no economic activity; declared a nature reserve
Brazil
Characterized by large and well-developed agricultural,
mining, manufacturing, and service sectors, Brazil's economy
outweighs that of all other South American countries and is
expanding its presence in world markets. Having weathered 2001-03
financial turmoil, capital inflows are regaining strength and the
currency has resumed appreciating. The appreciation has slowed
export volume growth, but since 2004, Brazil's growth has yielded
increases in employment and real wages. The resilience in the
economy stems from commodity-driven current account surpluses, and
sound macroeconomic policies that have bolstered international
reserves to historically high levels, reduced public debt, and
allowed a significant decline in real interest rates. A floating
exchange rate, an inflation-targeting regime, and a tight fiscal
policy are the three pillars of the economic program. From 2003 to
2007, Brazil ran record trade surpluses and recorded its first
current account surpluses since 1992. Productivity gains coupled
with high commodity prices contributed to the surge in exports.
Brazil improved its debt profile in 2006 by shifting its debt burden
toward real denominated and domestically held instruments. "LULA" DA
SILVA restated his commitment to fiscal responsibility by
maintaining the country's primary surplus during the 2006 election.
Following his second inauguration, "LULA" DA SILVA announced a
package of further economic reforms to reduce taxes and increase
investment in infrastructure. The government's goal of achieving
strong growth while reducing the debt burden is likely to create
inflationary pressures.
British Indian Ocean Territory
All economic activity is concentrated
on the largest island of Diego Garcia, where a joint UK-US military
facility is located. Construction projects and various services
needed to support the military installation are performed by
military and contract employees from the UK, Mauritius, the
Philippines, and the US. There are no industrial or agricultural
activities on the islands. When the native Ilois return, they plan
to reestablish sugarcane production and fishing. The territory earns
foreign exchange by selling fishing licenses and postage stamps.
British Virgin Islands
The economy, one of the most stable and
prosperous in the Caribbean, is highly dependent on tourism,
generating an estimated 45% of the national income. An estimated
820,000 tourists, mainly from the US, visited the islands in 2005.
In the mid-1980s, the government began offering offshore
registration to companies wishing to incorporate in the islands, and
incorporation fees now generate substantial revenues. Roughly
400,000 companies were on the offshore registry by yearend 2000. The
adoption of a comprehensive insurance law in late 1994, which
provides a blanket of confidentiality with regulated statutory
gateways for investigation of criminal offenses, made the British
Virgin Islands even more attractive to international business.
Livestock raising is the most important agricultural activity; poor
soils limit the islands' ability to meet domestic food requirements.
Because of traditionally close links with the US Virgin Islands, the
British Virgin Islands has used the US dollar as its currency since
1959.
Brunei
Brunei has a small well-to-do economy that encompasses a
mixture of foreign and domestic entrepreneurship, government
regulation, welfare measures, and village tradition. Crude oil and
natural gas production account for just over half of GDP and more
than 90% of exports. Per capita GDP is among the highest in Asia,
and substantial income from overseas investment supplements income
from domestic production. The government provides for all medical
services and free education through the university level and
subsidizes rice and housing. Brunei's leaders are concerned that
steadily increased integration in the world economy will undermine
internal social cohesion. Plans for the future include upgrading the
labor force, reducing unemployment, strengthening the banking and
tourist sectors, and, in general, further widening the economic base
beyond oil and gas.
Bulgaria
Bulgaria, a former communist country that entered the EU on
1 January 2007, has experienced strong growth since a major economic
downturn in 1996. Successive governments have demonstrated
commitment to economic reforms and responsible fiscal planning, but
have failed so far to rein in rising inflation and large current
account deficits. Bulgaria has averaged more than 6% growth since
2004, attracting significant amounts of foreign direct investment,
but corruption in the public administration, a weak judiciary, and
the presence of organized crime remain significant challenges.
Burkina Faso
One of the poorest countries in the world, landlocked
Burkina Faso has few natural resources and a weak industrial base.
About 90% of the population is engaged in subsistence agriculture,
which is vulnerable to periodic drought. Cotton is the main cash
crop and the government has joined with three other cotton producing
countries in the region - Mali, Niger, and Chad - to lobby in the
World Trade Organization for fewer subsidies to producers in other
competing countries. Since 1998, Burkina Faso has embarked upon a
gradual but successful privatization of state-owned enterprises.
