Chapter CIII: Section 3: , Taipei, Taiwan, telephone: 886 (2) 2162-2000, FAX (38)

Turkey
Confederation of Public Sector Unions or KESK [Sami EVREN];
Confederation of Revolutionary Workers Unions or DISK [Suleyman
CELEBI]; Independent Industrialists' and Businessmen's Association
or MUSIAD [Omer BOLAT]; Moral Rights Workers Union or Hak-Is [Salim
USLU]; Turkish Industrialists' and Businessmen's Association or
TUSIAD [Omer SABANCI]; Turkish Confederation of Employers' Unions or
TISK [Refik BAYDUR]; Turkish Confederation of Labor or Turk-Is
[Salih KILIC]; Turkish Confederation of Tradesmen and Craftsmen or
TESK [Dervis GUNDAY]; Turkish Union of Chambers of Commerce and
Commodity Exchanges or TOBB [M. Rifat HISARCIKLIOGLU]

Turkmenistan
NA

Turks and Caicos Islands
NA

Tuvalu
none

Uganda
Popular Resistance Against a Life President or PRALP

Ukraine
NA

United Arab Emirates
NA

United Kingdom
Campaign for Nuclear Disarmament; Confederation of
British Industry; National Farmers' Union; Trades Union Congress

United States
NA

Uruguay
Agrupacion UTE (powerful state worker's union), Rural
Association of Uruguay (rancher's association), Uruguayan
Construction League, Chamber of Uruguayan Industries (manufacturer's
association), Chemist and Pharmaceutical Association (professional
organization), Architect's Society of Uruguay (professional
organization), the Catholic Church, students

Uzbekistan
Agrarian and Entrepreneurs' Party [Marat ZAHIDOV]; Birlik
(Unity) Movement [Abdurakhim POLAT, chairman]; Erk (Freedom)
Democratic Party [Muhammad SOLIH, chairman] was banned 9 December
1992; Ezgulik Human Rights Society [Vasilia INOYATOVA]; Free
Farmers' Party or Ozod Dehqonlar [Nigara KHIDOYATOVA]; Human Rights
Society of Uzbekistan [Tolib YAKUBOV, chairman]; Independent Human
Rights Society of Uzbekistan [Mikhail ARDZINOV, chairman]; Mazlum
[leader NA]

Vanuatu
NA

Venezuela
FEDECAMARAS, a conservative business group; VECINOS
groups; Venezuelan Confederation of Workers or CTV (labor
organization dominated by the Democratic Action)

Vietnam
none

Virgin Islands
NA

Wallis and Futuna
NA

Western Sahara
none

Yemen
NA

Zambia
NA

Zimbabwe
National Constitutional Assembly or NCA [Lovemore MADHUKU];
Crisis in Zimbabwe Coalition [Brian KAGORO]; Zimbabwe Congress of
Trade Unions or ZCTU [Lovemore MATOMBO]

This page was last updated on 20 October, 2005

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@2116 Economy - overview

Afghanistan
Afghanistan's economic outlook has improved
significantly since the fall of the Taliban regime in 2001 because
of the infusion of over $2 billion in international assistance,
recovery of the agricultural sector, and the reestablishment of
market institutions. Agriculture boomed in 2003 with the end of a
four-year drought, but drought conditions returned for the southern
half of the country in 2004. Despite the progress of the past few
years, Afghanistan remains extremely poor, landlocked, and highly
dependent on foreign aid, farming, and trade with neighboring
countries. It will probably take the remainder of the decade and
continuing donor aid and attention to raise Afghanistan's living
standards up from its current status among the lowest in the world.
Much of the population continues to suffer from shortages of
housing, clean water, electricity, medical care, and jobs, but the
Afghan government and international donors remain committed to
improving access to these basic necessities by prioritizing
infrastructure development, education, housing development, jobs
programs, and economic reform over the next year. Growing political
stability and continued international commitment to Afghan
reconstruction create an optimistic outlook for maintaining
improvements in the Afghan economy in 2005. Expanding poppy
cultivation and a growing opium trade may account for one-third of
GDP and looms as one of Kabul's most serious policy challenges.

Akrotiri
Economic activity is limited to providing services to the
military and their families located in Akrotiri. All food and
manufactured goods must be imported.

Albania
Poor and backward by European standards, Albania is making
the difficult transition to a more modern open-market economy. The
government has taken measures to curb violent crime and to spur
economic activity and trade. The economy is bolstered by annual
remittances from abroad of $600-$800 million, mostly from Greece and
Italy; this helps offset the towering trade deficit. Agriculture,
which accounts for about one-half of GDP, is held back because of
frequent drought and the need to modernize equipment, to clarify
property rights, and to consolidate small plots of land. Energy
shortages and antiquated and inadequate infrastructure make it
difficult to attract and sustain foreign investment. The planned
construction of a new thermal power plant near Vlore and improved
transmission and distribution facilities will help relieve the
energy shortages. Also, the government is moving slowly to improve
the poor national road and rail network, a long-standing barrier to
sustained economic growth. On the positive side: growth was strong
in 2003 and 2004, the nation has important oil and gas reserves, and
inflation is not a problem.

