Chapter M: Major infectious diseases (132)

Bulgaria
Bulgaria, a former Communist country that entered the EU on
1 January 2007, averaged more than 6% growth from 2004 to 2008,
driven by significant amounts of foreign direct investment and
consumption. Successive governments have demonstrated a commitment
to economic reforms and responsible fiscal planning, but the global
downturn sharply reduced domestic demand, exports, capital inflows,
and industrial production. GDP contracted by approximately 5% in
2009, and stagnated in 2010, despite a significant recovery in
exports. The economy is expected to grow modestly in 2011, however.
Corruption in the public administration, a weak judiciary, and the
presence of organized crime remain significant challenges.

Burkina Faso
Burkina Faso is a poor, landlocked country that relies
heavily on cotton and gold exports for revenue. The country has few
natural resources and a weak industrial base. About 90% of the
population is engaged in subsistence agriculture, which is
vulnerable to periodic drought. Cotton is the main cash crop. Since
1998, Burkina Faso has embarked upon a gradual privatization of
state-owned enterprises and in 2004 revised its investment code to
attract foreign investment. As a result of this new code and other
legislation favoring the mining sector, the country has seen an
upswing in gold exploration and production. By 2010, gold had become
the main source of export revenue.

Burma
Burma, a resource-rich country, suffers from pervasive
government controls, inefficient economic policies, corruption, and
rural poverty. Despite Burma's emergence as a natural gas exporter,
socio-economic conditions have deteriorated under the regime's
mismanagement, leaving most of the public in poverty, while military
leaders and their business cronies exploit the country's ample
natural resources. The economy suffers from serious macroeconomic
imbalances - including rising inflation, fiscal deficits, multiple
official exchange rates that overvalue the Burmese kyat, a distorted
interest rate regime, unreliable statistics, and an inability to
reconcile national accounts to determine a realistic GDP figure.
Burma's poor investment climate hampers the inflow of foreign
investment; in recent years, foreign investors have shied away from
nearly every sector except for natural gas, power generation,
timber, and mining. The business climate is widely perceived as
opaque, corrupt, and highly inefficient. Over 60% of the FY 2009-10
budget is allocated to state owned enterprises - most operating at a
deficit. The government has recently privatized a number of state
owned enterprises, but most of the benefits have accrued to regime
insiders and cronies. The most productive sectors will continue to
be in extractive industries - especially oil and gas, mining, and
timber - with the latter two causing significant environmental
degradation. Other areas, such as manufacturing, tourism and
services, struggle in the face of inadequate infrastructure,
unpredictable trade policies, neglected health and education
systems, and endemic corruption. A major banking crisis in 2003
caused 20 private banks to close; private banks still operate under
tight restrictions, limiting the private sector's access to credit.
The United States, the European Union, Canada, and Australia have
imposed financial and economic sanctions on Burma, prohibiting most
financial transactions with Burmese entities, imposing travel bans
on Burmese officials and others connected to the ruling regime, and
banning imports of certain Burmese products. These sanctions
affected the country's fledgling garment industry, isolated the
struggling banking sector, and raised the costs of doing business
with Burmese companies, particularly firms tied to Burmese regime
leaders. The global crisis of 2008-09 caused exports and domestic
consumer demand to drop. Remittances from overseas Burmese workers -
who had provided significant financial support for their families -
slowed or dried up as jobs were lost and migrant workers returned
home. Though the Burmese government has good economic relations with
its neighbors, better investment and business climates and an
improved political situation are needed to promote serious foreign
investment, exports, and tourism.

Burundi
Burundi is a landlocked, resource-poor country with an
underdeveloped manufacturing sector. The economy is predominantly
agricultural which accounts for about 35% of GDP and employs more
than 90% of the population. Burundi's primary exports are coffee and
tea, which account for 90% of foreign exchange earnings, though
exports are a relatively small share of GDP. Burundi's export
earning - and its ability to pay for imports - rests primarily on
weather conditions and international coffee and tea prices. The
Tutsi minority, 14% of the population, dominates the coffee trade.
An ethnic-based war that lasted for over a decade resulted in more
than 200,000 deaths, forced more than 48,000 refugees into Tanzania,
and displaced 140,000 others internally. Only one in two children go
to school, and approximately one in 15 adults has HIV/AIDS. Food,
medicine, and electricity remain in short supply. Burundi's GDP grew
around 4% annually in 2006-09. Political stability and the end of
the civil war have improved aid flows and economic activity has
increased, but underlying weaknesses - a high poverty rate, poor
education rates, a weak legal system, and low administrative
capacity - risk undermining planned economic reforms. Burundi will
continue to remain heavily dependent on aid from bilateral and
multilateral donors; the delay of funds after a corruption scandal
cut off bilateral aid in 2007 reduced government's revenues and its
ability to pay salaries. Burundi joined the East African Community,
which should boost Burundi's regional trade ties, and received $700
million in debt relief in 2009. Instability spilling over from
eastern Congo-Kinshasa and the ban on minerals smuggled across
Burundi's border will be the main challenges to economic growth.

