with the imf and world bank, which cut off most assistance in 2003, and is working closely with technical advisors from the u. s. treasury department, the world bank and imf, seeking to return to a fully funded program. growth rose slightly in 2006 - 07, primarily due to increases in global demand and commodity prices on world markets, but the standard of living fell. the guinea franc depreciated sharply as the prices for basic necessities like food and fuel rose beyond the reach of most guineans. dissatisfaction with economic conditions prompted nationwide strikes in february and june 2006. one of the five poorest countries in the world, guinea - bissau depends mainly on farming and fishing. cashew crops have increased remarkably in recent years, and the country now ranks sixth in cashew production. guinea - bissau exports fish and seafood along with small amounts of peanuts, palm kernels, and timber. rice is the major crop and staple food. however, intermittent fighting between senegalese - backed government troops and a military junta destroyed much of the country ' s infrastructure and caused widespread damage to the economy in 1998 ; the civil war led to a 28 % drop in gdp that year, with partial recovery in 1999 - 2002. before the war, trade reform and price liberalization were the most successful part of the country ' s structural adjustment program under imf sponsorship. the tightening of monetary policy and the development of the private sector had also begun to reinvigorate the economy. because of high costs, the development of petroleum, phosphate, and other mineral resources is not a near - term prospect. offshore oil prospecting is underway in several sectors but has not yet led to commercially viable crude deposits. the inequality of income distribution is one of the most extreme in the world. the government and international donors continue to work out plans to forward economic development from a lamentably low base. in december 2003, the world bank, imf, and undp were forced to step in to provide emergency budgetary support in the amount of $ 107 million for 2004, representing over 80 % of the total national budget. government drift and indecision, however, resulted in continued low growth in 2002 - 06. higher raw material prices boosted growth to 3. 7 % in 2007. the guyanese economy exhibited moderate economic growth in 2001 - 07, based on expansion in the agricultural and mining sectors, a more favorable atmosphere for business initiatives, a more realistic exchange rate, fairly low inflation, and the continued support of international organizations. economic recovery since


, equaling nearly a quarter of gdp and over double the total for exports. this unique, noncommercial economy is supported financially by an annual contribution ( known as peter ' s pence ) from roman catholic dioceses throughout the world ; by the sale of postage stamps, coins, medals, and tourist mementos ; by fees for admission to museums ; and by the sale of publications. investments and real estate income also account for a sizable portion of revenue. the incomes and living standards of lay workers are comparable to those of counterparts who work in the city of rome. honduras, the second poorest country in central america and one of the poorest countries in the western hemisphere, with an extraordinarily unequal distribution of income and massive unemployment, is banking on expanded trade under the us - central america free trade agreement ( cafta ) and on debt relief under the heavily indebted poor countries ( hipc ) initiative. despite improvements in tax collections, the government ' s fiscal deficit is growing due to increases in current expenditures and financial losses from the state energy and telephone companies. honduras is the fastest growing remittance destination in the region with inflows representing over a quarter of gdp, equivalent to nearly three - quarters of exports. the economy relies heavily on a narrow range of exports, notably bananas and coffee, making it vulnerable to natural disasters and shifts in commodity prices, however, investments in the maquila and non - traditional export sectors are slowly diversifying the economy. growth remains dependent on the economy of the us, its largest trading partner, and on reduction of the high crime rate, as a means of attracting and maintaining investment. hong kong has a free market economy highly dependent on international trade. in 2006, the total value of goods and services trade, including the sizable share of reexports, was equivalent to 400 % of gdp. the territory has become increasingly integrated with mainland china over the past few years through trade, tourism, and financial links. the mainland has long been hong kong ' s largest trading partner, accounting for 46 % of hong kong ' s total trade by value in 2006. as a result of china ' s easing of travel restrictions, the number of mainland tourists to the territory has surged from 4. 5 million in 2001 to 13. 6 million in 2006, when they outnumbered visitors from all other countries combined. hong kong has also established itself as the premier stock market for chinese firms seeking to list abroad. bolstered by several successful initial public offerings in 2007, mainland companies by september 2007 accounted for


2006, when they outnumbered visitors from all other countries combined. hong kong has also established itself as the premier stock market for chinese firms seeking to list abroad. bolstered by several successful initial public offerings in 2007, mainland companies by september 2007 accounted for one - third of the firms listed on the hong kong stock exchange, and over half of the exchange ' s market capitalization. hong kong ' s service industry over the past decade has grown rapidly as its manufacturing industry has moved to the mainland and now accounts for 91 % of the territory ' s gdp. hong kong ' s natural resources are limited, and food and raw materials must be imported. gdp growth averaged a strong 5 % from 1989 to 2007, despite the economy suffering two recessions during the asian financial crisis in 1997 - 98 and the global downturn in 2001 - 02. hong kong continues to link its currency closely to the us dollar, maintaining an arrangement established in 1983. hungary has made the transition from a centrally planned to a market economy, with a per capita income nearly two - thirds that of the eu - 25 average. the private sector accounts for over 80 % of gdp. foreign ownership of and investment in hungarian firms are widespread, with cumulative foreign direct investment totaling more than $ 60 billion since 1989. hungary issues investment - grade sovereign debt. international observers, however, have expressed concerns over hungary ' s fiscal and current account deficits. in 2007, hungary eliminated a trade deficit that had persisted for several years. inflation declined from 14 % in 1998 to a low of 3. 7 % in 2006, but jumped to 7. 8 % in 2007. unemployment has persisted above 6 %. hungary ' s labor force participation rate of 57 % is one of the lowest in the organization for economic cooperation and development ( oecd ). germany is by far hungary ' s largest economic partner. policy challenges include cutting the public sector deficit to 4 % of gdp by 2008, from about 6 % in 2007. the government ' s austerity program of tax hikes and subsidy cuts has reduced hungary ' s large budget deficit, but the reforms have dampened domestic consumption, slowing gdp growth to less than 2 % in 2007. the government will need to pass additional reforms to ensure the long - term stability of public finances. the government plans to eventually lower its public sector deficit to below 3 % of gdp to adopt the euro. iceland ' s scandinavian - type economy is basically capitalistic, yet with an extensive welfare system ( including generous housing subsidies ), low unemployment, and remarkably even distribution of income


lower its public sector deficit to below 3 % of gdp to adopt the euro. iceland ' s scandinavian - type economy is basically capitalistic, yet with an extensive welfare system ( including generous housing subsidies ), low unemployment, and remarkably even distribution of income. in the absence of other natural resources ( except for abundant geothermal power ), the economy depends heavily on the fishing industry, which provides nearly 70 % of export earnings and employs 6 % of the work force. the economy remains sensitive to declining fish stocks as well as to fluctuations in world prices for its main exports : fish and fish products, aluminum, and ferrosilicon. substantial foreign investment in the aluminum and hydropower sectors has boosted economic growth which, nevertheless, has been volatile and characterized by recurrent imbalances. government policies include reducing the current account deficit, limiting foreign borrowing, containing inflation, revising agricultural and fishing policies, and diversifying the economy. the government remains opposed to eu membership, primarily because of icelanders ' concern about losing control over their fishing resources. iceland ' s economy has been diversifying into manufacturing and service industries in the last decade, and new developments in software production, biotechnology, and financial services are taking place. the tourism sector is also expanding, with the recent trends in ecotourism and whale watching. the 2006 closure of the us military base at keflavik had very little impact on the national economy ; iceland ' s low unemployment rate aided former base employees in finding alternate employment. india ' s diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. services are the major source of economic growth, accounting for more than half of india ' s output with less than one third of its labor force. about three - fifths of the work force is in agriculture, leading the united progressive alliance ( upa ) government to articulate an economic reform program that includes developing basic infrastructure to improve the lives of the rural poor and boost economic performance. the government has reduced controls on foreign trade and investment. higher limits on foreign direct investment were permitted in a few key sectors, such as telecommunications. however, tariff spikes in sensitive categories, including agriculture, and incremental progress on economic reforms still hinder foreign access to india ' s vast and growing market. privatization of government - owned industries remains stalled and continues to generate political debate ; populist pressure from within the upa government and from its left front allies continues to restrain needed initiatives. the economy has posted an average


' s vast and growing market. privatization of government - owned industries remains stalled and continues to generate political debate ; populist pressure from within the upa government and from its left front allies continues to restrain needed initiatives. the economy has posted an average growth rate of more than 7 % in the decade since 1997, reducing poverty by about 10 percentage points. india achieved 8. 5 % gdp growth in 2006, and again in 2007, significantly expanding production of manufactures. india is capitalizing on its large numbers of well - educated people skilled in the english language to become a major exporter of software services and software workers. economic expansion has helped new delhi continue to make progress in reducing its federal fiscal deficit. however, strong growth combined with easy consumer credit and a real estate boom fueled inflation concerns in 2006 and 2007, leading to a series of central bank interest rate hikes that have slowed credit growth and eased inflation concerns. the huge and growing population is the fundamental social, economic, and environmental problem. the indian ocean provides major sea routes connecting the middle east, africa, and east asia with europe and the americas. it carries a particularly heavy traffic of petroleum and petroleum products from the oilfields of the persian gulf and indonesia. its fish are of great and growing importance to the bordering countries for domestic consumption and export. fishing fleets from russia, japan, south korea, and taiwan also exploit the indian ocean, mainly for shrimp and tuna. large reserves of hydrocarbons are being tapped in the offshore areas of saudi arabia, iran, india, and western australia. an estimated 40 % of the world ' s offshore oil production comes from the indian ocean. beach sands rich in heavy minerals and offshore placer deposits are actively exploited by bordering countries, particularly india, south africa, indonesia, sri lanka, and thailand. indonesia, a vast polyglot nation, has been undergoing significant economic reforms under president yudhoyono. indonesia ' s debt - to - gdp ratio has been declining steadily, its foreign exchange reserves are at an all - time high of over $ 50 billion, and its stock market has been one of the 3 best performers in the world in 2006 and 2007, as global investors sought out higher returns in emerging markets. the government has introduced significant reforms in the financial sector, including tax and customs reforms, the introduction of treasury bills, and improved capital market supervision. indonesia ' s new investment law, passed in march 2007, seeks to address some of the concerns of foreign and domestic investors. indonesia still struggles with poverty and unemployment, inadequate infrastructure, corruption