Algeria
The hydrocarbons sector is the backbone of the economy,
accounting for roughly 60% of budget revenues, 30% of GDP, and over
95% of export earnings. Algeria has the seventh-largest reserves of
natural gas in the world and is the second-largest gas exporter; it
ranks 14th in oil reserves. Sustained high oil prices in recent
years, along with macroeconomic policy reforms supported by the IMF,
have helped improve Algeria's financial and macroeconomic
indicators. Algeria is running substantial trade surpluses and
building up record foreign exchange reserves. Real GDP has risen due
to higher oil output and increased government spending. The
government's continued efforts to diversify the economy by
attracting foreign and domestic investment outside the energy
sector, however, has had little success in reducing high
unemployment and improving living standards. Structural reform
within the economy moves ahead slowly.

American Samoa
This is a traditional Polynesian economy in which
more than 90% of the land is communally owned. Economic activity is
strongly linked to the US, with which American Samoa conducts most
of its foreign trade. Tuna fishing and tuna processing plants are
the backbone of the private sector, with canned tuna the primary
export. Transfers from the US Government add substantially to
American Samoa's economic well-being. Attempts by the government to
develop a larger and broader economy are restrained by Samoa's
remote location, its limited transportation, and its devastating
hurricanes. Tourism is a promising developing sector.

Andorra
Tourism, the mainstay of Andorra's tiny, well-to-do economy,
accounts for roughly 80% of GDP. An estimated 9 million tourists
visit annually, attracted by Andorra's duty-free status and by its
summer and winter resorts. Andorra's comparative advantage has
recently eroded as the economies of neighboring France and Spain
have been opened up, providing broader availability of goods and
lower tariffs. The banking sector, with its "tax haven" status, also
contributes substantially to the economy. Agricultural production is
limited - only 2% of the land is arable - and most food has to be
imported. The principal livestock activity is sheep raising.
Manufacturing output consists mainly of cigarettes, cigars, and
furniture. Andorra is a member of the EU Customs Union and is
treated as an EU member for trade in manufactured goods (no tariffs)
and as a non-EU member for agricultural products.

Angola
Angola has been an economy in disarray because of a quarter
century of nearly continuous warfare. An apparently durable peace
was established after the death of rebel leader Jonas SAVIMBI in
February 2002, but consequences from the conflict continue including
the impact of widespread land mines. Subsistence agriculture
provides the main livelihood for 85% of the population. Oil
production and the supporting activities are vital to the economy,
contributing about 45% to GDP and more than half of exports. Much of
the country's food must still be imported. To fully take advantage
of its rich natural resources - gold, diamonds, extensive forests,
Atlantic fisheries, and large oil deposits - Angola will need to
continue reforming government policies and to reduce corruption.
While Angola made progress in further lowering inflation, from 325%
in 2000 to about 106% in 2002, the government has failed to make
sufficient progress on reforms recommended by the IMF such as
increasing foreign exchange reserves and promoting greater
transparency in government spending. Increased oil production
supported 7% GDP growth in 2003 and 12% growth in 2004.

Anguilla
Anguilla has few natural resources, and the economy depends
heavily on luxury tourism, offshore banking, lobster fishing, and
remittances from emigrants. Increased activity in the tourism
industry, which has spurred the growth of the construction sector,
has contributed to economic growth. Anguillan officials have put
substantial effort into developing the offshore financial sector,
which is small, but growing. In the medium term, prospects for the
economy will depend largely on the tourism sector and, therefore, on
revived income growth in the industrialized nations as well as on
favorable weather conditions.

Antarctica
Fishing off the coast and tourism, both based abroad,
account for the limited economic activity. Antarctic fisheries in
2000-01 (1 July-30 June) reported landing 112,934 metric tons.
Unregulated fishing, particularly of Patagonian toothfish, is a
serious problem. The Convention on the Conservation of Antarctic
Marine Living Resources determines the recommended catch limits for
marine species. A total of 13,571 tourists visited in the 2002-03
antarctic summer, up from the 11,588 visitors the previous year.
Nearly all of them were passengers on commercial (nongovernmental)
ships and several yachts that make trips during the summer. Most
tourist trips last approximately two weeks.

Antigua and Barbuda
Tourism continues to dominate the economy,
accounting for more than half of GDP. Weak tourist arrival numbers
since early 2000 have slowed the economy, however, and pressed the
government into a tight fiscal corner. The dual-island nation's
agricultural production is focused on the domestic market and
constrained by a limited water supply and a labor shortage stemming
from the lure of higher wages in tourism and construction.
Manufacturing comprises enclave-type assembly for export with major
products being bedding, handicrafts, and electronic components.
Prospects for economic growth in the medium term will continue to
depend on income growth in the industrialized world, especially in
the US, which accounts for slightly more than one-third of tourist
arrivals.

Arctic Ocean
Economic activity is limited to the exploitation of
natural resources, including petroleum, natural gas, fish, and seals.

Argentina
Argentina benefits from rich natural resources, a highly
literate population, an export-oriented agricultural sector, and a
diversified industrial base. Over the past decade, however, the
country has suffered problems of inflation, external debt, capital
flight, and budget deficits. Growth in 2000 was a negative 0.8%, as
both domestic and foreign investors remained skeptical of the
government's ability to pay debts and maintain the peso's fixed
exchange rate with the US dollar. The economic situation worsened in
2001 with the widening of spreads on Argentine bonds, massive
withdrawals from the banks, and a further decline in consumer and
investor confidence. Government efforts to achieve a "zero deficit,"
to stabilize the banking system, and to restore economic growth
proved inadequate in the face of the mounting economic problems. The
peso's peg to the dollar was abandoned in January 2002, and the peso
was floated in February; the exchange rate plunged and real GDP fell
by 10.9% in 2002, but by mid-year the economy had stabilized, albeit
at a lower level. GDP expanded by more than 8% in 2003 and again in
2004, with unemployment falling and inflation remaining in single
digits.