Having revised its investment code in 2004, Burkina Faso hopes to
attract foreign investors. Thanks to this new code and other
legislation favoring the mining sector, the country has seen an
upswing in gold exploration and production. While the bitter
internal crisis in neighboring Cote d'Ivoire is beginning to be
resolved, it is still having a negative effect on Burkina Faso's
trade and employment. In 2007 higher costs for energy and imported
foodstuffs, as well as low cotton prices, dampened a GDP growth rate
that had averaged 6% in the last 10 years. Burkina Faso received a
Millennium Challenge Account threshold grant to improve girls'
education at the primary school level, and appears likely to receive
a grant in the areas of infrastructure, agriculture, and land reform.
Burma
Burma, a resource-rich country, suffers from pervasive
government controls, inefficient economic policies, and rural
poverty. The junta took steps in the early 1990s to liberalize the
economy after decades of failure under the "Burmese Way to
Socialism," but those efforts stalled, and some of the
liberalization measures were rescinded. Despite Burma's increasing
oil and gas revenue, socio-economic conditions have deteriorated due
to the regime's mismanagement of the economy. Lacking monetary or
fiscal stability, the economy suffers from serious macroeconomic
imbalances - including rising inflation, fiscal deficits, multiple
official exchange rates that overvalue the Burmese kyat, a distorted
interest rate regime, unreliable statistics, and an inability to
reconcile national accounts to determine a realistic GDP figure.
Most overseas development assistance ceased after the junta began to
suppress the democracy movement in 1988 and subsequently refused to
honor the results of the 1990 legislative elections. In response to
the government of Burma's attack in May 2003 on AUNG SAN SUU KYI and
her convoy, the US imposed new economic sanctions in August 2003
including a ban on imports of Burmese products and a ban on
provision of financial services by US persons. Further, a poor
investment climate hampers attracting outside investment slowing the
inflow of foreign exchange. The most productive sectors will
continue to be in extractive industries, especially oil and gas,
mining, and timber with the latter especially causing environmental
degradation. Other areas, such as manufacturing and services, are
struggling with inadequate infrastructure, unpredictable
import/export policies, deteriorating health and education systems,
and endemic corruption. A major banking crisis in 2003 shuttered the
country's 20 private banks and disrupted the economy. As of 2007,
the largest private banks operated under tight restrictions limiting
the private sector's access to formal credit. Moreover, the
September 2007 crackdown on prodemocracy demonstrators, including
thousands of monks, further strained the economy as the tourism
industry, which directly employs about 500,000 people, suffered
dramatic declines in foreign visitor levels. In November 2007, the
European Union announced new sanctions banning investment and trade
in Burmese gems, timber and precious stones, while the United States
expanded its sanctions list to include more Burmese government and
military officials and their family members, as well as prominent
regime business cronies, their family members, and associated
companies. Official statistics are inaccurate. Published statistics
on foreign trade are greatly understated because of the size of the
black market and unofficial border trade - often estimated to be as
large as the official economy. Though the Burmese government has
good economic relations with its neighbors, better investment and
business climates and an improved political situation are needed to
promote serious foreign investment, exports, and tourism.
Burundi
Burundi is a landlocked, resource-poor country with an
underdeveloped manufacturing sector. The economy is predominantly
agricultural with more than 90% of the population dependent on
subsistence agriculture. Economic growth depends on coffee and tea
exports, which account for 90% of foreign exchange earnings. The
ability to pay for imports, therefore, rests primarily on weather
conditions and international coffee and tea prices. The Tutsi
minority, 14% of the population, dominates the government and the
coffee trade at the expense of the Hutu majority, 85% of the
population. An ethnic-based war that lasted for over a decade
resulted in more than 200,000 deaths, forced more than 48,000
refugees into Tanzania, and displaced 140,000 others internally.
Only one in two children go to school, and approximately one in 15
adults has HIV/AIDS. Food, medicine, and electricity remain in short
supply. Burundi's GDP grew around 5% annually in 2006-07. Political
stability and the end of the civil war have improved aid flows and
economic activity has increased, but underlying weaknesses - a high
poverty rate, poor education rates, a weak legal system, and low
administrative capacity - risk undermining planned economic reforms.
Burundi will continue to remain heavily dependent on aid from
bilateral and multilateral donors; the delay of funds after a
corruption scandal cut off bilateral aid in 2007 reduced
government's revenues and its ability to pay salaries.