, the introduction of treasury bills, and improved capital market supervision. indonesia ' s new investment law, passed in march 2007, seeks to address some of the concerns of foreign and domestic investors. indonesia still struggles with poverty and unemployment, inadequate infrastructure, corruption, a complex regulatory environment, and unequal resource distribution among regions. indonesia has been slow to privatize over 100 state - owned enterprises, several of which have monopolies in key sectors. the non - bank financial sector, including pension funds and insurance, remains weak. capital markets are underdeveloped. the high global price of oil in 2007 increased the cost of domestic fuel and electricity subsidies, and are contributing to concerns about higher food prices. located on the pacific " ring of fire " indonesia remains vulnerable to volcanic and tectonic disasters. significant progress has been made in rebuilding aceh after the devastating december 2004 tsunami, and the province now shows more economic activity than before the disaster. unfortunately, indonesia suffered new disasters in 2006 and early 2007 including : a major earthquake near yogyakarta, an industrial accident in sidoarjo, east java that created a " mud volcano, " a tsunami in south java, and major flooding in jakarta, all of which caused additional damages in the billions of dollars. donors are assisting indonesia with its disaster mitigation and early warning efforts. iran ' s economy is marked by an inefficient state sector, reliance on the oil sector ( which provides 85 % of government revenues ), and statist policies that create major distortions throughout. most economic activity is controlled by the state. private sector activity is typically small - scale workshops, farming, and services. president mahmud ahmadi - nejad failed to make any notable progress in fulfilling the goals of the nation ' s latest five - year plan. a combination of price controls and subsidies, particularly on food and energy, continue to weigh down the economy, and administrative controls, widespread corruption, and other rigidities undermine the potential for private - sector - led growth. as a result of these inefficiencies, significant informal market activity flourishes and shortages are common. high oil prices in recent years have enabled iran to amass nearly $ 70 billion in foreign exchange reserves. yet this increased revenue has not eased economic hardships, which include double - digit unemployment and inflation. the economy has seen only moderate growth. iran ' s educated population, economic inefficiency and insufficient investment - both foreign and domestic - have prompted an increasing number of iranians to seek employment overseas,


which include double - digit unemployment and inflation. the economy has seen only moderate growth. iran ' s educated population, economic inefficiency and insufficient investment - both foreign and domestic - have prompted an increasing number of iranians to seek employment overseas, resulting in significant " brain drain. " iraq ' s economy is dominated by the oil sector, which has traditionally provided about 95 % of foreign exchange earnings. although looting, insurgent attacks, and sabotage have undermined economy rebuilding efforts, economic activity is beginning to pick up in areas recently secured by the us military surge. oil exports are around levels seen before operation iraqi freedom, and total government revenues have benefited from high oil prices. despite political uncertainty, iraq is making some progress in building the institutions needed to implement economic policy and has negotiated a debt reduction agreement with the paris club and a new stand - by arrangement with the imf. the international compact with iraq was established in may 2007 to integrate iraq into the regional and global economy, and the iraqi government is seeking to pass laws to strengthen its economy. this legislation includes a hydrocarbon law to establish a modern legal framework to allow iraq to develop its resources and a revenue sharing law to equitably divide oil revenues within the nation, although both are still bogged down in discussions. the central bank has been successful in controlling inflation through appreciation of the dinar against the us dollar. reducing corruption and implementing structural reforms, such as bank restructuring and developing the private sector, will be key to iraq ' s economic success. ireland is a small, modern, trade - dependent economy with growth averaging 6 % in 1995 - 2007. agriculture, once the most important sector, is now dwarfed by industry and services. although the exports sector, dominated by foreign multinationals, remains a key component of ireland ' s economy, construction has most recently fueled economic growth along with strong consumer spending and business investment. property prices have risen more rapidly in ireland in the decade up to 2006 than in any other developed world economy. per capita gdp is 40 % above that of the four big european economies and the second highest in the eu behind luxembourg, and in 2007 surpassed that of the united states. the irish government has implemented a series of national economic programs designed to curb price and wage inflation, invest in infrastructure, increase labor force skills, and promote foreign investment. a slowdown in the property market, more intense global competition, and increased costs, however, have compelled government economists to lower ireland ' s growth forecast slightly for 2008. ireland joined in circulating the euro on 1 january


skills, and promote foreign investment. a slowdown in the property market, more intense global competition, and increased costs, however, have compelled government economists to lower ireland ' s growth forecast slightly for 2008. ireland joined in circulating the euro on 1 january 2002 along with 11 other eu nations. offshore banking, manufacturing, and tourism are key sectors of the economy. the government offers incentives to high - technology companies and financial institutions to locate on the island ; this has paid off in expanding employment opportunities in high - income industries. as a result, agriculture and fishing, once the mainstays of the economy, have declined in their shares of gdp. the isle of man also attracts online gambling sites and the film industry. trade is mostly with the uk. the isle of man enjoys free access to eu markets. israel has a technologically advanced market economy with substantial, though diminishing, government participation. it depends on imports of crude oil, grains, raw materials, and military equipment. despite limited natural resources, israel has intensively developed its agricultural and industrial sectors over the past 20 years. israel imports substantial quantities of grain, but is largely self - sufficient in other agricultural products. cut diamonds, high - technology equipment, and agricultural products ( fruits and vegetables ) are the leading exports. israel usually posts sizable trade deficits, which are covered by large transfer payments from abroad and by foreign loans. roughly half of the government ' s external debt is owed to the us, its major source of economic and military aid. israel ' s gdp, after contracting slightly in 2001 and 2002 due to the palestinian conflict and troubles in the high - technology sector, has grown by about 5 % per year since 2003. the economy grew an estimated 5. 4 % in 2007, the fastest pace since 2000. the government ' s prudent fiscal policy and structural reforms over the past few years have helped to induce strong foreign investment, tax revenues, and private consumption, setting the economy on a solid growth path. italy has a diversified industrial economy with roughly the same total and per capita output as france and the uk. this capitalistic economy remains divided into a developed industrial north, dominated by private companies, and a less - developed, welfare - dependent, agricultural south, with 20 % unemployment. most raw materials needed by industry and more than 75 % of energy requirements are imported. over the past decade, italy has pursued a tight fiscal policy in order to meet the requirements of the economic and monetary unions and has benefited from lower interest and inflation rates. the current government has enacted numerous


more than 75 % of energy requirements are imported. over the past decade, italy has pursued a tight fiscal policy in order to meet the requirements of the economic and monetary unions and has benefited from lower interest and inflation rates. the current government has enacted numerous short - term reforms aimed at improving competitiveness and long - term growth. italy has moved slowly, however, on implementing needed structural reforms, such as lightening the high tax burden and overhauling italy ' s rigid labor market and over - generous pension system, because of the current economic slowdown and opposition from labor unions. but the leadership faces a severe economic constraint : italy ' s official debt remains above 100 % of gdp, and the government has found it difficult to bring the budget deficit down to a level that would allow a rapid decrease in that debt. the economy continues to grow by less than the euro - zone average and growth is expected to decelerate from 1. 9 % in 2006 and 2007 to under 1. 5 % in 2008 as the euro - zone and world economies slow. the jamaican economy is heavily dependent on services, which now account for more than 60 % of gdp. the country continues to derive most of its foreign exchange from tourism, remittances, and bauxite / alumina. remittances account for nearly 20 % of gdp and are equivalent to tourism revenues. jamaica ' s economy, already saddled with a record of sluggish growth, will suffer an economic setback from damages caused by hurricane dean in august 2007. the economy faces serious long - term problems : high but declining interest rates, increased foreign competition, exchange rate instability, a sizable merchandise trade deficit, large - scale unemployment and underemployment, and a debt - to - gdp ratio of 135 %. jamaica ' s onerous debt burden - the fourth highest per capita - is the result of government bailouts to ailing sectors of the economy, most notably the financial sector in the mid - to - late 1990s. inflation also has declined, standing at about 7 % at the end of 2007. high unemployment exacerbates the serious crime problem, including gang violence that is fueled by the drug trade. the golding administration faces the difficult prospect of having to achieve fiscal discipline in order to maintain debt payments while simultaneously attacking a serious and growing crime problem that is hampering economic growth. government - industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation ( 1 % of gdp ) helped japan advance with extraordinary rapid