Armenia
Under the old Soviet central planning system, Armenia had
developed a modern industrial sector, supplying machine tools,
textiles, and other manufactured goods to sister republics in
exchange for raw materials and energy. Since the implosion of the
USSR in December 1991, Armenia has switched to small-scale
agriculture away from the large agroindustrial complexes of the
Soviet era. The agricultural sector has long-term needs for more
investment and updated technology. The privatization of industry has
been at a slower pace, but has been given renewed emphasis by the
current administration. Armenia is a food importer, and its mineral
deposits (copper, gold, bauxite) are small. The ongoing conflict
with Azerbaijan over the ethnic Armenian-dominated region of
Nagorno-Karabakh and the breakup of the centrally directed economic
system of the former Soviet Union contributed to a severe economic
decline in the early 1990s. By 1994, however, the Armenian
Government had launched an ambitious IMF-sponsored economic
liberalization program that resulted in positive growth rates in
1995-2003. Armenia joined the WTO in January 2003. Armenia also has
managed to slash inflation, stabilize the local currency (the dram),
and privatize most small- and medium-sized enterprises. The chronic
energy shortages Armenia suffered in the early and mid-1990s have
been offset by the energy supplied by one of its nuclear power
plants at Metsamor. Armenia is now a net energy exporter, although
it does not have sufficient generating capacity to replace Metsamor,
which is under international pressure to close. The electricity
distribution system was privatized in 2002. Armenia's severe trade
imbalance has been offset somewhat by international aid and foreign
direct investment. Economic ties with Russia remain close,
especially in the energy sector.

Aruba
Tourism is the mainstay of the small, open Aruban economy,
with offshore banking and oil refining and storage also important.
The rapid growth of the tourism sector over the last decade has
resulted in a substantial expansion of other activities.
Construction has boomed, with hotel capacity five times the 1985
level. In addition, the reopening of the country's oil refinery in
1993, a major source of employment and foreign exchange earnings,
has further spurred growth. Aruba's small labor force and
exceptionally low unemployment rate have led to a large number of
unfilled job vacancies, despite sharp rises in wage rates in recent
years. Tourist arrivals have declined in the aftermath of the 11
September 2001 terrorist attacks on the US. The government now must
deal with a budget deficit and a negative trade balance.

Ashmore and Cartier Islands
no economic activity

Atlantic Ocean
The Atlantic Ocean provides some of the world's most
heavily trafficked sea routes, between and within the Eastern and
Western Hemispheres. Other economic activity includes the
exploitation of natural resources, e.g., fishing, dredging of
aragonite sands (The Bahamas), and production of crude oil and
natural gas (Caribbean Sea, Gulf of Mexico, and North Sea).

Australia
Australia has an enviable Western-style capitalist
economy, with a per capita GDP on par with the four dominant West
European economies. Rising output in the domestic economy, robust
business and consumer confidence, and rising exports of raw
materials and agricultural products are fueling the economy.
Australia's emphasis on reforms, low inflation, and growing ties
with China are other key factors behind the economy's strength. The
impact of drought, weak foreign demand, and strong import demand
pushed the trade deficit up from $8 billion in 2002, to $18 billion
in 2003, and to $13 billion in 2004. One other concern is the rapid
increase in domestic housing prices, which have raised the prospect
that interest rates will need to be raised to prevent a speculative
bubble.

Austria
Austria, with its well-developed market economy and high
standard of living, is closely tied to other EU economies,
especially Germany's. The economy features up-to-date industrial and
agricultural sectors. Timber is a key industry, 47% of the land area
being forested. Membership in the EU has drawn an influx of foreign
investors attracted by Austria's access to the single European
market and proximity to the new EU economies. Slow growth in Europe
has held the economy to 0.7% growth in 2001, 1.4% in 2002, 0.8% in
2003, and 1.9% in 2004. To meet increased competition from both EU
and Central European countries, particularly the new EU members,
Austria will need to emphasize knowledge-based sectors of the
economy, continue to deregulate the service sector, and encourage
much greater participation in the labor market by its aging
population. The aging phenomenon, together with already high health
and pension costs, poses fundamental problems in tax and welfare
policies.

Azerbaijan
Azerbaijan's number one export is oil. Azerbaijan's oil
production declined through 1997 but has registered an increase
every year since. Negotiation of production-sharing arrangements
(PSAs) with foreign firms, which have thus far committed $60 billion
to long-term oilfield development, should generate the funds needed
to spur future industrial development. Oil production under the
first of these PSAs, with the Azerbaijan International Operating
Company, began in November 1997. Azerbaijan shares all the
formidable problems of the former Soviet republics in making the
transition from a command to a market economy, but its considerable
energy resources brighten its long-term prospects. Baku has only
recently begun making progress on economic reform, and old economic
ties and structures are slowly being replaced. One obstacle to
economic progress is the need for stepped up foreign investment in
the non-energy sector. A second obstacle is the continuing conflict
with Armenia over the Nagorno-Karabakh region. Trade with Russia and
the other former Soviet republics is declining in importance while
trade is building with Turkey and the nations of Europe. Long-term
prospects will depend on world oil prices, the location of new
pipelines in the region, and Azerbaijan's ability to manage its oil
wealth.