Cambodia
From 2001 to 2004, the economy grew at an average rate of
6.4%, driven largely by an expansion in the garment sector and
tourism. The US and Cambodia signed a Bilateral Textile Agreement,
which gave Cambodia a guaranteed quota of US textile imports and
established a bonus for improving working conditions and enforcing
Cambodian labor laws and international labor standards in the
industry. With the January 2005 expiration of a WTO Agreement on
Textiles and Clothing, Cambodia-based textile producers were forced
to compete directly with lower-priced producing countries such as
China and India. Better-than-expected garment sector performance led
to more than 9% growth in 2007. Its vibrant garment industry employs
more than 350,000 people and contributes more than 70% of Cambodia's
exports. The Cambodian government has committed itself to a policy
supporting high labor standards in an attempt to maintain buyer
interest. In 2005, exploitable oil and natural gas deposits were
found beneath Cambodia's territorial waters, representing a new
revenue stream for the government if commercial extraction begins.
Mining also is attracting significant investor interest,
particularly in the northeastern parts of the country, and the
government has said opportunities exist for mining bauxite, gold,
iron and gems. In 2006, a US-Cambodia bilateral Trade and Investment
Framework Agreement (TIFA) was signed and the first round of
discussions took place in early 2007. The tourism industry continues
to grow rapidly, with foreign arrivals reaching 2 million in 2007.
In 2007 the government signed a joint venture agreement with two
companies to form a new national airline. The long-term development
of the economy remains a daunting challenge. The Cambodian
government is working with bilateral and multilateral donors,
including the World Bank and IMF, to address the country's many
pressing needs. The major economic challenge for Cambodia over the
next decade will be fashioning an economic environment in which the
private sector can create enough jobs to handle Cambodia's
demographic imbalance. More than 50% of the population is less than
21 years old. The population lacks education and productive skills,
particularly in the poverty-ridden countryside, which suffers from
an almost total lack of basic infrastructure.
Cameroon
Because of its modest oil resources and favorable
agricultural conditions, Cameroon has one of the best-endowed
primary commodity economies in sub-Saharan Africa. Still, it faces
many of the serious problems facing other underdeveloped countries,
such as a top-heavy civil service and a generally unfavorable
climate for business enterprise. Since 1990, the government has
embarked on various IMF and World Bank programs designed to spur
business investment, increase efficiency in agriculture, improve
trade, and recapitalize the nation's banks. In June 2000, the
government completed an IMF-sponsored, three-year structural
adjustment program; however, the IMF is pressing for more reforms,
including increased budget transparency, privatization, and poverty
reduction programs. In January 2001, the Paris Club agreed to reduce
Cameroon's debt of $1.3 billion by $900 million; debt relief now
totals $1.26 billion. International oil and cocoa prices have a
significant impact on the economy.
Canada
As an affluent, high-tech industrial society in the
trillion-dollar class, Canada resembles the US in its
market-oriented economic system, pattern of production, and affluent
living standards. Since World War II, the impressive growth of the
manufacturing, mining, and service sectors has transformed the
nation from a largely rural economy into one primarily industrial
and urban. The 1989 US-Canada Free Trade Agreement (FTA) and the
1994 North American Free Trade Agreement (NAFTA) (which includes
Mexico) touched off a dramatic increase in trade and economic
integration with the US. Given its great natural resources, skilled
labor force, and modern capital plant, Canada enjoys solid economic
prospects. Top-notch fiscal management has produced consecutive
balanced budgets since 1997, although public debate continues over
the equitable distribution of federal funds to the Canadian
provinces. Exports account for roughly a third of GDP. Canada enjoys
a substantial trade surplus with its principal trading partner, the
US, which absorbs 80% of Canadian exports each year. Canada is the
US's largest foreign supplier of energy, including oil, gas,
uranium, and electric power. During 2007, Canada enjoyed good
economic growth, moderate inflation, and the lowest unemployment
rate in more than three decades.
Cape Verde
This island economy suffers from a poor natural resource
base, including serious water shortages exacerbated by cycles of
long-term drought. The economy is service-oriented, with commerce,
transport, tourism, and public services accounting for about
three-fourths of GDP. Although nearly 70% of the population lives in
rural areas, the share of food production in GDP is low. About 82%
of food must be imported. The fishing potential, mostly lobster and
tuna, is not fully exploited. Cape Verde annually runs a high trade
deficit, financed by foreign aid and remittances from emigrants;
remittances supplement GDP by more than 20%. Economic reforms are
aimed at developing the private sector and attracting foreign
investment to diversify the economy. Future prospects depend heavily
on the maintenance of aid flows, the encouragement of tourism,
remittances, and the momentum of the government's development
program. Cape Verde became a member of the WTO in July 2008.