simultaneously attacking a serious and growing crime problem that is hampering economic growth. government - industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation ( 1 % of gdp ) helped japan advance with extraordinary rapidity to the rank of second most technologically powerful economy in the world after the us and the third - largest economy in the world after the us and china, measured on a purchasing power parity ( ppp ) basis. one notable characteristic of the economy has been how manufacturers, suppliers, and distributors have worked together in closely - knit groups called keiretsu. a second basic feature has been the guarantee of lifetime employment for a substantial portion of the urban labor force. both features have now eroded. japan ' s industrial sector is heavily dependent on imported raw materials and fuels. the tiny agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. usually self sufficient in rice, japan must import about 55 % of its food on a caloric basis. japan maintains one of the world ' s largest fishing fleets and accounts for nearly 15 % of the global catch. for three decades, overall real economic growth had been spectacular - a 10 % average in the 1960s, a 5 % average in the 1970s, and a 4 % average in the 1980s. growth slowed markedly in the 1990s, averaging just 1. 7 %, largely because of the after effects of overinvestment and an asset price bubble during the late 1980s that required a protracted period of time for firms to reduce excess debt, capital, and labor. from 2000 to 2001, government efforts to revive economic growth proved short lived and were hampered by the slowing of the us, european, and asian economies. in 2002 - 07, growth improved and the lingering fears of deflation in prices and economic activity lessened, leading the central bank to raise interest rates to 0. 25 % in july 2006, up from the near 0 % rate of the six years prior, and to 0. 50 % in february 2007. in addition, the ten - year privatization of japan post, which has functioned not only as the national postal delivery system but also, through its banking and insurance facilities as japan ' s largest financial institution, was completed in october 2007, marking a major milestone in the process of structural reform. nevertheless, japan ' s huge government debt, which totals 182 % of gdp, and the aging of the population are two major long - run problems. some fear that a rise in taxes could endanger the


major milestone in the process of structural reform. nevertheless, japan ' s huge government debt, which totals 182 % of gdp, and the aging of the population are two major long - run problems. some fear that a rise in taxes could endanger the current economic recovery. debate also continues on the role of and effects of reform in restructuring the economy, particularly with respect to increasing income disparities. jersey ' s economy is based on international financial services, agriculture, and tourism. in 2005 the finance sector accounted for about 50 % of the island ' s output. potatoes, cauliflower, tomatoes, and especially flowers are important export crops, shipped mostly to the uk. the jersey breed of dairy cattle is known worldwide and represents an important export income earner. milk products go to the uk and other eu countries. tourism accounts for one - quarter of gdp. in recent years, the government has encouraged light industry to locate in jersey, with the result that an electronics industry has developed alongside the traditional manufacturing of knitwear. all raw material and energy requirements are imported, as well as a large share of jersey ' s food needs. light taxes and death duties make the island a popular tax haven. living standards come close to those of the uk. jordan is a small arab country with insufficient supplies of water, oil, and other natural resources. poverty, unemployment, and inflation are fundamental problems, but king abdallah ii, since assuming the throne in 1999, has undertaken some broad economic reforms in a long - term effort to improve living standards. since jordan ' s graduation from its most recent imf program in 2002, amman has continued to follow imf guidelines, practicing careful monetary policy, making substantial headway with privatization, and opening the trade regime. jordan ' s exports have significantly increased under the free trade accord with the us and jordanian qualifying industrial zones ( qiz ), which allow jordan to export goods duty free to the us. in 2006, jordan reduced its debt - to - gdp ratio significantly. these measures have helped improve productivity and have made jordan more attractive for foreign investment. before the us - led war in iraq, jordan imported most of its oil from iraq. since 2003, however, jordan has been more dependent on oil from other gulf nations. the government ended subsidies for petroleum and other consumer goods in 2008 in an effort to control the budget. the main challenges facing jordan are reducing dependence on foreign grants, reducing the budget deficit, attracting investments, and creating jobs. kazakhstan, the largest of the former soviet republics in territory, excluding russia


consumer goods in 2008 in an effort to control the budget. the main challenges facing jordan are reducing dependence on foreign grants, reducing the budget deficit, attracting investments, and creating jobs. kazakhstan, the largest of the former soviet republics in territory, excluding russia, possesses enormous fossil fuel reserves and plentiful supplies of other minerals and metals. it also has a large agricultural sector featuring livestock and grain. kazakhstan ' s industrial sector rests on the extraction and processing of these natural resources and also on a growing machine - building sector specializing in construction equipment, tractors, agricultural machinery, and some defense items. the breakup of the ussr in december 1991 and the collapse in demand for kazakhstan ' s traditional heavy industry products resulted in a short - term contraction of the economy, with the steepest annual decline occurring in 1994. in 1995 - 97, the pace of the government program of economic reform and privatization quickened, resulting in a substantial shifting of assets into the private sector. kazakhstan enjoyed double - digit growth in 2000 - 01 - 8 % or more per year in 2002 - 07 - thanks largely to its booming energy sector, but also to economic reform, good harvests, and foreign investment. the opening of the caspian consortium pipeline in 2001, from western kazakhstan ' s tengiz oilfield to the black sea, substantially raised export capacity. kazakhstan in 2006 completed the atasu - alashankou portion of an oil pipeline to china that is planned to extend from the country ' s caspian coast eastward to the chinese border in future construction. the country has embarked upon an industrial policy designed to diversify the economy away from overdependence on the oil sector by developing light industry. the policy aims to reduce the influence of foreign investment and foreign personnel. the government has engaged in several disputes with foreign oil companies over the terms of production agreements ; tensions continue. upward pressure on the local currency continued in 2007 due to massive oil - related foreign - exchange inflows. aided by strong growth and foreign exchange earnings, kazakhstan aspires to become a regional financial center and has created a banking system comparable to those in central europe. the regional hub for trade and finance in east africa, kenya has been hampered by corruption and by reliance upon several primary goods whose prices have remained low. in 1997, the imf suspended kenya ' s enhanced structural adjustment program due to the government ' s failure to maintain reforms and curb corruption. a severe drought from 1999 to 2000 compounded kenya ' s problems, causing water and energy rationing and reducing agricultural output. as a result, gdp contracted


s enhanced structural adjustment program due to the government ' s failure to maintain reforms and curb corruption. a severe drought from 1999 to 2000 compounded kenya ' s problems, causing water and energy rationing and reducing agricultural output. as a result, gdp contracted by 0. 2 % in 2000. the imf, which had resumed loans in 2000 to help kenya through the drought, again halted lending in 2001 when the government failed to institute several anticorruption measures. despite the return of strong rains in 2001, weak commodity prices, endemic corruption, and low investment limited kenya ' s economic growth to 1. 2 %. growth lagged at 1. 1 % in 2002 because of erratic rains, low investor confidence, meager donor support, and political infighting up to the elections. in the key december 2002 elections, daniel arap moi ' s 24 - year - old reign ended, and a new opposition government took on the formidable economic problems facing the nation. after some early progress in rooting out corruption and encouraging donor support, the kibaki government was rocked by high - level graft scandals in 2005 and 2006. in 2006 the world bank and imf delayed loans pending action by the government on corruption. the international financial institutions and donors have since resumed lending, despite little action on the government ' s part to deal with corruption. the scandals have not weighed down growth, with estimated real gdp growth at more than 6 percent in 2007. a remote country of 33 scattered coral atolls, kiribati has few natural resources. commercially viable phosphate deposits were exhausted at the time of independence from the uk in 1979. copra and fish now represent the bulk of production and exports. the economy has fluctuated widely in recent years. economic development is constrained by a shortage of skilled workers, weak infrastructure, and remoteness from international markets. tourism provides more than one - fifth of gdp. private sector initiatives and a financial sector are in the early stages of development. foreign financial aid from uk, japan, australia, new zealand, and china equals more than 10 % of gdp. remittances from seamen on merchant ships abroad account for more than $ 5 million each year. kiribati receives around $ 15 million annually for the government budget from an australian trust fund. north korea, one of the world ' s most centrally directed and least open economies, faces chronic economic problems. industrial capital stock is nearly beyond repair as a result of years of underinvestment and shortages of spare parts. industrial and power output have declined in parallel from


of the world ' s most centrally directed and least open economies, faces chronic economic problems. industrial capital stock is nearly beyond repair as a result of years of underinvestment and shortages of spare parts. industrial and power output have declined in parallel from pre - 1990 levels. due in part to severe summer flooding followed by dry weather conditions in the fall of 2006, the nation suffered its 13th year of food shortages because of on - going systemic problems including a lack of arable land, collective farming practices, and persistent shortages of tractors and fuel. during the summer of 2007, severe flooding again occurred. large - scale international food aid deliveries have allowed the people of north korea to escape widespread starvation since famine threatened in 1995, but the population continues to suffer from prolonged malnutrition and poor living conditions. large - scale military spending draws off resources needed for investment and civilian consumption. since 2002, the government has formalized an arrangement whereby private " farmers ' markets " were allowed to begin selling a wider range of goods. it also permitted some private farming on an experimental basis in an effort to boost agricultural output. in october 2005, the government tried to reverse some of these policies by forbidding private sales of grains and reinstituting a centralized food rationing system. by december 2005, the government terminated most international humanitarian assistance operations in north korea ( calling instead for developmental assistance only ) and restricted the activities of remaining international and non - governmental aid organizations such as the world food program. external food aid now comes primarily from china and south korea in the form of grants and long - term concessional loans. during the october 2007 summit, south korea also agreed to develop some of north korea ' s infrastructure and natural resources and light industry. firm political control remains the communist government ' s overriding concern, which will likely inhibit the loosening of economic regulations. since the 1960s, south korea has achieved an incredible record of growth and integration into the high - tech modern world economy. four decades ago, gdp per capita was comparable with levels in the poorer countries of africa and asia. in 2004, south korea joined the trillion dollar club of world economies. today its gdp per capita is roughly the same as that of greece and spain. this success was achieved by a system of close government / business ties including directed credit, import restrictions, sponsorship of specific industries, and a strong labor effort. the government promoted the import of raw materials and technology at the expense of consumer goods and encouraged savings and investment over consumption. the asian financial crisis of 1997 - 98 exposed longstanding weaknesses


