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 1
meter or less above sea level.
Mali
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.
Malta
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.
Marshall Islands
US Government assistance is the mainstay of this
tiny island economy. The Marshall Islands received more than $1
billion in aid from the US from 1986-2002. 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 GDP growth to an average of 1% over the past
decade.
Mauritania
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.
Mauritius
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, 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).
Mayotte
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
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.
Micronesia, Federated States of
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. Under the original terms of the Compact of Free
Association, the US provided $1.3 billion in grant aid during the
period 1986-2001; the level of aid has been subsequently reduced.
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 fragile due not only to the reduction in US
assistance but also to the current slow growth of the private sector.
Moldova
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
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 sectors, including tobacco, the telephone
network, and the postal service. Living standards are high, roughly
comparable to those in prosperous French metropolitan areas.
Mongolia
Economic activity in Mongolia has traditionally been based
on herding and agriculture. Mongolia has extensive mineral deposits.
Copper, coal, gold, molybdenum, fluorspar, uranium, tin, and
tungsten account for a large part of industrial production and
foreign direct investment. Soviet assistance, at its height
one-third of GDP, disappeared almost overnight in 1990 and 1991 at
the time of the dismantlement of the USSR. The following decade saw
Mongolia endure both deep recession because of political inaction
and natural disasters, as well as economic growth because of
reform-embracing, free-market economics and extensive privatization
of the formerly state-run economy. Severe winters and summer
droughts in 2000-02 resulted in massive livestock die-off and zero
or negative GDP growth. This was compounded by falling prices for
Mongolia's primary sector exports and widespread opposition to
privatization. Growth was 10.6% in 2004, 5.5% in 2005, 7.5% in 2006,
and 9.9% in 2007 largely because of high copper prices and new gold
production. Mongolia is experiencing its highest inflation rate in
over a decade as consumer prices in 2007 rose 15%, largely because
of increased fuel and food costs. Mongolia's economy continues to be
heavily influenced by its neighbors. For example, Mongolia purchases
95% of its petroleum products and a substantial amount of electric
power from Russia, leaving it vulnerable to price increases. Trade
with China represents more than half of Mongolia's total external
trade - China receives about 70% of Mongolia's exports. Remittances
from Mongolians working abroad both legally and illegally are
sizable, and money laundering is a growing concern. Mongolia settled
its $11 billion debt with Russia at the end of 2003 on favorable
terms. Mongolia, which joined the World Trade Organization in 1997,
seeks to expand its participation and integration into Asian
regional economic and trade regimes.
Montenegro
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.
Montserrat
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.
Morocco
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, 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.
Mozambique
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 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.
Namibia
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.
Nauru
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 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.
Navassa Island
Subsistence fishing and commercial trawling occur
within refuge waters.
Nepal
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.
Netherlands
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.