Bahamas, The
The Bahamas is a stable, developing nation with an
economy heavily dependent on tourism and offshore banking. Tourism
alone accounts for more than 60% of GDP and directly or indirectly
employs half of the archipelago's labor force. Steady growth in
tourism receipts and a boom in construction of new hotels, resorts,
and residences had led to solid GDP growth in recent years, but the
slowdown in the US economy and the attacks of 11 September 2001 held
back growth in these sectors in 2001-03. Financial services
constitute the second-most important sector of the Bahamian economy,
accounting for about 15% of GDP. However, since December 2000, when
the government enacted new regulations on the financial sector, many
international businesses have left The Bahamas. Manufacturing and
agriculture together contribute approximately a tenth of GDP and
show little growth, despite government incentives aimed at those
sectors. Overall growth prospects in the short run rest heavily on
the fortunes of the tourism sector, which depends on growth in the
US, the source of more than 80% of the visitors. In addition to
tourism and banking, the government supports the development of a
"third pillar," e-commerce.

Bahrain
In well-to-do Bahrain, petroleum production and refining
account for about 60% of export receipts, 60% of government
revenues, and 30% of GDP. With its highly developed communication
and transport facilities, Bahrain is home to numerous multinational
firms with business in the Gulf. A large share of exports consist of
petroleum products made from refining imported crude. Construction
proceeds on several major industrial projects. Unemployment,
especially among the young, and the depletion of oil and underground
water resources are major long-term economic problems. In September
2004 Bahrain signed a Free Trade Agreement (FTA) with the United
States - the first such agreement undertaken by a Gulf state. Both
countries must ratify the FTA before it is enforced.

Baker Island
no economic activity

Bangladesh
Despite sustained domestic and international efforts to
improve economic and demographic prospects, Bangladesh remains a
poor, overpopulated, and ill-governed nation. Although half of GDP
is generated through the service sector, nearly two-thirds of
Bangladeshis are employed in the agriculture sector, with rice as
the single-most-important product. Major impediments to growth
include frequent cyclones and floods, inefficient state-owned
enterprises, inadequate port facilities, a rapidly growing labor
force that cannot be absorbed by agriculture, delays in exploiting
energy resources (natural gas), insufficient power supplies, and
slow implementation of economic reforms. Economic reform is stalled
in many instances by political infighting and corruption at all
levels of government. Progress also has been blocked by opposition
from the bureaucracy, public sector unions, and other vested
interest groups. The BNP government, led by Prime Minister Khaleda
ZIA, has the parliamentary strength to push through needed reforms,
but the party's political will to do so has been lacking in key
areas. One encouraging note: growth has been a steady 5% for the
past several years.

Barbados
Historically, the Barbadian economy had been dependent on
sugarcane cultivation and related activities, but production in
recent years has diversified into light industry and tourism.
Offshore finance and information services are important foreign
exchange earners. The government continues its efforts to reduce
unemployment, to encourage direct foreign investment, and to
privatize remaining state-owned enterprises. The economy contracted
in 2002-03 mainly due to a decline in tourism. Growth probably was
positive in 2004, as economic conditions in the US and Europe
moderately improved.

Bassas da India
no economic activity

Belarus
Belarus's economy in 2003-04 posted 6.1% and 6.4% growth.
Still, the economy continues to be hampered by high inflation,
persistent trade deficits, and ongoing rocky relations with Russia,
Belarus' largest trading partner and energy supplier. Belarus has
seen little structural reform since 1995, when President LUKASHENKO
launched the country on the path of "market socialism." In keeping
with this policy, LUKASHENKO reimposed administrative controls over
prices and currency exchange rates and expanded the state's right to
intervene in the management of private enterprises. In addition,
businesses have been subject to pressure on the part of central and
local governments, e.g., arbitrary changes in regulations, numerous
rigorous inspections, retroactive application of new business
regulations, and arrests of "disruptive" businessmen and factory
owners. A wide range of redistributive policies has helped those at
the bottom of the ladder; the Gini coefficient is among the lowest
in the world. For the time being, Belarus remains self-isolated from
the West and its open-market economies. Growth has been strong in
recent years, despite the roadblocks in a tough, centrally directed
economy and the high, but decreasing, rate of inflation. Growth has
been buoyed by increased Russian demand for generally noncompetitive
Belarusian goods.

Belgium
This modern private enterprise economy has capitalized on
its central geographic location, highly developed transport network,
and diversified industrial and commercial base. Industry is
concentrated mainly in the populous Flemish area in the north. With
few natural resources, Belgium must import substantial quantities of
raw materials and export a large volume of manufactures, making its
economy unusually dependent on the state of world markets. Roughly
three-quarters of its trade is with other EU countries. Public debt
is nearly 100% of GDP. On the positive side, the government has
succeeded in balancing its budget, and income distribution is
relatively equal. Belgium began circulating the euro currency in
January 2002. Economic growth in 2001-03 dropped sharply because of
the global economic slowdown, with moderate recovery in 2004.

Belize
In this small, essentially private enterprise economy the
tourism industry is the number one foreign exchange earner followed
by marine products, citrus, cane sugar, bananas, and garments. The
government's expansionary monetary and fiscal policies, initiated in
September 1998, led to sturdy GDP growth averaging nearly 6% in
1999-2004. Major concerns continue to be the sizable trade deficit
and foreign debt. A key short-term objective remains the reduction
of poverty with the help of international donors.