import restrictions, sponsorship of specific industries, and a strong labor effort. the government promoted the import of raw materials and technology at the expense of consumer goods and encouraged savings and investment over consumption. the asian financial crisis of 1997 - 98 exposed longstanding weaknesses in south korea ' s development model including high debt / equity ratios, massive foreign borrowing, and an undisciplined financial sector. gdp plunged by 6. 9 % in 1998, then recovered by 9. 5 % in 1999 and 8. 5 % in 2000. growth fell back to 3. 3 % in 2001 because of the slowing global economy, falling exports, and the perception that much - needed corporate and financial reforms had stalled. led by consumer spending and exports, growth in 2002 was an impressive 7 %, despite anemic global growth. between 2003 and 2007, growth moderated to about 4 - 5 % annually. a downturn in consumer spending was offset by rapid export growth. moderate inflation, low unemployment, and an export surplus in 2007 characterize this solid economy, but inflation and unemployment are increasing in the face of rising oil prices. kosovo ' s economy continues to transition to a market - based system and is largely dependent on the international community and the diaspora for financial and technical assistance. remittances from the diaspora - located mainly in germany and switzerland - account for about 30 % of gdp. kosovo ' s citizens are the poorest in europe with an average per capita income of only $ 1900 - about one - third the level of neighboring albania. most of kosovo ' s population lives in rural towns outside of the largest city, pristina. inefficient, near - subsistence farming is common - the result of small plots, limited mechanization, and lack of technical expertise. the complexity of serbia and kosovo ' s political and legal relationships has created uncertainty over property rights and hindered the privatization of state - owned assets. minerals and metals - including lignite, lead, zinc, nickel, chrome, aluminum, magnesium, and a wide variety of construction materials - formed the backbone of industry, but have declined because investment is insufficient to replace ageing eastern bloc equipment. technical and financial problems in the power sector also impede industrial development. economic growth is largely driven by the private sector - mostly small - scale retail businesses. both the euro and the serbian dinar circulate. kosovo ' s tie to the euro has helped keep inflation low. kosovo has maintained a budget surplus as a result of efficient tax collection and inefficient spending


- scale retail businesses. both the euro and the serbian dinar circulate. kosovo ' s tie to the euro has helped keep inflation low. kosovo has maintained a budget surplus as a result of efficient tax collection and inefficient spending. while maintaining ultimate oversight, unmik continues to work with the eu and kosovo ' s provisional government to accelerate economic growth, lower unemployment, and attract foreign investment. in order to help integrate kosovo into regional economic structures, unmik signed ( on behalf of kosovo ) its accession to the central europe free trade area ( cefta ) in 2006. kosovo ' s economy has largely transitioned to a market - based system but is highly dependent on the international community and the diaspora for financial and technical assistance. remittances from the diaspora - located mainly in germany and switzerland - account for about 30 % of gdp. kosovo ' s citizens are the poorest in europe with an average per capita income of only $ 1900 - about one - third the level of neighboring albania. unemployment - at 50 % of the population - is a severe problem that encourages outward migration. most of kosovo ' s population lives in rural towns outside of the largest city, pristina. inefficient, near - subsistence farming is common - the result of small plots, limited mechanization, and lack of technical expertise. the complexity of serbia and kosovo ' s political and legal relationships created uncertainty over property rights and hindered the privatization of state - owned assets. minerals and metals - including lignite, lead, zinc, nickel, chrome, aluminum, magnesium, and a wide variety of construction materials - once formed the backbone of industry, but output has declined because investment is insufficient to replace ageing eastern bloc equipment. technical and financial problems in the power sector also impede industrial development, and deter foreign investment. economic growth is largely driven by the private sector - mostly small - scale retail businesses. both the euro and the serbian dinar circulate. kosovo ' s tie to the euro has helped keep inflation low. kosovo has maintained a budget surplus as a result of efficient tax collection and inefficient spending. while maintaining ultimate oversight, unmik continues to work with the eu and kosovo ' s provisional government to accelerate economic growth, lower unemployment, and attract foreign investment. in order to help integrate kosovo into regional economic structures, unmik signed ( on behalf of kosovo ) its accession to the central europe free trade area ( cefta ) in 2006. kuwait is a small,


unemployment, and attract foreign investment. in order to help integrate kosovo into regional economic structures, unmik signed ( on behalf of kosovo ) its accession to the central europe free trade area ( cefta ) in 2006. kuwait is a small, rich, relatively open economy with self - reported crude oil reserves of about 104 billion barrels - 10 % of world reserves. petroleum accounts for nearly half of gdp, 95 % of export revenues, and 80 % of government income. high oil prices in recent years have helped build kuwait ' s budget and trade surpluses and foreign reserves. as a result of this positive fiscal situation, the need for economic reforms is less urgent and the government has not earnestly pushed through new initiatives. despite its vast oil reserves, kuwait experienced power outages during the summer months in 2006 and 2007 because demand exceeded power generating capacity. power outages are likely to worsen, given its high population growth rates, unless the government can increase generating capacity. in may 2007 kuwait changed its currency peg from the us dollar to a basket of currencies in order to curb inflation and to reduce its vulnerability to external shocks. kyrgyzstan is a poor, mountainous country with a predominantly agricultural economy. cotton, tobacco, wool, and meat are the main agricultural products, although only tobacco and cotton are exported in any quantity. industrial exports include gold, mercury, uranium, natural gas, and electricity. following independence kyrgyzstan was progressive in carrying out market reforms, such as an improved regulatory system and land reform. kyrgyzstan was the first commonwealth of independent states ( cis ) country to be accepted into the world trade organization. much of the government ' s stock in enterprises has been sold. drops in production had been severe after the breakup of the soviet union in december 1991, but by mid - 1995, production began to recover and exports began to increase. the economy is heavily weighted toward gold export and a drop in output at the main kumtor gold mine sparked a 0. 5 % decline in gdp in 2002 and a 0. 6 % decline in 2005. gdp grew more than 6 % in 2007, partly due to higher gold prices internationally. the government made steady strides in controlling its substantial fiscal deficit, nearly closing the gap between revenues and expenditures in 2006, before boosting expenditures more than 20 % in 2007. the government and international financial institutions have been engaged in a comprehensive medium - term poverty reduction and economic growth strategy ; in 2005, bishkek agreed to pursue much - needed tax reform and, in 2006, became eligible for the heavily indebted


the government and international financial institutions have been engaged in a comprehensive medium - term poverty reduction and economic growth strategy ; in 2005, bishkek agreed to pursue much - needed tax reform and, in 2006, became eligible for the heavily indebted poor countries ( hipc ) initiative. progress fighting corruption, further restructuring of domestic industry, and success in attracting foreign investment are keys to future growth. the government of laos, one of the few remaining one - party communist states, began decentralizing control and encouraging private enterprise in 1986. the results, starting from an extremely low base, were striking - growth averaged 6 % per year in 1988 - 2007 except during the short - lived drop caused by the asian financial crisis beginning in 1997. despite this high growth rate, laos remains a country with a underdeveloped infrastructure, particularly in rural areas. it has no railroads, a rudimentary road system, and limited external and internal telecommunications, though the government is sponsoring major improvements in the road system with support from japan and china. electricity is available in urban areas and in most rural districts. subsistence agriculture, dominated by rice, accounts for about 40 % of gdp and provides 80 % of total employment. the economy will continue to benefit from aid from international donors and from foreign investment in hydropower and mining. construction will be another strong economic driver, especially as hydroelectric dam and road projects gain steam. several policy changes since 2004 may help spur growth. in late 2004, laos gained normal trade relations status with the us, allowing laos - based producers to benefit from lower tariffs on exports. laos is taking steps to join the world trade organization in the next few years ; the resulting trade policy reforms will improve the business environment. on the fiscal side, a value - added tax ( vat ) regime, slated to begin in 2008, should help streamline the government ' s inefficient tax system. latvia ' s economy experienced gdp growth of more than 10 % per year during 2006 - 07. the majority of companies, banks, and real estate have been privatized, although the state still holds sizable stakes in a few large enterprises. latvia officially joined the world trade organization in february 1999. eu membership, a top foreign policy goal, came in may 2004. the current account deficit - more than 22 % of gdp in 2007 - and inflation - at nearly 10 % per year - remain major concerns. the 1975 - 90 civil war seriously damaged lebanon ' s economic infrastructure, cut national output by half, and all but ended lebanon ' s position