Cayman Islands
With no direct taxation, the islands are a thriving
offshore financial center. More than 68,000 companies were
registered in the Cayman Islands as of 2003, including almost 500
banks, 800 insurers, and 5,000 mutual funds. A stock exchange was
opened in 1997. Tourism is also a mainstay, accounting for about 70%
of GDP and 75% of foreign currency earnings. The tourist industry is
aimed at the luxury market and caters mainly to visitors from North
America. Total tourist arrivals exceeded 2.1 million in 2003, with
about half from the US. About 90% of the islands' food and consumer
goods must be imported. The Caymanians enjoy one of the highest
outputs per capita and one of the highest standards of living in the
world.
Central African Republic
Subsistence agriculture, together with
forestry, remains the backbone of the economy of the Central African
Republic (CAR), with more than 70% of the population living in
outlying areas. The agricultural sector generates more than half of
GDP. Timber has accounted for about 16% of export earnings and the
diamond industry, for 40%. Important constraints to economic
development include the CAR's landlocked position, a poor
transportation system, a largely unskilled work force, and a legacy
of misdirected macroeconomic policies. Factional fighting between
the government and its opponents remains a drag on economic
revitalization. Distribution of income is extraordinarily unequal.
Grants from France and the international community can only
partially meet humanitarian needs.
Chad
Chad's primarily agricultural economy will continue to be
boosted by major foreign direct investment projects in the oil
sector that began in 2000. At least 80% of Chad's population relies
on subsistence farming and livestock raising for its livelihood.
Chad's economy has long been handicapped by its landlocked position,
high energy costs, and a history of instability. Chad relies on
foreign assistance and foreign capital for most public and private
sector investment projects. A consortium led by two US companies has
been investing $3.7 billion to develop oil reserves - estimated at 1
billion barrels - in southern Chad. Chinese companies are also
expanding exploration efforts and plan to build a refinery. The
nation's total oil reserves have been estimated to be 1.5 billion
barrels. Oil production came on stream in late 2003. Chad began to
export oil in 2004. Cotton, cattle, and gum arabic provide the bulk
of Chad's non-oil export earnings.
Chile
Chile has a market-oriented economy characterized by a high
level of foreign trade. During the early 1990s, Chile's reputation
as a role model for economic reform was strengthened when the
democratic government of Patricio AYLWIN - which took over from the
military in 1990 - deepened the economic reform initiated by the
military government. Growth in real GDP averaged 8% during 1991-97,
but fell to half that level in 1998 because of tight monetary
policies implemented to keep the current account deficit in check
and because of lower export earnings - the latter a product of the
global financial crisis. A severe drought exacerbated the recession
in 1999, reducing crop yields and causing hydroelectric shortfalls
and electricity rationing, and Chile experienced negative economic
growth for the first time in more than 15 years. Despite the effects
of the recession, Chile maintained its reputation for strong
financial institutions and sound policy that have given it the
strongest sovereign bond rating in South America. Between 2000 and
2007 growth ranged between 2%-6%. Throughout these years Chile
maintained a low rate of inflation with GDP growth coming from high
copper prices, solid export earnings (particularly forestry,
fishing, and mining), and growing domestic consumption. President
BACHELET in 2006 established an Economic and Social Stabilization
Fund to hold excess copper revenues so that social spending can be
maintained during periods of copper shortfalls. This fund probably
surpassed $20 billion at the end of 2007. Chile continues to attract
foreign direct investment, but most foreign investment goes into
gas, water, electricity and mining. Unemployment has exhibited a
downward trend over the past two years, dropping to 7.8% and 7.0% at
the end of 2006 and 2007, respectively. Chile deepened its
longstanding commitment to trade liberalization with the signing of
a free trade agreement with the US, which took effect on 1 January
2004. Chile claims to have more bilateral or regional trade
agreements than any other country. It has 57 such agreements (not
all of them full free trade agreements), including with the European
Union, Mercosur, China, India, South Korea, and Mexico.