Benin
The economy of Benin remains underdeveloped and dependent on
subsistence agriculture, cotton production, and regional trade.
Growth in real output has averaged around 5% in the past six years,
but rapid population growth has offset much of this increase.
Inflation has subsided over the past several years. In order to
raise growth still further, Benin plans to attract more foreign
investment, place more emphasis on tourism, facilitate the
development of new food processing systems and agricultural
products, and encourage new information and communication
technology. The 2001 privatization policy should continue in
telecommunications, water, electricity, and agriculture in spite of
initial government reluctance. The Paris Club and bilateral
creditors have eased the external debt situation, while pressing for
more rapid structural reforms. Benin continues to be hurt by
Nigerian trade protection that bans imports of a growing list of
products from Benin and elsewhere. As a result, smuggling and
criminality along the Benin-Nigeria border has been on the rise.

Bermuda
Bermuda enjoys one of the highest per capita incomes in the
world, nearly equal to that of the US. Its economy is primarily
based on providing financial services for international business and
luxury facilities for tourists. The effects of 11 September 2001
have had both positive and negative ramifications for Bermuda. On
the positive side, a number of new reinsurance companies have
located on the island, contributing to the expansion of an already
robust international business sector. On the negative side,
Bermuda's tourism industry - which derives over 80% of its visitors
from the US - was severely hit as American tourists chose not to
travel. Tourism rebounded somewhat in 2002-04. Most capital
equipment and food must be imported. Bermuda's industrial sector is
small, although construction continues to be important; the average
cost of a house in June 2003 had risen to $976,000. Agriculture is
limited, only 20% of the land being arable.

Bhutan
The economy, one of the world's smallest and least developed,
is based on agriculture and forestry, which provide the main
livelihood for more than 90% of the population. Agriculture consists
largely of subsistence farming and animal husbandry. Rugged
mountains dominate the terrain and make the building of roads and
other infrastructure difficult and expensive. The economy is closely
aligned with India's through strong trade and monetary links and
dependence on India's financial assistance. The industrial sector is
technologically backward, with most production of the cottage
industry type. Most development projects, such as road construction,
rely on Indian migrant labor. Bhutan's hydropower potential and its
attraction for tourists are key resources. Model education, social,
and environment programs are underway with support from multilateral
development organizations. Each economic program takes into account
the government's desire to protect the country's environment and
cultural traditions. For example, the government, in its cautious
expansion of the tourist sector, encourages visits by upscale,
environmentally conscientious tourists. Detailed controls and
uncertain policies in areas like industrial licensing, trade, labor,
and finance continue to hamper foreign investment.

Bolivia
Bolivia, long one of the poorest and least developed Latin
American countries, reformed its economy after suffering a
disastrous economic crisis in the early 1980s. The reforms spurred
real GDP growth, which averaged 4 percent in the 1990s, and poverty
rates fell. Economic growth, however, lagged again beginning in 1999
because of a global slowdown and homegrown factors such as political
turmoil, civil unrest, and soaring fiscal deficits, all of which
hurt investor confidence. In 2003, violent protests against the
pro-foreign investment economic policies of President SANCHEZ DE
LOZADA led to his resignation and the cancellation of plans to
export Bolivia's newly discovered natural gas reserves to large
northern hemisphere markets. Foreign investment dried up as
companies adopted a wait-and-see attitude regarding new President
Carlos MESA's willingness to protect investor rights in the face of
increased demands by radical groups that the government expropriate
foreign-owned assets. Real GDP growth in 2003 and 2004 - helped by
increased demand for natural gas in neighboring Brazil - was
positive, but still below the levels seen during the 1990s. Bolivia
remains dependent on foreign aid from multilateral lenders and
foreign governments.

Bosnia and Herzegovina
Bosnia and Herzegovina ranked next to
Macedonia as the poorest republic in the old Yugoslav federation.
Although agriculture is almost all in private hands, farms are small
and inefficient, and the republic traditionally is a net importer of
food. Industry has been greatly overstaffed, one reflection of the
socialist economic structure of Yugoslavia. TITO had pushed the
development of military industries in the republic with the result
that Bosnia hosted a number of Yugoslavia's defense plants. The
interethnic warfare in Bosnia caused production to plummet by 80%
from 1992 to 1995 and unemployment to soar. With an uneasy peace in
place, output recovered in 1996-99 at high percentage rates from a
low base; but output growth slowed in 2000-02. Part of the lag in
output was made up in 2003-2004. National-level statistics are
limited and do not capture the large share of black market activity.
The konvertibilna marka (convertible mark or BAM)- the national
currency introduced in 1998 - is now pegged to the euro, and the
Central Bank of Bosnia and Herzegovina has dramatically increased
its reserve holdings. Implementation of privatization, however, has
been slow, and local entities only reluctantly support
national-level institutions. Banking reform accelerated in 2001 as
all the Communist-era payments bureaus were shut down. A sizeable
current account deficit and high unemployment rate remain the two
most serious economic problems. The country receives substantial
amounts of reconstruction assistance and humanitarian aid from the
international community but will have to prepare for an era of
declining assistance.

Botswana
Botswana has maintained one of the world's highest economic
growth rates since independence in 1966. Through fiscal discipline
and sound management, Botswana has transformed itself from one of
the poorest countries in the world to a middle-income country with a
per capita GDP of $9,200 in 2004. Two major investment services rank
Botswana as the best credit risk in Africa. Diamond mining has
fueled much of the expansion and currently accounts for more than
one-third of GDP and for 70-80% of export earnings. Tourism,
financial services, subsistence farming, and cattle raising are
other key sectors. On the downside, the government must deal with
high rates of unemployment and poverty. Unemployment officially is
23.8%, but unofficial estimates place it closer to 40%. HIV/AIDS
infection rates are the second highest in the world and threaten
Botswana's impressive economic gains. An expected leveling off in
diamond mining production overshadow long-term prospects.