than 22 % of gdp in 2007 - and inflation - at nearly 10 % per year - remain major concerns. the 1975 - 90 civil war seriously damaged lebanon ' s economic infrastructure, cut national output by half, and all but ended lebanon ' s position as a middle eastern entrepot and banking hub. in the years since, lebanon has rebuilt much of its war - torn physical and financial infrastructure by borrowing heavily - mostly from domestic banks. in an attempt to reduce the ballooning national debt, the rafiq hariri government began an austerity program, reining in government expenditures, increasing revenue collection, and privatizing state enterprises, but economic and financial reform initiatives stalled and public debt continued to grow despite receipt of more than $ 2 billion in bilateral assistance at the paris ii donors conference. the israeli - hizballah conflict in july - august 2006 caused an estimated $ 3. 6 billion in infrastructure damage, and prompted international donors to pledge nearly $ 1 billion in recovery and reconstruction assistance. donors met again in january 2007 and pledged over $ 7. 5 billion to lebanon for development projects and budget support, conditioned on progress on beirut ' s fiscal reform and privatization program. internal lebanese political tension continues to hamper economic activity, particularly in the tourism and retail sectors. small, landlocked, and mountainous, lesotho relies on remittances from miners employed in south africa and customs duties from the southern africa customs union for the majority of government revenue. however, the government has recently strengthened its tax system to reduce dependency on customs duties. completion of a major hydropower facility in january 1998 now permits the sale of water to south africa and also generates royalties for lesotho. lesotho produces about 90 % of its own electrical power needs. as the number of mineworkers has declined steadily over the past several years, a small manufacturing base has developed based on farm products that support the milling, canning, leather, and jute industries, as well as a rapidly expanding apparel - assembly sector. the latter has grown significantly mainly due to lesotho qualifying for the trade benefits contained in the africa growth and opportunity act. the economy is still primarily based on subsistence agriculture, especially livestock, although drought has decreased agricultural activity. the extreme inequality in the distribution of income remains a major drawback. lesotho has signed an interim poverty reduction and growth facility with the imf. in july 2007 lesotho signed a millennium challenge account compact with the us worth $ 362. 5 million. civil war and government mismanagement destroyed much of liberia ' s


for wto membership, reducing some subsidies, and announcing plans for privatization - are laying the groundwork for a transition to a more market - based economy. the non - oil manufacturing and construction sectors, which account for more than 20 % of gdp, have expanded from processing mostly agricultural products to include the production of petrochemicals, iron, steel, and aluminum. climatic conditions and poor soils severely limit agricultural output, and libya imports about 75 % of its food. libya ' s primary agricultural water source remains the great manmade river project, but significant resources are being invested in desalinization research to meet growing water demands. despite its small size and limited natural resources, liechtenstein has developed into a prosperous, highly industrialized, free - enterprise economy with a vital financial service sector and living standards on a par with its large european neighbors. the liechtenstein economy is widely diversified with a large number of small businesses. low business taxes - the maximum tax rate is 20 % - and easy incorporation rules have induced many holding or so - called letter box companies to establish nominal offices in liechtenstein, providing 30 % of state revenues. the country participates in a customs union with switzerland and uses the swiss franc as its national currency. it imports more than 90 % of its energy requirements. liechtenstein has been a member of the european economic area ( an organization serving as a bridge between the european free trade association ( efta ) and the eu ) since may 1995. the government is working to harmonize its economic policies with those of an integrated europe. lithuania, the baltic state that has conducted the most trade with russia, has grown rapidly since rebounding from the 1998 russian financial crisis. unemployment fell to 3. 2 % in 2007, while wages continued to grow at double digit rates, contributing to rising inflation. exports and imports also grew strongly, and the current account deficit rose to nearly 15 % of gdp in 2007. trade has been increasingly oriented toward the west. lithuania has gained membership in the world trade organization and joined the eu in may 2004. privatization of the large, state - owned utilities is nearly complete. foreign government and business support have helped in the transition from the old command economy to a market economy. this stable, high - income economy - benefiting from its proximity to france, belgium, and germany - features solid growth, low inflation, and low unemployment. the industrial sector, initially dominated by steel, has become increasingly diversified to include chemicals, rubber, and other products. growth in the financial sector, which now accounts for about 28 % of gdp,


features solid growth, low inflation, and low unemployment. the industrial sector, initially dominated by steel, has become increasingly diversified to include chemicals, rubber, and other products. growth in the financial sector, which now accounts for about 28 % of gdp, has more than compensated for the decline in steel. most banks are foreign - owned and have extensive foreign dealings. agriculture is based on small family - owned farms. the economy depends on foreign and cross - border workers for about 60 % of its labor force. although luxembourg, like all eu members, suffered from the global economic slump in the early part of this decade, the country continues to enjoy an extraordinarily high standard of living - gdp per capita ranks first in the world. after two years of strong economic growth in 2006 - 07, luxembourg ' s economy probably will slow in 2008 as a result of turmoil in the world financial markets, but growth will remain above the european average. macau ' s economy has enjoyed strong growth in recent years on the back of its expanding tourism and gaming sectors. since opening up its locally - controlled casino industry to foreign competition in 2001, the territory has attracted 10s of billions of dollars in foreign investment that have helped transform it into the world ' s largest gaming center. in 2006, macau ' s gaming revenue surpassed that of the las vegas strip, and gaming - related taxes accounted for 75 % of total government revenue. the expanding casino sector, and china ' s decision beginning in 2002 to relax travel restrictions, have reenergized macau ' s tourism industry, which saw total visitors grow to 27 million in 2007, up 62 % in three years. macau ' s strong economic growth has put pressure its labor market prompting businesses to look abroad to meet their staffing needs. the resulting influx of non - resident workers, who totaled one - fifth of the workforce in 2006, has fueled tensions among some segments of the population. macau ' s traditional manufacturing industry has been in a slow decline. in 2006, exports of textiles and garments generated only $ 1. 8 billion compared to $ 6. 9 billion in gross gaming receipts. macau ' s textile industry will continue to move to the mainland because of the termination in 2005 of the multi - fiber agreement, which provided a near guarantee of export markets, leaving the territory more dependent on gambling and trade - related services to generate growth. however, the closer economic partnership agreement ( cepa ) between macau and mainland china that came into effect on 1 january 2004 offers many macau - made products tariff - free access to the mainland. macau


on gambling and trade - related services to generate growth. however, the closer economic partnership agreement ( cepa ) between macau and mainland china that came into effect on 1 january 2004 offers many macau - made products tariff - free access to the mainland. macau ' s currency, the pataca, is closely tied to the hong kong dollar, which is also freely accepted in the territory. at independence in september 1991, macedonia was the least developed of the yugoslav republics, producing a mere 5 % of the total federal output of goods and services. the collapse of yugoslavia ended transfer payments from the central government and eliminated advantages from inclusion in a de facto free trade area. an absence of infrastructure, un sanctions on the downsized yugoslavia, and a greek economic embargo over a dispute about the country ' s constitutional name and flag hindered economic growth until 1996. gdp subsequently rose each year through 2000. however, the leadership ' s commitment to economic reform, free trade, and regional integration was undermined by the ethnic albanian insurgency of 2001. the economy shrank 4. 5 % because of decreased trade, intermittent border closures, increased deficit spending on security needs, and investor uncertainty. growth barely recovered in 2002 to 0. 9 %, then averaged 4 % per year during 2003 - 07. macedonia has maintained macroeconomic stability with low inflation, but it has so far lagged the region in attracting foreign investment and job creation despite making extensive fiscal and business sector reforms. official unemployment remains the highest in europe at 35 %, but may be somewhat overstated based on the existence of an extensive gray market, estimated to be more than 20 percent of gdp, that falls outside official statistics. having discarded past socialist economic policies, madagascar has since the mid 1990s followed a world bank - and imf - led policy of privatization and liberalization. this strategy placed the country on a slow and steady growth path from an extremely low level. agriculture, including fishing and forestry, is a mainstay of the economy, accounting for more than one - fourth of gdp and employing 80 % of the population. exports of apparel have boomed in recent years primarily due to duty - free access to the us. deforestation and erosion, aggravated by the use of firewood as the primary source of fuel, are serious concerns. president ravalomanana has worked aggressively to revive the economy following the 2002 political crisis, which triggered a 12 % drop in gdp that year. poverty reduction and combating corruption will be the centerpieces of economic policy for the next few years. landlocked malawi