Cambodia
From 2004 to 2007, the economy grew about 10% per year,
driven largely by an expansion in the garment sector, construction,
agriculture, and tourism. GDP contracted 1.5% in 2009 as a result of
the global economic slowdown, but climbed more than 4% in 1010,
driven by renewed exports. With the January 2005 expiration of a WTO
Agreement on Textiles and Clothing, Cambodian textile producers were
forced to compete directly with lower-priced countries such as
China, India, Vietnam, and Bangladesh. The garment industry
currently employs more than 280,000 people - about 5% of the work
force - and contributes more than 70% of Cambodia's exports. In
2005, exploitable oil deposits were found beneath Cambodia's
territorial waters, representing a new revenue stream for the
government if commercial extraction begins. Mining also is
attracting significant investor interest, particularly in the
northern parts of the country. The government has said opportunities
exist for mining bauxite, gold, iron and gems. In 2006, a
US-Cambodia bilateral Trade and Investment Framework Agreement
(TIFA) was signed, and several rounds of discussions have been held
since 2007. Rubber exports increased about 25% in 2009 due to rising
global demand. The tourism industry has continued to grow rapidly,
with foreign arrivals exceeding 2 million per year in 2007-08,
however, economic troubles abroad dampened growth in 2009. The
global financial crisis is weakening demand for Cambodian exports,
and construction is declining due to a shortage of credit. The
long-term development of the economy remains a daunting challenge.
The Cambodian government is working with bilateral and multilateral
donors, including the World Bank and IMF, to address the country's
many pressing needs. 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 less than
25 years old. The population lacks education and productive skills,
particularly in the poverty-ridden countryside, which suffers from
an almost total lack of basic infrastructure.

Cameroon
Because of its modest 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 stagnate per capita income, a relatively inequitable
distribution of income, 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. The
IMF is pressing for more reforms, including increased budget
transparency, privatization, and poverty reduction programs. Weak
prices for oil and cocoa led to the significant slowdown in growth
in 2009. The government is under pressure to reduce its budget
deficit, which by the government's own forecast will hit 2.8% of
GDP, but the presidential election in 2011 may make fiscal austerity
difficult.

Canada
As an affluent, high-tech industrial society in the
trillion-dollar class, Canada 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, its principal trading partner. Canada
enjoys a substantial trade surplus with the US, which absorbs about
three-fourths of Canadian exports each year. Canada is the US's
largest foreign supplier of energy, including oil, gas, uranium, and
electric power. Given its great natural resources, skilled labor
force, and modern capital plant, Canada enjoyed solid economic
growth from 1993 through 2007. Buffeted by the global economic
crisis, the economy dropped into a sharp recession in the final
months of 2008, and Ottawa posted its first fiscal deficit in 2009
after 12 years of surplus. Canada's major banks, however, emerged
from the financial crisis of 2008-09 among the strongest in the
world, owing to the country's tradition of conservative lending
practices and strong capitalization. During 2010, Canada's economy
grew only 3%, because of weak exports.

Cape Verde
This island economy suffers from a poor natural resource
base, including serious water shortages exacerbated by cycles of
long-term drought and poor soil for agriculture on several of the
islands. The economy is service oriented with commerce, transport,
tourism, and public services accounting for about three-fourths of
GDP. Although nearly 70% of the population lives in rural areas, the
share of food production in GDP is low. 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 its large pool of
emigrants; remittances supplement GDP by more than 20%. Despite the
lack of resources, sound economic management has produced steadily
improving incomes. Continued 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. Cape Verde
became a member of the WTO in July 2008.

Cayman Islands
With no direct taxation, the islands are a thriving
offshore financial center. More than 93,000 companies were
registered in the Cayman Islands as of 2008, including almost 300
banks, 800 insurers, and 10,000 mutual funds. 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 1.9 million in 2008, with
about half 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 about 60% of the population living in outlying
areas. The agricultural sector generates more than half of GDP.
Timber has accounted for about 16% of export earnings and the
diamond industry, for 40%. 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. 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 foreign direct investment projects in the oil
sector that began in 2000. At least 80% of Chad's population relies
on subsistence farming and livestock raising for its livelihood.
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. Chinese companies are also
expanding exploration efforts and are currently building a 300-km
pipleline and the country's first refinery. The nation's total oil
reserves are estimated at 1.5 billion barrels. Oil production came
on stream in late 2003. Chad began to export oil in 2004. Cotton,
cattle, and gum arabic provide the bulk of Chad's non-oil export
earnings.

Chile
Chile has a market-oriented economy characterized by a high
level of foreign trade and a reputation for strong financial
institutions and sound policy that have given it the strongest
sovereign bond rating in South America. Exports account for more
than one-fourth of GDP, with commodities making up some
three-quarters of total exports. Copper alone provides one-third of
government revenue. 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 situation 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. In the years since
then, growth has averaged 4% per year. 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. Chile claims to have more bilateral or regional trade
agreements than any other country. It has 57 such agreements (not
all of them full free trade agreements), including with the European
Union, Mercosur, China, India, South Korea, and Mexico. Over the
past seven years, foreign direct investment inflows have quadrupled
to some $15 billion in 2010, but FDI had dropped to about $7 billion
in 2009 in the face of diminished investment throughout the world.
The Chilean government conducts a rule-based countercyclical fiscal
policy, accumulating surpluses in sovereign wealth funds during
periods of high copper prices and economic growth, and allowing
deficit spending only during periods of low copper prices and
growth. As of September 2008, those sovereign wealth funds - kept
mostly outside the country and separate from Central Bank reserves -
amounted to more than $20 billion. Chile used $4 billion from this
fund to finance a fiscal stimulus package to fend off recession. In
December 2009, the OECD invited Chile to become a full member, after
a two year period of compliance with organization mandates. The
economy started to show signs of a rebound in the fourth quarter,
2009, and GDP grew more than 5% in 2010. The magnitude 8.8
earthquake that struck Chile in February 2010 was one of the top ten
strongest earthquakes on record. It caused considerable damage near
the epicenter, located about 70 miles from Concepcion - and about
200 miles southwest of Santiago.