Bouvet Island
no economic activity; declared a nature reserve

Brazil
Possessing large and well-developed agricultural, mining,
manufacturing, and service sectors, Brazil's economy outweighs that
of all other South American countries and is expanding its presence
in world markets. From 2001-03 real wages fell and Brazil's economy
grew, on average, only 2.2% per year, as the country absorbed a
series of domestic and international economic shocks. That Brazil
absorbed these shocks without financial collapse is a tribute to the
resiliency of the Brazilian economy and the economic program put in
place by former President CARDOSO and strengthened by President LULA
DA SILVA. In 2004, Brazil enjoyed more robust growth that yielded
increases in employment and real wages. The three pillars of the
economic program are a floating exchange rate, an
inflation-targeting regime, and tight fiscal policy, all reinforced
by a series of IMF programs. The currency depreciated sharply in
2001 and 2002, which contributed to a dramatic current account
adjustment: in 2003 and 2004, Brazil ran record trade surpluses and
recorded its first current account surpluses since 1992.
Productivity gains - particularly in agriculture - also contributed
to the surge in exports, and Brazil in 2004 surpassed the previous
year's record export level and again posted a current account
surplus. While economic management has been good, there remain
important economic vulnerabilities. The most significant are
debt-related: the government's largely domestic debt increased
steadily from 1994 to 2003 - straining government finances - before
falling as a percentage of GDP in 2004, while Brazil's foreign debt
(a mix of private and public debt) is large in relation to Brazil's
small (but growing) export base. Another challenge is maintaining
economic growth over a period of time to generate employment and
make the government debt burden more manageable.

British Indian Ocean Territory
All economic activity is concentrated
on the largest island of Diego Garcia, where joint UK-US defense
facilities are located. Construction projects and various services
needed to support the military installations are done by military
and contract employees from the UK, Mauritius, the Philippines, and
the US. There are no industrial or agricultural activities on the
islands. When the Ilois return, they plan to reestablish sugarcane
production and fishing.

British Virgin Islands
The economy, one of the most stable and
prosperous in the Caribbean, is highly dependent on tourism,
generating an estimated 45% of the national income. An estimated
350,000 tourists, mainly from the US, visited the islands in 1998.
Tourism suffered in 2002 because of the lackluster US economy. 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. Roughly
400,000 companies were on the offshore registry by yearend 2000. 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, well-to-do economy encompasses a mixture of
foreign and domestic entrepreneurship, government regulation,
welfare measures, and village tradition. Crude oil and natural gas
production account for nearly 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 free education
through the university level 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, further widening the economic base beyond oil and gas.

Bulgaria
Bulgaria, a former communist country striving to enter the
European Union, has experienced macroeconomic stability and strong
growth since a major economic downturn in 1996 led to the fall of
the then socialist government. As a result, the government became
committed to economic reform and responsible fiscal planning.
Minerals, including coal, copper, and zinc play an important role in
industry. In 1997, macroeconomic stability was reinforced by the
imposition of a fixed exchange rate of the lev against the German
D-mark and the negotiation of an IMF standby agreement. Low
inflation and steady progress on structural reforms improved the
business environment; Bulgaria has averaged 4% growth since 2000 and
has begun to attract significant amounts of foreign direct
investment. Corruption in the public administration, a weak
judiciary, and the presence of organized crime remain the largest
challenges for Bulgaria.

Burkina Faso
One of the poorest countries in the world, landlocked
Burkina Faso has few natural resources and a weak industrial base.
About 90% of the population is engaged in subsistence agriculture,
which is vulnerable to harsh climatic conditions. Cotton is the key
crop and the government has joined with other cotton producing
countries in the region to lobby for improved access to Western
markets. GDP growth has largely been driven by increases in world
cotton prices. 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;
exports and economic growth have increased. The government devolved
macroeconomic policy and inflation targeting to the West African
regional central bank (BCEAO), but maintains control over
microeconomic policies, including reducing the trade deficit and
implementing reforms to encourage private investment. The bitter
internal crisis in neighboring Cote d'Ivoire continues to hurt trade
and industrial prospects and deepens the need for international
assistance.

Burma
Burma is a resource-rich country that suffers from government
controls, inefficient economic policies, and abject rural poverty.
The junta took steps in the early 1990s to liberalize the economy
after decades of failure under the "Burmese Way to Socialism", but
those efforts have since stalled and some of the liberalization
measures have been rescinded. Burma has been unable to achieve
monetary or fiscal stability, resulting in an economy that suffers
from serious macroeconomic imbalances - including inflation and
multiple official exchange rates that overvalue the Burmese kyat. In
addition, most overseas development assistance ceased after the
junta began to suppress the democracy movement in 1988 and
subsequently ignored the results of the 1990 legislative elections.
Economic sanctions against Burma by the United States - including a
ban on imports of Burmese products and a ban on provision of
financial services by US persons in response to the government of
Burma's attack in May 2003 on AUNG SAN SUU KYI and her convoy -
further slowed the inflow of foreign exchange. Official statistics
are inaccurate. Published statistics on foreign trade are greatly
understated because of the size of the black market and unofficial
border trade - often estimated to be one to two times the size of
the official economy. Though the Burmese government has good
economic relations with its neighbors, a better investment climate
and an improved political situation are needed to promote foreign
investment, exports, and tourism. In February 2003, a major banking
crisis hit the country's 20 private banks, shutting them down and
disrupting the economy. As of January 2004, the largest private
banks remained moribund, leaving the private sector with little
formal access to credit.