gasoline and diesel fuel forced kuala lumpur to reduce government subsidies. malaysia " unpegged " the ringgit from the us dollar in 2005 and the currency appreciated 6 % per year against the dollar in 2006 - 07. although this has helped to hold down the price of imports, inflationary pressures began to build in 2007. healthy foreign exchange reserves and a small external debt greatly reduce the risk that malaysia will experience a financial crisis over the near term similar to the one in 1997. the government presented its five - year national development agenda in april 2006 through the ninth malaysia plan, a comprehensive blueprint for the allocation of the national budget from 2006 - 10. with national elections expected within the year, abdullah has unveiled a series of ambitious development schemes for several regions that have had trouble attracting business investment. real gdp growth has averaged about 6 % per year under abdullah, but regions outside of kuala lumpur and the manufacturing hub penang have not fared as well. tourism, maldives ' largest industry, accounts for 28 % of gdp and more than 60 % of the maldives ' foreign exchange receipts. over 90 % of government tax revenue comes from import duties and tourism - related taxes. fishing is the second leading sector. agriculture and manufacturing continue to play a lesser role in the economy, constrained by the limited availability of cultivable land and the shortage of domestic labor. most staple foods must be imported. industry, which consists mainly of garment production, boat building, and handicrafts, accounts for about 7 % of gdp. the maldivian government began an economic reform program in 1989 initially by lifting import quotas and opening some exports to the private sector. subsequently, it has liberalized regulations to allow more foreign investment. real gdp growth averaged over 7. 5 % per year for more than a decade. in late december 2004, a major tsunami left more than 100 dead, 12, 000 displaced, and property damage exceeding $ 300 million. as a result of the tsunami, the gdp contracted by about 3. 6 % in 2005. a rebound in tourism, post - tsunami reconstruction, and development of new resorts helped the economy recover quickly. the trade deficit has expanded sharply as a result of high oil prices and imports of construction material. diversifying beyond tourism and fishing and increasing employment are the major challenges facing the government. over the longer term maldivian authorities worry about the impact of erosion and possible global warming on their low - lying country ; 80 % of the area is one meter or less above sea level. mali is among the poorest countries in the world,


over the longer term maldivian authorities worry about the impact of erosion and possible global warming on their low - lying country ; 80 % of the area is one meter or less above sea level. mali is among the poorest countries in the world, with 65 % of its land area desert or semidesert and with a highly unequal distribution of income. economic activity is largely confined to the riverine area irrigated by the niger. about 10 % of the population is nomadic and some 80 % of the labor force is engaged in farming and fishing. industrial activity is concentrated on processing farm commodities. mali is heavily dependent on foreign aid and vulnerable to fluctuations in world prices for cotton, its main export, along with gold. the government has continued its successful implementation of an imf - recommended structural adjustment program that is helping the economy grow, diversify, and attract foreign investment. mali ' s adherence to economic reform and the 50 % devaluation of the cfa franc in january 1994 have pushed up economic growth to a 5 % average in 1996 - 2007. worker remittances and external trade routes for the landlocked country have been jeopardized by continued unrest in neighboring cote d ' ivoire. major resources are limestone, a favorable geographic location, and a productive labor force. malta produces only about 20 % of its food needs, has limited fresh water supplies, and has few domestic energy sources. the economy is dependent on foreign trade, manufacturing ( especially electronics and pharmaceuticals ), and tourism. economic recovery of the european economy has lifted exports, tourism, and overall growth. malta adopted the euro on 1 january 2008. us government assistance is the mainstay of this tiny island economy. agricultural production, primarily subsistence, is concentrated on small farms ; the most important commercial crops are coconuts and breadfruit. small - scale industry is limited to handicrafts, tuna processing, and copra. the tourist industry, now a small source of foreign exchange employing less than 10 % of the labor force, remains the best hope for future added income. the islands have few natural resources, and imports far exceed exports. under the terms of the amended compact of free association, the us will provide millions of dollars per year to the marshall islands ( rmi ) through 2023, at which time a trust fund made up of us and rmi contributions will begin perpetual annual payouts. government downsizing, drought, a drop in construction, the decline in tourism, and less income from the renewal of fishing vessel licenses have held


, at which time a trust fund made up of us and rmi contributions will begin perpetual annual payouts. government downsizing, drought, a drop in construction, the decline in tourism, and less income from the renewal of fishing vessel licenses have held gdp growth to an average of 1 % over the past decade. half the population still depends on agriculture and livestock for a livelihood, even though many of the nomads and subsistence farmers were forced into the cities by recurrent droughts in the 1970s and 1980s. mauritania has extensive deposits of iron ore, which account for nearly 40 % of total exports. the nation ' s coastal waters are among the richest fishing areas in the world, but overexploitation by foreigners threatens this key source of revenue. the country ' s first deepwater port opened near nouakchott in 1986. in the past, drought and economic mismanagement resulted in a buildup of foreign debt, which now stands at more than three times the level of annual exports. in february 2000, mauritania qualified for debt relief under the heavily indebted poor countries ( hipc ) initiative and in december 2001 received strong support from donor and lending countries at a triennial consultative group review. a new investment code approved in december 2001 improved the opportunities for direct foreign investment. ongoing negotiations with the imf involve problems of economic reforms and fiscal discipline. in 2001, exploratory oil wells in tracts 80 km offshore indicated potential extraction at current world oil prices. oil prospects, while initially promising, have failed to materialize. meantime the government emphasizes reduction of poverty, improvement of health and education, and promoting privatization of the economy. since independence in 1968, mauritius has developed from a low - income, agriculturally based economy to a middle - income diversified economy with growing industrial, financial, and tourist sectors. for most of the period, annual growth has been in the order of 5 % to 6 %. this remarkable achievement has been reflected in more equitable income distribution, increased life expectancy, lowered infant mortality, and a much - improved infrastructure. the economy rests on sugar, tourism, textiles and apparel, and financial services, and is expanding into fish processing, information and communications technology, and hospitality and property development. sugarcane is grown on about 90 % of the cultivated land area and accounts for 15 % of export earnings. the government ' s development strategy centers on creating vertical and horizontal clusters of development in these sectors. mauritius has attracted more than 32, 000 offshore entities, many aimed at commerce in india


of the cultivated land area and accounts for 15 % of export earnings. the government ' s development strategy centers on creating vertical and horizontal clusters of development in these sectors. mauritius has attracted more than 32, 000 offshore entities, many aimed at commerce in india, south africa, and china. investment in the banking sector alone has reached over $ 1 billion. mauritius, with its strong textile sector, has been well poised to take advantage of the africa growth and opportunity act ( agoa ). economic activity is based primarily on the agricultural sector, including fishing and livestock raising. mayotte is not self - sufficient and must import a large portion of its food requirements, mainly from france. the economy and future development of the island are heavily dependent on french financial assistance, an important supplement to gdp. mayotte ' s remote location is an obstacle to the development of tourism. mexico has a free market economy in the trillion dollar class. it contains a mixture of modern and outmoded industry and agriculture, increasingly dominated by the private sector. recent administrations have expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution, and airports. per capita income is one - fourth that of the us ; income distribution remains highly unequal. trade with the us and canada has tripled since the implementation of nafta in 1994. mexico has 12 free trade agreements with over 40 countries including, guatemala, honduras, el salvador, the european free trade area, and japan, putting more than 90 % of trade under free trade agreements. in 2007, during his first year in office, the felipe calderon administration was able to garner support from the opposition to successfully pass a pension and a fiscal reform. the administration continues to face many economic challenges including the need to upgrade infrastructure, modernize labor laws, and allow private investment in the energy sector. calderon has stated that his top economic priorities remain reducing poverty and creating jobs. economic activity consists primarily of subsistence farming and fishing. the islands have few mineral deposits worth exploiting, except for high - grade phosphate. the potential for a tourist industry exists, but the remote location, a lack of adequate facilities, and limited air connections hinder development. the amended compact of free association with the us guarantees the federated states of micronesia ( fsm ) millions of dollars in annual aid through 2023, and establishes a trust fund into which the us and the fsm make annual contributions in order to provide annual payouts to the fsm in perpetuity after 2023. the country ' s medium - term economic outlook appears


aid through 2023, and establishes a trust fund into which the us and the fsm make annual contributions in order to provide annual payouts to the fsm in perpetuity after 2023. the country ' s medium - term economic outlook appears fragile due not only to the reduction in us assistance but also to the current slow growth of the private sector. moldova remains one of the poorest countries in europe despite recent progress from its small economic base. it enjoys a favorable climate and good farmland but has no major mineral deposits. as a result, the economy depends heavily on agriculture, featuring fruits, vegetables, wine, and tobacco. moldova must import almost all of its energy supplies. moldova ' s dependence on russian energy was underscored at the end of 2005, when a russian - owned electrical station in moldova ' s separatist transnistria region cut off power to moldova and russia ' s gazprom cut off natural gas in disputes over pricing. russia ' s decision to ban moldovan wine and agricultural products, coupled with its decision to double the price moldova paid for russian natural gas, slowed gdp growth in 2006. however, in 2007 growth returned to the 6 % level moldova had achieved in 2000 - 05, boosted by russia ' s partial removal of the bans, solid fixed capital investment, and strong domestic demand driven by remittances from abroad. economic reforms have been slow because of corruption and strong political forces backing government controls. nevertheless, the government ' s primary goal of eu integration has resulted in some market - oriented progress. the granting of eu trade preferences and increased exports to russia will encourage higher growth rates in 2008, but the agreements are unlikely to serve as a panacea, given the extent to which export success depends on higher quality standards and other factors. the economy remains vulnerable to higher fuel prices, poor agricultural weather, and the skepticism of foreign investors. also, the presence of an illegal separatist regime in moldova ' s transnistria region continues to be a drag on the moldovan economy. monaco, bordering france on the mediterranean coast, is a popular resort, attracting tourists to its casino and pleasant climate. the principality also is a major banking center and has successfully sought to diversify into services and small, high - value - added, nonpolluting industries. the state has no income tax and low business taxes and thrives as a tax haven both for individuals who have established residence and for foreign companies that have set up businesses and offices. the state retains monopolies in a number of