China
China's economy since the late 1970s has changed from a
closed, centrally planned system to a more market-oriented one that
plays a major role in the global economy - in 2010 China became the
world's largest exporter. Reforms began with the phasing out of
collectivized agriculture, and expanded to include the gradual
liberalization of prices, fiscal decentralization, increased
autonomy for state enterprises, creation of a diversified banking
system, development of stock markets, rapid growth of the private
sector, and opening to foreign trade and investment. China generally
has implemented reforms in a gradualist fashion. In recent years,
China has renewed its support for state-owned enterprises in sectors
it considers important to "economic security," explicitly looking to
foster globally competitive national champions. After keeping its
currency tightly linked to the US dollar for years, in July 2005
China revalued its currency by 2.1% against the US dollar and moved
to an exchange rate system that references a basket of currencies.
From mid 2005 to late 2008 cumulative appreciation of the renminbi
against the US dollar was more than 20%, but the exchange rate
remained virtually pegged to the dollar from the onset of the global
financial crisis until June 2010, when Beijing allowed resumption of
a gradual appreciation. The restructuring of the economy and
resulting efficiency gains have contributed to a more than tenfold
increase in GDP since 1978. Measured on a purchasing power parity
(PPP) basis that adjusts for price differences, China in 2010 stood
as the second-largest economy in the world after the US, having
surpassed Japan in 2001. The dollar values of China's agricultural
and industrial output each exceeded those of the US, although China
was second to the US in the value of services it produced. Still,
per capita income is below the world average. The Chinese government
faces numerous economic development challenges, including: (a)
reducing its high domestic savings rate and correspondingly low
domestic demand; (b) sustaining adequate job growth for tens of
millions of migrants and new entrants to the work force; (c)
reducing corruption and other economic crimes; and (d) containing
environmental damage and social strife related to the economy's
rapid transformation. Economic development has progressed further in
coastal provinces than in the interior, and approximately 200
million rural laborers and their dependents have relocated to urban
areas to find work. One demographic consequence of the "one child"
policy is that China is now one of the most rapidly aging countries
in the world. Deterioration in the environment - notably air
pollution, soil erosion, and the steady fall of the water table,
especially in the north - is another long-term problem. China
continues to lose arable land because of erosion and economic
development. The Chinese government is seeking to add energy
production capacity from sources other than coal and oil, focusing
on nuclear and alternative energy development. In 2009, the global
economic downturn reduced foreign demand for Chinese exports for the
first time in many years, but China rebounded quickly, outperforming
all other major economies in 2010 with GDP growth around 10%. The
economy appears set to remain on a strong growth trajectory in 2011,
lending credibility to the stimulus policies the regime rolled out
during the global financial crisis. The government vows to continue
reforming the economy and emphasizes the need to increase domestic
consumption in order to make the economy less dependent on exports
for GDP growth in the future, but China likely will make only
marginal progress toward these rebalancing goals in 2011. Two
economic problems China currently faces are inflation - which, late
in 2010, surpassed the government's target of 3% - and local
government debt, which swelled as a result of stimulus policies, and
is largely off-the-books and potentially low-quality.

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, but closed in
1998.

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
Coconuts, grown throughout the islands, 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 experienced accelerating growth between 2002 and
2007, chiefly due to improvements in domestic security, rising
commodity prices, and to President URIBE's promarket economic
policies. Foreign direct investment reached a record $10 billion in
2008, and continues to flow in, especially in the oil sector. A
series of policies enhanced Colombia's investment climate:
pro-business reforms in the oil and gas sectors and export-led
growth fueled mainly by the Andean Trade Promotion and Drug
Eradication Act. Inequality, underemployment, and narcotrafficking
remain significant challenges, and Colombia's infrastructure
requires major improvements to sustain economic expansion. Because
of the global financial crisis and weakening demand for Colombia's
exports, Colombia's economy grew only 2.7% in 2008, and 0.8% in 2009
but rebounded to around 4.5% in 2010. The government has encouraged
exporters to diversify their customer base beyond the United States
and Venezuela, traditionally Colombia's largest trading partners;
the SANTOS administration continues to pursue free trade agreements
with Asian and South American partners and awaits the approval of a
Canadian trade accord by Canada's and EU's parliaments. The business
sector remains concerned about Venezuela's trade restrictions on
Colombian exports, an appreciating domestic currency, and the
pending US Congressional approval of the US-Colombia Trade Promotion
Agreement.

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.
Export income is heavily reliant on the three main crops of vanilla,
cloves, and ylang-ylang and Comoros' export earnings are easily
disrupted by disasters such as fires. 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 - lacks a comprehensive strategy to
attract foreign investment and 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. Political
problems have inhibited growth, which has averaged only about 1% in
2006-09. Remittances from 150,000 Comorans abroad help supplement
GDP. In September 2009 the IMF approved Comoros for a three-year $21
million loan. The IMF gave generally positive reports of the
country's program performance as of October 2010. The African
Development Bank approved a $34.6 million debt-relief package loan
for Comoros in September 2010, and Comoros will attempt to qualifry
for debt relief in 2012 under the IMF and World Bank's Heavily
Indebted Poor Countries (HIPC) initiative.