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. Economic growth depends on coffee and tea
exports, which account for 90% of foreign exchange earnings. The
ability to pay for imports, therefore, rests primarily on weather
conditions and international coffee and tea prices. The Tutsi
minority, 14% of the population, dominates the government and the
coffee trade at the expense of the Hutu majority, 85% of the
population. Since October 1993 an ethnic-based war has resulted in
more than 200,000 deaths, forced 450,000 refugees into Tanzania, and
displaced 140,000 others internally. Doubts about the prospects for
sustainable peace continue to impede development. Only one in two
children go to school, and approximately one in ten adults has
HIV/AIDS. Food, medicine, and electricity remain in short supply.

Cambodia
Cambodia's economy slowed dramatically in 1997 and 1998 due
to the regional economic crisis, civil violence, and political
infighting, and foreign investment and tourism decreased. In 1999,
the first full year of peace in 30 years, the government made
progress on economic reforms. Growth resumed and remained about 5%
from 2000 to 2004. Economic growth has been largely driven by
expansion in the garment sector and tourism, but is expected to fall
in 2005 as growth in the garment sector stalls. Clothing exports
were fostered by a US-Cambodian Bilateral Textile Agreement signed
in 1999 which gave Cambodia a guaranteed quota of US textile imports
and established a bonus for improving working conditions and
enforcing Cambodian labor laws and international labor standards in
the industry. With the January 2005 expiration of a WTO Agreement on
Textiles and Clothing, Cambodia-based textile producers are in
direct competition with lower priced producing countries such as
China and India. Faced with the possibility that over the next five
years Cambodia may lose orders and some of the 250,000 well-paid
jobs the industry provides, Cambodia has committed itself to a
policy of continued support for high labor standards in an attempt
to maintain favor with buyers. Tourism growth remains strong, with
arrivals up 15% in 2004. 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. Fully 75% of the population remains engaged
in subsistence farming. Fear of renewed political instability and a
dysfunctional legal system coupled with extensive government
corruption discourage foreign investment. The Cambodian government
continues to work with bilateral and multilateral donors to address
the country's many pressing needs. In December 2004, official donors
pledged $504 million in aid for 2005 on the condition that the
Cambodian government begins taking steps to address rampant
corruption. The next donor pledging session is scheduled for
December 2005. The major economic challenge for Cambodia over the
next decade will be fashioning an economic environment in which the
private sector can create enough jobs to handle Cambodia's
demographic imbalance. More than 50% of the population is 20 years
or younger.

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, privatization, and poverty reduction programs.
International oil and cocoa prices have considerable impact on the
economy.

Canada
As an affluent, high-tech industrial society, newly entered
in the trillion dollar class, Canada closely resembles the US in its
market-oriented economic system, pattern of production, and affluent
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. The 1989 US-Canada Free Trade Agreement (FTA) and the
1994 North American Free Trade Agreement (NAFTA) (which includes
Mexico) touched off a dramatic increase in trade and economic
integration with the US. Given its great natural resources, skilled
labor force, and modern capital plant Canada enjoys solid economic
prospects. Solid fiscal management has produced a long-term budget
surplus which is substantially reducing the national debt, although
public debate continues over how to manage the rising cost of the
publicly funded healthcare system. Exports account for roughly a
third of GDP. Canada enjoys a substantial trade surplus with its
principal trading partner, the United States, which absorbs more
than 85% of Canadian exports.

Cape Verde
This island economy suffers from a poor natural resource
base, including serious water shortages exacerbated by cycles of
long-term drought. The economy is service-oriented, with commerce,
transport, tourism, and public services accounting for 72% of GDP.
Although nearly 70% of the population lives in rural areas, the
share of agriculture in GDP in 2004 was only 12%, of which fishing
accounted for 1.5%. About 82% 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 supplement GDP by more
than 20%. Economic reforms are aimed at developing the private
sector and attracting foreign investment to diversify the economy.
Future prospects depend heavily on the maintenance of aid flows, the
encouragement of tourism, 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 1998, 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 in 1997, with 600,000 from the US. 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 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. Factional fighting between
the government and its opponents remains a drag on economic
revitalization, with GDP growth at only 0.5% in 2004. Distribution
of income is extraordinarily unequal. Grants from France and the
international community can only partially meet humanitarian needs.

Chad
Chad's primarily agricultural economy will continue to be
boosted by major oilfield and pipeline projects that began in 2000.
Over 80% of Chad's population relies on subsistence farming and
livestock raising for its livelihood. Cotton, cattle, and gum arabic
provide the bulk of Chad's export earnings; Chad began to export oil
in 2004. Chad's economy has long been handicapped by its landlocked
position, high energy costs, and a history of instability. Chad
relies on foreign assistance and foreign capital for most public and
private sector investment projects. A consortium led by two US
companies has been investing $3.7 billion to develop oil reserves
estimated at 1 billion barrels in southern Chad. Oil production came
on stream in late 2003.