montenegro severed its economy from federal control and from serbia during the milosevic era and maintained its own central bank, used the euro instead of the yugoslav dinar as official currency, collected customs tariffs, and managed its own budget. the dissolution of the loose political union between serbia and montenegro in 2006 led to separate membership in several international financial institutions, such as the european bank for reconstruction and development. on 18 january 2007, montenegro joined the world bank and imf. montenegro is pursuing its own membership in the world trade organization as well as negotiating a stabilization and association agreement with the european union in anticipation of eventual membership. severe unemployment remains a key political and economic problem for this entire region. montenegro has privatized its large aluminum complex - the dominant industry - as well as most of its financial sector, and has begun to attract foreign direct investment in the tourism sector. severe volcanic activity, which began in july 1995, has put a damper on this small, open economy. a catastrophic eruption in june 1997 closed the airports and seaports, causing further economic and social dislocation. two - thirds of the 12, 000 inhabitants fled the island. some began to return in 1998, but lack of housing limited the number. the agriculture sector continued to be affected by the lack of suitable land for farming and the destruction of crops. prospects for the economy depend largely on developments in relation to the volcanic activity and on public sector construction activity. the uk has launched a three - year $ 122. 8 million aid program to help reconstruct the economy. half of the island is expected to remain uninhabitable for another decade. moroccan economic policies brought macroeconomic stability to the country in the early 1990s but have not spurred growth sufficient to reduce unemployment - nearing 20 % in urban areas - despite the moroccan government ' s ongoing efforts to diversify the economy. morocco ' s gdp growth rate slowed to 2. 1 % in 2007 as a result of a draught that severely reduced agricultural output and necessitated wheat imports at rising world prices. continued dependence on foreign energy and morocco ' s inability to develop small and medium size enterprises also contributed to the slowdown. moroccan authorities understand that reducing poverty and providing jobs are key to domestic security and development. in 2005, morocco launched the national initiative for human development ( indh ), a $ 2 billion social development plan to address poverty and unemployment and to improve the living conditions of the country ' s urban slums. moroccan authorities are implementing reform efforts to open the economy to international investors. despite structural adjustment programs supported by the imf


a $ 2 billion social development plan to address poverty and unemployment and to improve the living conditions of the country ' s urban slums. moroccan authorities are implementing reform efforts to open the economy to international investors. despite structural adjustment programs supported by the imf, the world bank, and the paris club, the dirham is only fully convertible for current account transactions. in 2000, morocco entered an association agreement with the eu and, in 2006, entered a free trade agreement ( fta ) with the us. long - term challenges include improving education and job prospects for morocco ' s youth, and closing the income gap between the rich and the poor, which the government hopes to achieve by increasing tourist arrivals and boosting competitiveness in textiles. at independence in 1975, mozambique was one of the world ' s poorest countries. socialist mismanagement and a brutal civil war from 1977 - 92 exacerbated the situation. in 1987, the government embarked on a series of macroeconomic reforms designed to stabilize the economy. these steps, combined with donor assistance and with political stability since the multi - party elections in 1994, have led to dramatic improvements in the country ' s growth rate. inflation was reduced to single digits during the late 1990s, and although it returned to double digits in 2000 - 06, in 2007 inflation had slowed to 8 %, while gdp growth reached 7. 5 %. fiscal reforms, including the introduction of a value - added tax and reform of the customs service, have improved the government ' s revenue collection abilities. in spite of these gains, mozambique remains dependent upon foreign assistance for much of its annual budget, and the majority of the population remains below the poverty line. subsistence agriculture continues to employ the vast majority of the country ' s work force. a substantial trade imbalance persists although the opening of the mozal aluminum smelter, the country ' s largest foreign investment project to date, has increased export earnings. at the end of 2007, and after years of negotiations, the government took over portugal ' s majority share of the cahora bassa hydroelectricity ( hcb ) company, a dam that was not transferred to mozambique at independence because of the ensuing civil war and unpaid debts. more power is needed for additional investment projects in titanium extraction and processing and garment manufacturing that could further close the import / export gap. mozambique ' s once substantial foreign debt has been reduced through forgiveness and rescheduling under the imf ' s heavily indebted poor countries ( hipc ) and enhanced hipc initiatives, and is now at


close the import / export gap. mozambique ' s once substantial foreign debt has been reduced through forgiveness and rescheduling under the imf ' s heavily indebted poor countries ( hipc ) and enhanced hipc initiatives, and is now at a manageable level. in july 2007 the millennium challenge corporation ( mcc ) signed a compact with mozambique ; the mozambican government moved rapidly to ratify the compact and propose a plan for funding. the economy is heavily dependent on the extraction and processing of minerals for export. mining accounts for 8 % of gdp, but provides more than 50 % of foreign exchange earnings. rich alluvial diamond deposits make namibia a primary source for gem - quality diamonds. namibia is the fourth - largest exporter of nonfuel minerals in africa, the world ' s fifth - largest producer of uranium, and the producer of large quantities of lead, zinc, tin, silver, and tungsten. the mining sector employs only about 3 % of the population while about half of the population depends on subsistence agriculture for its livelihood. namibia normally imports about 50 % of its cereal requirements ; in drought years food shortages are a major problem in rural areas. a high per capita gdp, relative to the region, hides one of the world ' s most unequal income distributions. the namibian economy is closely linked to south africa with the namibian dollar pegged one - to - one to the south african rand. increased payments from the southern african customs union ( sacu ) put namibia ' s budget into surplus in 2007 for the first time since independence, but sacu payments will decline after 2008 as part of a new revenue sharing formula. increased fish production and mining of zinc, copper, uranium, and silver spurred growth in 2003 - 07, but growth in recent years was undercut by poor fish catches and high costs for metal inputs. revenues of this tiny island have traditionally come from exports of phosphates, now significantly depleted. an australian company in 2005 entered into an agreement intended to exploit remaining supplies. few other resources exist with most necessities being imported, mainly from australia, its former occupier and later major source of support. the rehabilitation of mined land and the replacement of income from phosphates are serious long - term problems. in anticipation of the exhaustion of nauru ' s phosphate deposits, substantial amounts of phosphate income were invested in trust funds to help cushion the transition and provide for nauru ' s economic future. as a result of heavy spending from the trust funds, the government faces virtual bankruptcy. to


nauru ' s phosphate deposits, substantial amounts of phosphate income were invested in trust funds to help cushion the transition and provide for nauru ' s economic future. as a result of heavy spending from the trust funds, the government faces virtual bankruptcy. to cut costs the government has frozen wages and reduced overstaffed public service departments. in 2005, the deterioration in housing, hospitals, and other capital plant continued, and the cost to australia of keeping the government and economy afloat continued to climb. few comprehensive statistics on the nauru economy exist, with estimates of nauru ' s gdp varying widely. nepal is among the poorest and least developed countries in the world with almost one - third of its population living below the poverty line. agriculture is the mainstay of the economy, providing a livelihood for three - fourths of the population and accounting for 38 % of gdp. industrial activity mainly involves the processing of agricultural produce including jute, sugarcane, tobacco, and grain. security concerns relating to the maoist conflict have led to a decrease in tourism, a key source of foreign exchange. nepal has considerable scope for exploiting its potential in hydropower and tourism, areas of recent foreign investment interest. prospects for foreign trade or investment in other sectors will remain poor, however, because of the small size of the economy, its technological backwardness, its remoteness, its landlocked geographic location, its civil strife, and its susceptibility to natural disaster. the netherlands has a prosperous and open economy, which depends heavily on foreign trade. the economy is noted for stable industrial relations, moderate unemployment and inflation, a sizable current account surplus, and an important role as a european transportation hub. industrial activity is predominantly in food processing, chemicals, petroleum refining, and electrical machinery. a highly mechanized agricultural sector employs no more than 3 % of the labor force but provides large surpluses for the food - processing industry and for exports. the netherlands, along with 11 of its eu partners, began circulating the euro currency on 1 january 2002. the country continues to be one of the leading european nations for attracting foreign direct investment and is one of the five largest investors in the us. the economy experienced a slowdown in 2005 but in 2006 recovered to the fastest pace in six years on the back of increased exports and strong investment. the pace of job growth reached 10 - year highs in 2007. tourism, petroleum refining, and offshore finance are the mainstays of this small economy, which is closely tied to the outside world. although gdp has declined or grown


and strong investment. the pace of job growth reached 10 - year highs in 2007. tourism, petroleum refining, and offshore finance are the mainstays of this small economy, which is closely tied to the outside world. although gdp has declined or grown slightly in each of the past eight years, the islands enjoy a high per capita income and a well - developed infrastructure compared with other countries in the region. most of the oil netherlands antilles imports for its refineries come from venezuela. almost all consumer and capital goods are imported, the us and mexico being the major suppliers. poor soils and inadequate water supplies hamper the development of agriculture. budgetary problems hamper reform of the health and pension systems of an aging population. new caledonia has about 25 % of the world ' s known nickel resources. only a small amount of the land is suitable for cultivation, and food accounts for about 20 % of imports. in addition to nickel, substantial financial support from france - equal to more than 15 % of gdp - and tourism are keys to the health of the economy. substantial new investment in the nickel industry, combined with the recovery of global nickel prices, brightens the economic outlook for the next several years. over the past 20 years the government has transformed new zealand from an agrarian economy dependent on concessionary british market access to a more industrialized, free market economy that can compete globally. this dynamic growth has boosted real incomes - but left behind many at the bottom of the ladder - and broadened and deepened the technological capabilities of the industrial sector. per capita income has risen for eight consecutive years and reached $ 27, 800 in 2007 in purchasing power parity terms. consumer and government spending have driven growth in recent years, and exports picked up in 2006 after struggling for several years. exports were equal to about 22 % of gdp in 2007, down from 33 % of gdp in 2001. thus far the economy has been resilient, and the labor government promises that expenditures on health, education, and pensions will increase proportionately to output. inflationary pressures have built in recent years and the central bank raised its key rate 13 times since january 2004 to finish 2007 at 8. 25 %. a large balance of payments deficit poses another challenge in managing the economy. nicaragua has widespread underemployment, one of the highest degrees of income inequality in the world, and the third lowest per capita income in the western hemisphere. while the country has progressed toward macroeconomic stability in the past few years, annual gdp growth has been far too low to meet the country