Congo, Democratic Republic of the
The economy of the Democratic
Republic of the Congo - a nation endowed with vast potential wealth
- is slowly recovering from decades of decline. Systemic corruption
since independence in 1960 and conflict that began in May 1997 has
dramatically reduced national output and government revenue,
increased external debt, and resulted in the deaths of more than 5
million people from violence, 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 began to improve in late 2002 with the
withdrawal of a large portion of the invading foreign troops. The
transitional government reopened relations with international
financial institutions and international donors, and President
KABILA began implementing reforms. Progress has been slow and the
International Monetary Fund curtailed their program for the DRC at
the end of March 2006 because of fiscal overruns. Much economic
activity still occurs in the informal sector, and is not reflected
in GDP data. Renewed activity in the mining sector, the source of
most export income, boosted Kinshasa's fiscal position and GDP
growth from 2006-2008, however, the government's review of mining
contracts that began in 2006, combined with a fall in world market
prices for the DRC's key mineral exports temporarily weakened output
in 2009, leading to a balance of payments crisis. The recovery in
mineral prices beginning in mid 2009 boosted mineral exports, and
emergency funds from the IMF boosted foreign reserves. An uncertain
legal framework, corruption, a lack of transparency in government
policy are long-term problems for the mining sector and the economy
as a whole. The global recession cut economic growth in 2009 to less
than half its 2008 level, but growth returned to 3% in 2010. The DRC
signed a Poverty Reduction and Growth Facility with the IMF in 2009
and received $12 billion in multilateral and bilateral debt relief
in 2010.

Congo, Republic of the
The economy is a mixture of subsistence
agriculture, an industrial sector based largely on oil and support
services, and government spending. Oil has supplanted forestry as
the mainstay of the economy, providing a major share of government
revenues and exports. In the early 1980s, rapidly rising oil
revenues enabled the government to finance large-scale development
projects with GDP growth averaging 5% annually, one of the highest
rates in Africa. Characterized by budget problems and overstaffing,
the government has mortgaged a substantial portion of its oil
earnings through oil-backed loans that have contributed to a growing
debt burden and chronic revenue shortfalls. Economic reform efforts
have been undertaken with the support of international
organizations, notably the World Bank and the IMF. However, the
reform program came to a halt in June 1997 when civil war erupted.
Denis SASSOU-NGUESSO, who returned to power when the war ended in
October 1997, publicly expressed interest in moving forward on
economic reforms and privatization and in renewing cooperation with
international financial institutions. Economic progress was badly
hurt by slumping oil prices and the resumption of armed conflict in
December 1998, which worsened the republic's budget deficit. The
current administration presides over an uneasy internal peace and
faces difficult economic challenges of stimulating recovery and
reducing poverty. The drop in oil prices during the global crisis
reduced oil revenue by about 30%, but the subsequent recovery of oil
prices has boosted the economy's GDP and near-term prospects. In
March 2006, the World Bank and the International Monetary Fund (IMF)
approved Heavily Indebted Poor Countries (HIPC) treatment for Congo,
receiving $1.9 billion in debt relief under the program in 2010.

Cook Islands
Like many other South Pacific island nations, the Cook
Islands' economic development is hindered by the isolation of the
country from foreign markets, the limited size of domestic markets,
lack of natural resources, periodic devastation from natural
disasters, and inadequate infrastructure. Agriculture, employing
more than one-quarter of the working population, provides the
economic base with major exports made up of copra and citrus fruit.
Black pearls are the Cook Islands' leading export. Manufacturing
activities are limited to fruit processing, clothing, and
handicrafts. Trade deficits are offset by remittances from emigrants
and by foreign aid overwhelmingly from New Zealand. In the 1980s and
1990s, the country lived beyond its means, maintaining a bloated
public service and accumulating a large foreign debt. Subsequent
reforms, including the sale of state assets, the strengthening of
economic management, the encouragement of tourism, and a debt
restructuring agreement, have rekindled investment and growth.

Coral Sea Islands
no economic activity

Costa Rica
Prior to the global economic crisis, Costa Rica enjoyed
stable economic growth. The economy contracted 0.7% in 2009, but
resumed growth at more than 3% in 2010. While the traditional
agricultural exports of bananas, coffee, sugar, and beef are still
the backbone of commodity export trade, a variety of industrial and
specialized agricultural products have broadened export trade in
recent years. High value added goods and services, including
microchips, have further bolstered exports. Tourism continues to
bring in foreign exchange, as Costa Rica's impressive biodiversity
makes it a key destination for ecotourism. Foreign investors remain
attracted by the country's political stability and relatively high
education levels, as well as the fiscal incentives offered in the
free-trade zones; and Costa Rica has attracted one of the highest
levels of foreign direct investment per capita in Latin America.
However, many business impediments, such as high levels of
bureaucracy, difficulty of enforcing contracts, and weak investor
protection, remain. Poverty has remained around 15-20% for nearly 20
years, and the strong social safety net that had been put into place
by the government has eroded due to increased financial constraints
on government expenditures. Unlike the rest of Central America,
Costa Rica is not highly dependent on remittances as they only
represent about 2% of GDP. Immigration from Nicaragua has
increasingly become a concern for the government. The estimated
300,000-500,000 Nicaraguans in Costa Rica legally and illegally are
an important source of - mostly unskilled - labor, but also place
heavy demands on the social welfare system. The US-Central
American-Dominican Republic Free Trade Agreement (CAFTA-DR) entered
into force on 1 January 2009, after significant delays within the
Costa Rican legislature. CAFTA-DR will likely lead to increased
foreign direct investment in key sectors of the economy, including
the insurance and telecommunications sectors recently opened to
private investors. President CHINCHILLA is likely to push for fiscal
reform in the coming year, seeking to boost revenue, possibly
through revised tax legislation, to fund an increase in security
services and education.