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 because of 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 4.2% in 2000. Growth fell back to 3.1% in 2001 and 2.1%
in 2002, largely due to lackluster global growth and the devaluation
of the Argentine peso. Chile's economy began a slow recovery in
2003, growing 3.2% and accelerated to 5.8% in 2004. GDP growth
benefited from high copper prices, solid export earnings
(particularly forestry, fishing, and mining), and stepped-up foreign
direct investment. Unemployment, however, remains stubbornly high.
Chile deepened its longstanding commitment to trade liberalization
with the signing of a free trade agreement with the US, which took
effect on 1 January 2004.

China
In late 1978 the Chinese leadership began moving the economy
from a sluggish, inefficient, Soviet-style centrally planned economy
to a more market-oriented system. Whereas the system operates within
a political framework of strict Communist control, the economic
influence of non-state organizations and individual citizens has
been steadily increasing. The authorities switched to a system of
household and village responsibility in agriculture in place of the
old collectivization, increased the authority of local officials and
plant managers in industry, permitted a wide variety of small-scale
enterprises in services and light manufacturing, and opened the
economy to increased foreign trade and investment. The result has
been a quadrupling of GDP since 1978. Measured on a purchasing power
parity (PPP) basis, China in 2004 stood as the second-largest
economy in the world after the US, although in per capita terms the
country is still poor. Agriculture and industry have posted major
gains especially in coastal areas near Hong Kong and opposite Taiwan
and in Shanghai, where foreign investment has helped spur output of
both domestic and export goods. The leadership, however, often has
experienced - as a result of its hybrid system - the worst results
of socialism (bureaucracy and lassitude) and of capitalism (growing
income disparities and rising unemployment). China thus has
periodically backtracked, retightening central controls at
intervals. The government has struggled to (a) sustain adequate jobs
growth for tens of millions of workers laid off from state-owned
enterprises, migrants, and new entrants to the work force; (b)
reduce corruption and other economic crimes; and (c) keep afloat the
large state-owned enterprises, many of which had been shielded from
competition by subsidies and had been losing the ability to pay full
wages and pensions. From 100 to 150 million surplus rural workers
are adrift between the villages and the cities, many subsisting
through part-time, low-paying jobs. Popular resistance, changes in
central policy, and loss of authority by rural cadres have weakened
China's population control program, which is essential to
maintaining long-term growth in living standards. At the same time,
one demographic consequence of the "one child" policy is that China
is now one of the most rapidly aging countries in the world. Another
long-term threat to growth is the deterioration in the environment -
notably air pollution, soil erosion, and the steady fall of the
water table especially in the north. China continues to lose arable
land because of erosion and economic development. As part of its
effort to gradually slow the rapid economic growth seen in 2004,
Beijing says it will reduce somewhat its spending on infrastructure
in 2005, while continuing to focus on poverty relief and through
rural tax reform. Accession to the World Trade Organization helps
strengthen its ability to maintain strong growth rates but at the
same time puts additional pressure on the hybrid system of strong
political controls and growing market influences. China has
benefited from a huge expansion in computer Internet use, with 94
million users at the end of 2004. Foreign investment remains a
strong element in China's remarkable economic growth. Shortages of
electric power and raw materials may affect industrial output in
2005. More power generating capacity is scheduled to come on line in
2006. In its rivalry with India as an economic power, China has a
lead in the absorption of technology, the rising prominence in world
trade, and the alleviation of poverty; India has one important
advantage in its relative mastery of the English language, but the
number of competent Chinese English-speakers is growing rapidly.

Christmas 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. With the support of
the government, a $34 million casino opened in 1993. The casino
closed in 1998. The Australian Government in 2001 agreed to support
the creation of a commercial space-launching site on the island,
projected to begin operations in the near future

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. Small local gardens and fishing contribute to
the food supply, but additional food and most other necessities must
be imported from Australia. There is a small tourist industry.

Colombia
Colombia's economy has been on a recovery trend during the
past two years despite a serious armed conflict. The economy
continues to improve thanks to austere government budgets, focused
efforts to reduce public debt levels, and an export-oriented growth
focus. Ongoing economic problems facing President URIBE range from
reforming the pension system to reducing high unemployment. New
exploration is needed to offset declining oil production. On the
positive side, several international financial institutions have
praised the economic reforms introduced by URIBE, which include
measures designed to reduce the public-sector deficit below 2.5% of
GDP. The government's economic policy and democratic security
strategy have engendered a growing sense of confidence in the
economy, particularly within the business sector. Coffee prices have
recovered from previous lows as the Colombian coffee industry
pursues greater market shares in developed countries such as the
United States.

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, 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 -
which is hampered by internal political disputes - is struggling to
upgrade education and technical training, privatize commercial and
industrial enterprises, improve health services, diversify exports,
promote tourism, and reduce the high population growth rate.
Increased foreign support is essential if the goal of 4% annual 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 war, which began
in August 1998, dramatically reduced national output and government
revenue, increased external debt, and resulted in the deaths of
perhaps 3.5 million people from war, famine, and disease. Foreign
businesses curtailed operations due to uncertainty about the outcome
of the conflict, lack of infrastructure, and the difficult operating
environment. Conditions improved in late 2002 with the withdrawal of
a large portion of the invading foreign troops. Several IMF and
World Bank missions have met with the government to help it develop
a coherent economic plan, and President KABILA has begun
implementing reforms. Much economic activity lies outside the GDP
data. Economic stability, aided by international donors, improved in
2003-04, although an uncertain legal framework, corruption, and a
lack of openness in government policy continues to hamper growth. In
2005, renewed activity in the mining sector, the source of most
exports, could boost Kinshasa's fiscal position and GDP growth.