of the highest degrees of income inequality in the world, and the third lowest per capita income in the western hemisphere. while the country has progressed toward macroeconomic stability in the past few years, annual gdp growth has been far too low to meet the country ' s needs, forcing the country to rely on international economic assistance to meet fiscal and debt financing obligations. in early 2004, nicaragua secured some $ 4. 5 billion in foreign debt reduction under the heavily indebted poor countries ( hipc ) initiative, and in october 2007, the imf approved a new poverty reduction and growth facility ( prgf ) program that should create fiscal space for social spending and investment. the continuity of a relationship with the imf reinforces donor confidence, despite private sector concerns surrounding ortega, which has dampened investment. the us - central america free trade agreement ( cafta ) has been in effect since april 2006 and has expanded export opportunities for many agricultural and manufactured goods. energy shortages fueled by high oil prices, however, are a serious bottleneck to growth. niger is one of the poorest countries in the world, ranking near last on the united nations development fund index of human development. it is a landlocked, sub - saharan nation, whose economy centers on subsistence crops, livestock, and some of the world ' s largest uranium deposits. drought cycles, desertification, and a 2. 9 % population growth rate, have undercut the economy. niger shares a common currency, the cfa franc, and a common central bank, the central bank of west african states ( bceao ), with seven other members of the west african monetary union. in december 2000, niger qualified for enhanced debt relief under the international monetary fund program for highly indebted poor countries ( hipc ) and concluded an agreement with the fund on a poverty reduction and growth facility ( prgf ). debt relief provided under the enhanced hipc initiative significantly reduces niger ' s annual debt service obligations, freeing funds for expenditures on basic health care, primary education, hiv / aids prevention, rural infrastructure, and other programs geared at poverty reduction. in december 2005, niger received 100 % multilateral debt relief from the imf, which translates into the forgiveness of approximately us $ 86 million in debts to the imf, excluding the remaining assistance under hipc. nearly half of the government ' s budget is derived from foreign donor resources. future growth may be sustained by exploitation of oil, gold, coal, and other mineral resources. uranium prices have increased sharply in the last few years. a drought


hipc. nearly half of the government ' s budget is derived from foreign donor resources. future growth may be sustained by exploitation of oil, gold, coal, and other mineral resources. uranium prices have increased sharply in the last few years. a drought and locust infestation in 2005 led to food shortages for as many as 2. 5 million nigeriens. oil - rich nigeria, long hobbled by political instability, corruption, inadequate infrastructure, and poor macroeconomic management, is undertaking some reforms under a new reform - minded administration. nigeria ' s former military rulers failed to diversify the economy away from its overdependence on the capital - intensive oil sector, which provides 20 % of gdp, 95 % of foreign exchange earnings, and about 80 % of budgetary revenues. the largely subsistence agricultural sector has failed to keep up with rapid population growth - nigeria is africa ' s most populous country - and the country, once a large net exporter of food, now must import food. following the signing of an imf stand - by agreement in august 2000, nigeria received a debt - restructuring deal from the paris club and a $ 1 billion credit from the imf, both contingent on economic reforms. nigeria pulled out of its imf program in april 2002, after failing to meet spending and exchange rate targets, making it ineligible for additional debt forgiveness from the paris club. in the last year the government has begun showing the political will to implement the market - oriented reforms urged by the imf, such as to modernize the banking system, to curb inflation by blocking excessive wage demands, and to resolve regional disputes over the distribution of earnings from the oil industry. in 2003, the government began deregulating fuel prices, announced the privatization of the country ' s four oil refineries, and instituted the national economic empowerment development strategy, a domestically designed and run program modeled on the imf ' s poverty reduction and growth facility for fiscal and monetary management. in november 2005, abuja won paris club approval for a debt - relief deal that eliminated $ 18 billion of debt in exchange for $ 12 billion in payments - a total package worth $ 30 billion of nigeria ' s total $ 37 billion external debt. the deal requires nigeria to be subject to stringent imf reviews. gdp rose strongly in 2007, based largely on increased oil exports and high global crude prices. newly - elected president yar ' adua has pledged to continue the economic reforms of his successor and the proposed budget for 2008 reflects the administrations emphasis on infrastructure improvements. infrastructure is


in 2007, based largely on increased oil exports and high global crude prices. newly - elected president yar ' adua has pledged to continue the economic reforms of his successor and the proposed budget for 2008 reflects the administrations emphasis on infrastructure improvements. infrastructure is the main impediment to growth. the government is working toward developing stronger public - private partnerships for electricity and roads. the economy suffers from the typical pacific island problems of geographic isolation, few resources, and a small population. government expenditures regularly exceed revenues, and the shortfall is made up by critically needed grants from new zealand that are used to pay wages to public employees. niue has cut government expenditures by reducing the public service by almost half. the agricultural sector consists mainly of subsistence gardening, although some cash crops are grown for export. industry consists primarily of small factories to process passion fruit, lime oil, honey, and coconut cream. the sale of postage stamps to foreign collectors is an important source of revenue. the island in recent years has suffered a serious loss of population because of emigration to new zealand. efforts to increase gdp include the promotion of tourism and a financial services industry, although the international banking repeal act of 2002 resulted in the termination of all offshore banking licenses. economic aid from new zealand in 2002 was about us $ 2 million. niue suffered a devastating typhoon in january 2004, which decimated nascent economic programs. while in the process of rebuilding, niue has been dependent on foreign aid. tourism, the primary economic activity, has steadily increased over the years and has brought a level of prosperity unusual among inhabitants of the pacific islands. the agricultural sector has become self - sufficient in the production of beef, poultry, and eggs. the economy benefits substantially from financial assistance from the us. the rate of funding has declined as locally generated government revenues have grown. the key tourist industry employs about 50 % of the work force and accounts for roughly one - fourth of gdp. japanese tourists predominate. annual tourist entries have exceeded one - half million in recent years, but financial difficulties in japan have caused a temporary slowdown. the agricultural sector is made up of cattle ranches and small farms producing coconuts, breadfruit, tomatoes, and melons. garment production is by far the most important industry with the employment of 17, 500 mostly chinese workers and sizable shipments to the us under duty and quota exemptions. the norwegian economy is a prosperous bastion of welfare capitalism, featuring a combination of free market activity and government intervention. the government controls key areas, such as the vital petroleum sector


mostly chinese workers and sizable shipments to the us under duty and quota exemptions. the norwegian economy is a prosperous bastion of welfare capitalism, featuring a combination of free market activity and government intervention. the government controls key areas, such as the vital petroleum sector, through large - scale state enterprises. the country is richly endowed with natural resources - petroleum, hydropower, fish, forests, and minerals - and is highly dependent on its oil production and international oil prices, with oil and gas accounting for one - third of exports. only saudi arabia and russia export more oil than norway. norway opted to stay out of the eu during a referendum in november 1994 ; nonetheless, as a member of the european economic area, it contributes sizably to the eu budget. the government has moved ahead with privatization. although norwegian oil production peaked in 2000, natural gas production is still rising. norwegians realize that once their gas production peaks they will eventually face declining oil and gas revenues ; accordingly, norway has been saving its oil - and - gas - boosted budget surpluses in a government petroleum fund, which is invested abroad and now is valued at more than $ 250 billion. after lackluster growth of less than 1 % in 2002 - 03, gdp growth picked up to 3 - 5 % in 2004 - 07, partly due to higher oil prices. norway ' s economy remains buoyant. domestic economic activity is, and will continue to be, the main driver of growth, supported by high consumer confidence and strong investment spending in the offshore oil and gas sector. norway ' s record high budget surplus and upswing in the labor market in 2007 highlight the strength of its economic position going into 2008. oman is a middle - income economy that is heavily dependent on dwindling oil resources, but sustained high oil prices in recent years have helped build oman ' s budget and trade surpluses and foreign reserves. oman joined the world trade organization in november 2000 and continues to liberalize its markets. it ratified a free trade agreement with the us in september 2006, and, through the gulf cooperation council, seeks similar agreements with the eu, china and japan. as a result of its dwindling oil resources, oman is actively pursuing a development plan that focuses on diversification, industrialization, and privatization, with the objective of reducing the oil sector ' s contribution to gdp to 9 percent by 2020. muscat is attempting to " omanize " the labor force by replacing foreign expatriate workers with local workers. oman actively seeks private foreign investors, especially in the industrial