Cote d'Ivoire
Cote d'Ivoire is heavily dependent on agriculture and
related activities, which engage roughly 68% of the population. Cote
d'Ivoire is the world's largest producer and exporter of cocoa beans
and a significant producer and exporter of coffee and palm oil.
Consequently, the economy is highly sensitive to fluctuations in
international prices for these products, and, to a lesser extent, in
climatic conditions. Cocoa, oil, and coffee are the country's top
export revenue earners, but the country is also producing gold.
Since the end of the civil war in 2003, political turmoil has
continued to damage the economy, resulting in the loss of foreign
investment and slow economic growth. GDP grew by more than 2% in
2008 and around 4% per year in 2009-10. Per capita income has
declined by 15% since 1999, but registered a slight improvement in
2009-10. Power cuts caused by a turbine failure in early 2010 slowed
economic activity. Cote d'Ivoire in 2010 signed agreements to
restructure its Paris Club bilateral, other bilateral, and London
Club debt. Cote d'Ivoire's long term challenges include political
instability and degrading infrastructure.

Croatia
Once one of the wealthiest of the Yugoslav republics,
Croatia's economy suffered badly during the 1991-95 war as output
collapsed and the country missed the early waves of investment in
Central and Eastern Europe that followed the fall of the Berlin
Wall. Between 2000 and 2007, however, Croatia's economic fortunes
began to improve slowly, with moderate but steady GDP growth between
4% and 6% led by a rebound in tourism and credit-driven consumer
spending. Inflation over the same period has remained tame and the
currency, the kuna, stable. Nevertheless, difficult problems still
remain, including a stubbornly high unemployment rate, a growing
trade deficit and uneven regional development. The state retains a
large role in the economy, as privatization efforts often meet stiff
public and political resistance. While macroeconomic stabilization
has largely been achieved, structural reforms lag because of deep
resistance on the part of the public and lack of strong support from
politicians. The EU accession process should accelerate fiscal and
structural reform. While long term growth prospects for the economy
remain strong, Croatia will face significant pressure as a result of
the global financial crisis. Croatia's high foreign debt, anemic
export sector, strained state budget, and over-reliance on tourism
revenue will result in higher risk to economic stability over the
medium term.

Cuba
The government continues to balance the need for economic
loosening against a desire for firm political control. The
government announced it would eliminate 500,000 state jobs by March
2011 and has expanded opportunities for self-employment. President
CASTRO said such changes were needed to update the economic model to
ensure the survival of socialism. It has rolled back limited reforms
undertaken in the 1990s to increase enterprise efficiency and
alleviate serious shortages of food, consumer goods, and services.
The average Cuban's standard of living remains at a lower level than
before the downturn of the 1990s, which was caused by the loss of
Soviet aid and domestic inefficiencies. Since late 2000, Venezuela
has been providing oil on preferential terms, and it currently
supplies about 100,000 barrels per day of petroleum products. Cuba
has been paying for the oil, in part, with the services of Cuban
personnel in Venezuela including some 30,000 medical professionals.

Curacao
Tourism, petroleum refining, and offshore finance are the
mainstays of this small economy, which is closely tied to the
outside world. Although GDP grew slightly during the past decade,
the island enjoys a high per capita income and a well-developed
infrastructure compared with other countries in the region. Curacao
has an excellent natural harbor that can accommodate large oil
tankers. The Venezuelan state oil company leases the single refinery
on the island from the government; most of the oil for the refinery
is imported from Venezuela; most of the refined products are
exported to the US. Almost all consumer and capital goods are
imported, with the US, Brazil, Italy, and Mexico being the major
suppliers. The government is attempting to diversify its industry
and trade and has signed an Association Agreement with the EU to
expand business there. Poor soils and inadequate water supplies
hamper the development of agriculture. Budgetary problems complicate
reform of the health and pension systems for an aging population.

Cyprus
The area of the Republic of Cyprus under government control
has a market economy dominated by the service sector, which accounts
for nearly four-fifths of GDP. Tourism, financial services, and real
estate are the most important sectors. Erratic growth rates over the
past decade reflect the economy's reliance on tourism, which often
fluctuates with political instability in the region and economic
conditions in Western Europe. Nevertheless, the economy in the area
under government control has grown at a rate well above the EU
average since 2000. Cyprus joined the European Exchange Rate
Mechanism (ERM2) in May 2005 and adopted the euro as its national
currency on 1 January 2008. An aggressive austerity program in the
preceding years, aimed at paving the way for the euro, helped turn a
soaring fiscal deficit (6.3% in 2003) into a surplus of 1.2% in
2008, and reduced inflation to 4.7%. This prosperity came under
pressure in 2009, as construction and tourism slowed in the face of
reduced foreign demand triggered by the ongoing global financial
crisis. Although Cyprus lagged its EU peers in showing signs of
stress from the global crisis, the economy tipped into recession in
mid 2009 and contracted 1.8% for the year. In addition, the budget
deficit is on the rise and reached 5.7% of GDP in 2010, a violation
of the EU's budget deficit criteria of no more than 3% of GDP. In
response to the country's deteriorating finances, Nicosia is
promising to implement measures to cut the cost of the state
payroll, curb tax evasion, and revamp social benefits. However, it
has been slow to act, lacking a consensus in parliament and among
the social partners for its proposed measures.

