused extensive damage to the
northern island of Pentecote and left thousands homeless. Another
powerful earthquake in January 2002 caused extensive damage in the
capital, Port-Vila, and surrounding areas, and also was followed by
a tsunami. GDP growth rose less than 3% on average in the 1990s. In
response to foreign concerns, the government has promised to tighten
regulation of its offshore financial center. In mid-2002 the
government stepped up efforts to boost tourism. Agriculture,
especially livestock farming, is a second target for growth.
Australia and New Zealand are the main suppliers of tourists and
foreign aid. Growth expanded moderately in 2003.

Venezuela
Venezuela continues to be highly dependent on the
petroleum sector, which accounts for roughly one-third of GDP,
around 80% of export earnings, and more than half of government
operating revenues. Despite higher oil prices at the end of 2002 and
into 2003, domestic political instability, culminating in a
disastrous two-month national oil strike from December 2002 to
February 2003, temporarily halted economic activity. The economy
remained in depression in 2003, declining by 9.2% after an 8.9% fall
in 2002. In late 2003, President CHAVEZ committed himself to $1
billion in new social programs, money the government does not have.

Vietnam
Vietnam is a poor, densely-populated country that has had to
recover from the ravages of war, the loss of financial support from
the old Soviet Bloc, and the rigidities of a centrally-planned
economy. Substantial progress was achieved from 1986 to 1996 in
moving forward from an extremely low starting point - growth
averaged around 9% per year from 1993 to 1997. The 1997 Asian
financial crisis highlighted the problems in the Vietnamese economy,
but rather than prompting reform, reaffirmed the government's belief
that shifting to a market-oriented economy would lead to disaster.
GDP growth of 8.5% in 1997 fell to 6% in 1998 and 5% in 1999. Growth
then rose to 6% to 7% in 2000-02 even against the background of
global recession. These numbers mask some major difficulties in
economic performance. Many domestic industries, including coal,
cement, steel, and paper, have reported large stockpiles of
inventory and tough competition from more efficient foreign
producers. Since the Party elected new leadership in 2001,
Vietnamese authorities have reaffirmed their commitment to economic
liberalization and have moved to implement the structural reforms
needed to modernize the economy and to produce more competitive,
export-driven industries. The US-Vietnam Bilateral Trade Agreement
entered into force near the end of 2001 and is expected to
significantly increase Vietnam's exports to the US. The US is
assisting Vietnam with implementing the legal and structural reforms
called for in the agreement.

Virgin Islands
Tourism is the primary economic activity, accounting
for 80% of GDP and employment. The islands normally host 2 million
visitors a year. The manufacturing sector consists of petroleum
refining, textiles, electronics, pharmaceuticals, and watch
assembly. The agricultural sector is small, with most food being
imported. International business and financial services are a small
but growing component of the economy. One of the world's largest
petroleum refineries is at Saint Croix. The islands are subject to
substantial damage from storms. The government is working to improve
fiscal discipline, to support construction projects in the private
sector, to expand tourist facilities, to reduce crime, and to
protect the environment.

Wake Island
Economic activity is limited to providing services to
contractors located on the island. All food and manufactured goods
must be imported.

Wallis and Futuna
The economy is limited to traditional subsistence
agriculture, with about 80% labor force earnings from agriculture
(coconuts and vegetables), livestock (mostly pigs), and fishing.
About 4% of the population is employed in government. Revenues come
from French Government subsidies, licensing of fishing rights to
Japan and South Korea, import taxes, and remittances from expatriate
workers in New Caledonia.

West Bank
Real per capita GDP for the West Bank and Gaza Strip
(WBGS) declined by about one-third between 1992 and 1996 due to the
combined effect of falling aggregate incomes and rapid population
growth. The downturn in economic activity was largely the result of
Israeli closure policies - the imposition of border closures in
response to security incidents in Israel - which disrupted labor and
commodity market relationships between Israel and the WBGS. The most
serious social effect of this downturn was rising unemployment,
which in the WBGS during the 1980s was generally under 5%; by 1995
it had risen to over 20%. Israel's use of comprehensive closures
during the next three years 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 violence, which triggered tight Israeli closures of
Palestinian self-rule areas and severely disrupted trade and labor
movements. In 2001, and even more severely in 2002, Israeli military
measures in Palestinian Authority areas resulted in the destruction
of much capital plant and administrative structure, widespread
business closures, and a sharp drop in GDP. Including Gaza Strip,
the UN estimates that more than 100,000 Palestinians out of the
125,000 who used to work in Israel, in Israeli settlements, or in
joint industrial zones have lost their jobs. In addition, about
80,000 Palestinian workers inside the Territories are losing their
jobs. International aid of $2 billion in 2001-02 to the West Bank
and Gaza Strip prevented the complete collapse of the economy. In
2004, on-going border issues and the death of Yasser ARAFAT
continued to complicate the economic situation.