Czech Republic
The Czech Republic is one of the most stable and
prosperous of the post-Communist states of Central and Eastern
Europe. Maintaining an open investment climate has been a key
element of the Czech Republic's transition from a communist,
centrally planned economy to a functioning market economy. As a
member of the European Union, with an advantageous location in the
center of Europe, a relatively low cost structure, and a
well-qualified labor force, the Czech Republic is an attractive
destination for foreign investment. Prior to its EU accession in
2004, the Czech government harmonized its laws and regulations with
those of the European Union. The small, open, export-driven Czech
economy grew by over 6% annually from 2005-2007 and by 2.5% in 2008.
The conservative Czech financial system has remained relatively
healthy throughout 2009. Nevertheless, the real economy contracted
by 4.1% in 2009, mainly due to a significant drop in external demand
as the Czech Republic's main export markets fell into recession. GDP
is expected to grow by 2.4% in 2010, driven largely by a rebound in
external demand, particularly from Gremany.

Denmark
This thoroughly modern market economy features a high-tech
agricultural sector, state-of-the-art industry with world-leading
firms in pharmaceuticals, maritime shipping and renewable energy,
and a high dependence on foreign trade. The Danish economy is also
characterized by extensive government welfare measures, an equitable
distribution of income, and comfortable living standards. Denmark is
a net exporter of food and energy and enjoys a comfortable balance
of payments surplus. After a long consumption-driven upswing,
Denmark's economy began slowing in 2007 with the end of a housing
boom. Housing prices dropped markedly in 2008-09. The global
financial crisis has exacerbated this cyclical slowdown through
increased borrowing costs and lower export demand, consumer
confidence, and investment. The global financial crises cut Danish
GDP by 0.9% in 2008 and 4.7% in 2009. Historically low levels of
unemployment rose sharply with the recession but remain below 5%,
about half the level of the EU. Denmark made a modest recovery in
2010 in part because of increased government spending. An impending
decline in the ratio of workers to retirees will be a major
long-term issue. Denmark maintained a healthy budget surplus for
many years up to 2008, but the budget balance swung into deficit
during 2009-10. Nonetheless, Denmark's fiscal position remains among
the strongest in the EU. Despite previously meeting the criteria to
join the European Economic and Monetary Union (EMU), so far Denmark
has decided not to join, although the Danish krone remains pegged to
the euro.

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

Djibouti
The economy is based on service activities connected with
the country's strategic location and status as a free trade zone in
the Horn of Africa. Two-thirds of Djibouti's inhabitants live in the
capital city; the remainder are mostly nomadic herders. Scanty
rainfall limits crop production to fruits and vegetables, and most
food must be imported. Djibouti provides services as both a transit
port for the region and an international transshipment and refueling
center. Imports and exports from landlocked neighbor Ethiopia
represent 70% of port activity at Djibouti's container terminal.
Djibouti has few natural resources and little industry. The nation
is, therefore, heavily dependent on foreign assistance to help
support its balance of payments and to finance development projects.
An unemployment rate of nearly 60% in urban areas continues to be a
major problem. While inflation is not a concern, due to the fixed
tie of the Djiboutian franc to the US dollar, the artificially high
value of the Djiboutian franc adversely affects Djibouti's balance
of payments. Per capita consumption dropped an estimated 35% between
1999 and 2006 because of recession, civil war, and a high population
growth rate (including immigrants and refugees). Djibouti has
experienced relatively minimal impact from the global economic
downturn, but its reliance on diesel-generated electricity and
imported food leave average consumers vulnerable to global price
shocks.

Dominica
The Dominican economy has been dependent on agriculture -
primarily bananas - in years past, but increasingly has been driven
by tourism as the government seeks to promote Dominica as an
"ecotourism" destination. In order to diversify the island's
production base, the government also is attempting to develop an
offshore financial sector and has signed an agreement with the EU to
develop geothermal energy resources. In 2003, the government began a
comprehensive restructuring of the economy - including elimination
of price controls, privatization of the state banana company, and
tax increases - to address an economic and financial crisis and to
meet IMF requirements. This restructuring paved the way for an
economic recovery - real growth for 2006 reached a two-decade high -
and helped to reduce the debt burden, which remains at about 85% of
GDP. Hurricane Dean struck the island in August 2007 causing damages
equivalent to 20% of GDP. In 2009, growth slowed as a result of the
global recession; it picked up only slightly in 2010.

Dominican Republic
The Dominican Republic has long been viewed
primarily as an exporter of sugar, coffee, and tobacco, but in
recent years the service sector has overtaken agriculture as the
economy's largest employer, due to growth in tourism and free trade
zones. The economy is highly dependent upon the US, the destination
for nearly 60% of exports. Remittances from the US amount to about a
tenth of GDP, equivalent to almost half of exports and
three-quarters of tourism receipts. The country suffers from marked
income inequality; the poorest half of the population receives less
than one-fifth of GDP, while the richest 10% enjoys nearly 40% of
GDP. High unemployment and underemployment remains an important
long-term challenge. The Central America-Dominican Republic Free
Trade Agreement (CAFTA-DR) came into force in March 2007, boosting
investment and exports and reducing losses to the Asian garment
industry. The growth of the Dominican Republic's economy slowed in
2008-09 because of the global recession, but still remained one of
the fastest growing in the region.

Ecuador
Ecuador is substantially dependent on its petroleum
resources, which have accounted for more than half of the country's
export earnings and one-fourth of public sector revenues in recent
years. In 1999/2000, Ecuador suffered a severe economic crisis, with
GDP contracting by more than 6%. Poverty increased significantly,
the banking system collapsed, and Ecuador defaulted on its external
debt later that year. In March 2000, the Congress approved a series
of structural reforms that also provided for the adoption of the US
dollar as legal tender. Dollarization stabilized the economy, and
positive growth returned in the years that followed, helped by high
oil prices, remittances, and increased non-traditional exports. From
2002-06 the economy grew 5.5%, the highest five-year average in 25
years. After moderate growth in 2007, the economy reached a growth
rate of 7.2% in 2008, in large part due to high global petroleum
prices. President Rafael CORREA, who took office in January 2007,
defaulted on Ecuador's sovereign debt in December 2008, refusing to
make payment on $3.2 billion in international bonds, representing
over 80% of Ecuador's private external debt. Economic policies under
the CORREA administration - including an announcement in late 2009
terminating 13 bilateral investment treaties - have generated
economic uncertainty and discouraged private investment. The
Ecuadorian economy slowed to 0.4% growth in 2009 due to the global
financial crisis, and the sharp decline in world oil prices and
remittance flows, but picked up to a 2.4% growth rate in 2010.

Egypt
Occupying the northeast corner of the African continent, Egypt
is bisected by the highly fertile Nile valley, where most economic
activity takes place. Egypt's economy was highly centralized during
the rule of former President Gamal Abdel NASSER but has opened up
considerably under former President Anwar EL-SADAT and current
President Mohamed Hosni MUBARAK. Cairo from 2004 to 2008
aggressively pursued economic reforms to attract foreign investment
and facilitate GDP growth. The global financial crisis has slowed
the reform efforts. The budget deficit climbed to over 8% of GDP and
Egypt's GDP growth slowed to 4.6% in 2009, predominately due to
reduced growth in export-oriented sectors, including manufacturing
and tourism, and Suez Canal revenues. In 2010, the government spent
more on infrastructure and public projects, and exports drove GDP
growth to more than 5%, but GDP growth in 2011 is unlikely to bounce
back to pre-global financial recession levels, when it stood at 7%.
Despite the relatively high levels of economic growth over the past
few years, living conditions for the average Egyptian remain poor.

El Salvador
Despite being the smallest country geographically in
Central America, El Salvador has the third largest economy in the
region. The economy took a hit from the global recession and real
GDP contracted by 3.5% in 2009. The economy began a slow recovery in
2010 on the back of improved export and remittances figures.
Remittances accounted for 16% of GDP in 2009, and about a third of
all households receive these transfers. In 2006 El Salvador was the
first country to ratify the Dominican Republic-Central American Free
Trade Agreement (CAFTA-DR), which has bolstered the export of
processed foods, sugar, and ethanol, and supported investment in the
apparel sector amid increased Asian competition and the expiration
of the Multi-Fiber Agreement in 2005. El Salvador has promoted an
open trade and investment environment, and has embarked on a wave of
privatizations extending to telecom, electricity distribution,
banking, and pension funds. In late 2006, the government and the
Millennium Challenge Corporation signed a five-year, $461 million
compact to stimulate economic growth and reduce poverty in the
country's northern region, the primary conflict zone during the
civil war, through investments in education, public services,
enterprise development, and transportation infrastructure. With the
adoption of the US dollar as its currency in 2001, El Salvador lost
control over monetary policy. Any counter-cyclical policy response
to the downturn must be through fiscal policy, which is constrained
by legislative requirements for a two-thirds majority to approve any
international financing.

Equatorial Guinea
The discovery and exploitation of large oil
reserves have contributed to dramatic economic growth but
fluctuating oil prices have produced huge swings in GDP growth in
recent years. Forestry, farming, and fishing are also major
components of GDP. Subsistence farming is the dominate form of
livelihood. Although pre-independence Equatorial Guinea counted on
cocoa production for hard currency earnings, the neglect of the
rural economy under successive regimes has diminished potential for
agriculture-led growth (the government has stated its intention to
reinvest some oil revenue into agriculture). A number of aid
programs sponsored by the World Bank and the IMF have been cut off
since 1993 because of corruption and mismanagement. Government
officials and their family members own most businesses, but
corruption is rampant. Undeveloped natural resources include
titanium, iron ore, manganese, uranium, and alluvial gold. Growth
remained strong in 2008, led by oil, but dropped in 2009-10, as the
price of oil fell.

Eritrea
Since independence from Ethiopia in 1993, Eritrea has faced
the economic problems of a small, desperately poor country,
accentuated by the recent implementation of restrictive economic
policies. Eritrea has a command economy under the control of the
sole political party, the People's Front for Democracy and Justice
(PFDJ). Like the economies of many African nations, a large share of
the population - nearly 80% - is engaged in subsistence agriculture,
but they produce only a small share of total output. Since the
conclusion of the Ethiopian-Eritrea war in 2000, the government has
maintained a firm grip on the economy, expanding the use of the
military and party-owned businesses to complete Eritrea's
development agenda. The government strictly controls the use of
foreign currency by limiting access and availability. Few private
enterprises remain in Eritrea. Eritrea's economy depends heavily on
taxes paid by members of the diaspora. Erratic rainfall and the
delayed demobilization of agriculturalists from the military
continue to interfere with agricultural production, and Eritrea's
recent harvests have been unable to meet the food needs of the
country. The Government continues to place its hope for additional
revenue on the development of several international mining projects.
Despite difficulties for international companies in working with the
Eritrean Government, a Canadian mining company signed a contract
with the government in 2007 and began mineral extraction in 2010.
Eritrea's economic future depends upon its ability to master social
problems such as illiteracy, unemployment, and low skills, and more
importantly, on the government's willingness to support a true
market economy.

Estonia
Estonia, a 2004 European Union entrant, has a modern
market-based economy and one of the higher per capita income levels
in Central Europe and the Baltic region. Estonia's successive
governments have pursued a free market, pro-business economic agenda
and have wavered little in their commitment to pro-market reforms.
The current government has pursued relatively sound fiscal policies
that have resulted in balanced budgets and very low public debt. The
economy benefits from strong electronics and telecommunications
sectors and strong trade ties with Finland, Sweden, and Germany.
Tallinn's priority has been to sustain high growth rates - on
average 8% per year from 2003 to 2007. Estonia's economy slowed down
markedly and fell sharply into recession in mid-2008, primarily as a
result of an investment and consumption slump following the bursting
of the real estate market bubble. GDP dropped nearly 15% in 2009,
among the world's highest rates of contraction. A modest recovery
began in 2010, but unemployment stands above 13%. Estonia adopted
the euro in January 2011.

Ethiopia
Ethiopia's poverty-stricken economy is based on
agriculture, accounting for almost 45% of GDP, and 85% of total
employment. The agricultural sector suffers from frequent drought
and poor cultivation practices. Coffee is critical to the Ethiopian
economy with exports of some $350 million in 2006, but historically
low prices have seen many farmers switching to qat to supplement
income. Under Ethiopia's constitution, the state owns all land and
provides long-term leases to the tenants; the system continues to
hamper growth in the industrial sector as entrepreneurs are unable
to use land as collateral for loans. In November 2001, Ethiopia
qualified for debt relief from the Highly Indebted Poor Countries
(HIPC) initiative, and in December 2005 the IMF forgave Ethiopia's
debt. The global economic downturn led to balance of payments
pressures, partially alleviated by recent emergency funding from the
IMF. While GDP growth has remained high, per capita inome is among
the lowest in the world.

European Union
Internally, the EU has abolished trade barriers,
adopted a common currency, and is striving toward convergence of
living standards. Internationally, the EU aims to bolster Europe's
trade position and its political and economic power. Because of the
great differences in per capita income among member states (from
$7,000 to $78,000) and in national attitudes toward issues like
inflation, debt, and foreign trade, the EU faces difficulties in
devising and enforcing common policies. In the wake of the global
economic crisis, the European Commission projected that the EU's
economy would shrink by 4% in 2009 and 0.1% in 2010. The EU has
recovered from the crisis faster than expected, however, and the
Commission estimates 2010 growth at 1.8%. Significant risks to
growth nevertheless remain, including, high official debts and
deficits, aging populations, over-regulation of non-financial
businesses, and doubts about the sustainability of European Economic
and Monetary Union (EMU). In June 2010, prompted by the Greek
financial crisis, the EU and the IMF set up a $1 trillion bailout
fund to rescue any EMU member in danger of default, but it has not
calmed market jitters that have diminished the value of the euro.
Eleven established EU member states introduced the euro as their
common currency on 1 January 1999 (Greece did so two years later),
but the UK and Denmark have 'opt-outs' that allow them to keep their
national currencies, and Sweden has not taken the steps needed to
participate. Between 2004 and 2007, the EU admitted 12 countries
that are, in general, less advanced economically than the other 15.
Of the 12 most recent member states, only Slovenia (1 January 2007),
Cyprus and Malta (1 January 2008), Slovakia (1 January 2009), and
Estonia (1 January 2011) have adopted the euro; the remaining states
other than the UK and Denmark are legally required to adopt the
currency upon meeting EU's fiscal and monetary convergence criteria.

Falkland Islands (Islas Malvinas)
The economy was formerly based on
agriculture, mainly sheep farming, but today fishing contributes the
bulk of economic activity. In 1987, the government began selling
fishing licenses to foreign trawlers operating within the Falkland
Islands' exclusive fishing zone. These license fees total more than
$40 million per year, which help support the island's health,
education, and welfare system. Squid accounts for 75% of the fish
taken. Dairy farming supports domestic consumption; crops furnish
winter fodder. Foreign exchange earnings come from shipments of
high-grade wool to the UK and the sale of postage stamps and coins.
The islands are now self-financing except for defense. The British
Geological Survey announced a 200-mile oil exploration zone around
the islands in 1993, and early seismic surveys suggest substantial
reserves capable of producing 500,000 barrels per day; to date, no
exploitable site has been identified. An agreement between Argentina
and the UK in 1995 seeks to defuse licensing and sovereignty
conflicts that would dampen foreign interest in exploiting potential
oil reserves. Political tensions between the UK and Argentina rose
in early 2010 after a UK company began oil drilling activities in
the waters around the Falkland Islands but abated somewhat when the
drilling operation failed to discover commercially exploitable oil
reserves. Tourism, especially eco-tourism, is increasing rapidly,
with about 30,000 visitors in 2001. Another large source of income
is interest paid on money the government has in the bank. The
British military presence also provides a sizeable economic boost.