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 into 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, increasing agricultural production, 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 a
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. Burkina Faso received a Millennium Challenge
Corporation (MCC) threshold grant to improve girls' education at the
primary school level, and signed an MCC compact that focuses on the
areas of infrastructure, agriculture, and land reform in July 2008.
Burma
Burma, a resource-rich country, suffers from pervasive
government controls, inefficient economic policies, and rural
poverty. Despite Burma's increasing oil and gas revenue,
socio-economic conditions have deteriorated because of the regime's
mismanagement of the economy. 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
the inflow of foreign investment. Foreign investors have shied away
from nearly every sector except for natural gas and power
generation. The business climate is widely perceived as opaque,
corrupt, and highly inefficient. The most productive sectors will
continue to be in extractive industries - especially oil and gas,
mining, and timber - with the latter causing significant
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 20 private banks and disrupted the economy. As of
2008, the largest private banks operated under tight restrictions,
limiting the private sector's access to formal credit. The September
2007 crackdown on prodemocracy demonstrators, including thousands of
monks, 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. In July 2008 the President signed into law the Tom
LANTOS JADE (Junta's Anti-Democratic Efforts) Act of 2008, imposing
new targeted sanctions on the regime. 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 rests primarily on weather conditions and
international coffee and tea prices. The Tutsi minority, 14% of the
population, dominates the coffee trade. An ethnic-based war that
lasted for over a decade resulted in more than 200,000 deaths,
forced more than 48,000 refugees into Tanzania, and displaced
140,000 others internally. Only one in two children go to school,
and approximately one in 15 adults has HIV/AIDS. Food, medicine, and
electricity remain in short supply. Burundi's GDP grew around 4%
annually in 2006-08. 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 2004 to 2007, the economy grew about 10% per year,
driven largely by an expansion in the garment sector, construction,
agriculture, and tourism. Growth dropped to below 7% in 2008 as a
result of the global economic slowdown. With the January 2005
expiration of a WTO Agreement on Textiles and Clothing, Cambodian
textile producers were forced to compete directly with lower-priced
countries such as China, India, Vietnam, and Bangladesh. The garment
industry currently employs more than 320,000 people and contributes
more than 85% of Cambodia's exports. In 2005, exploitable oil
deposits were found beneath Cambodia's territorial waters,
representing a new revenue stream for the government if commercial
extraction begins. Mining also is attracting significant investor
interest, particularly in the northern parts of the country. The
government has said opportunities exist for mining bauxite, gold,
iron and gems. In 2006, a US-Cambodia bilateral Trade and Investment
Framework Agreement (TIFA) was signed, and several rounds of
discussions have been held since 2007. The tourism industry has
continued to grow rapidly, with foreign arrivals exceeding 2 million
per year in 2007-08, however, economic troubles abroad will dampen
growth in 2009. Rubber exports declined more than 15% in 2008 due to
falling world market prices. The global financial crisis is
weakening demand for Cambodian exports, and construction is
declining due to a shortage of credit. The long-term development of
the economy remains a daunting challenge. The Cambodian government
is working with bilateral and multilateral donors, including the
World Bank and IMF, to address the country's many pressing needs.
The major economic challenge for Cambodia over the next decade will
be fashioning an economic environment in which the private sector
can create enough jobs to handle Cambodia's demographic imbalance.
More than 50% of the population is less than 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 stagnating per capita income, a relatively inequitable
distribution of income, a top-heavy civil service, and a generally
unfavorable climate for business enterprise. International oil and
cocoa prices have a significant impact on the economy. Since 1990,
the government has embarked on various IMF and World Bank programs
designed to spur business investment, increase efficiency in
agriculture, improve trade, and recapitalize the nation's banks. The
IMF is pressing for more reforms, including increased budget
transparency, privatization, and poverty reduction programs.
Canada
As an affluent, high-tech industrial society in the
trillion-dollar class, Canada resembles the US in its
market-oriented economic system, pattern of production, and affluent
living standards. Since World War II, the impressive growth of the
manufacturing, mining, and service sectors has transformed the
nation from a largely rural economy into one primarily industrial
and urban. The 1989 US-Canada Free Trade Agreement (FTA) and the
1994 North American Free Trade Agreement (NAFTA) (which includes
Mexico) touched off a dramatic increase in trade and economic
integration with the US, its principle trading partner. Canada
enjoys a substantial trade surplus with the US, which absorbs nearly
80% of Canadian exports each year. Canada is the US's largest
foreign supplier of energy, including oil, gas, uranium, and
electric power. Given its great natural resources, skilled labor
force, and modern capital plant, Canada has enjoyed solid economic
growth, and prudent fiscal management has produced consecutive
balanced budgets from 1997 to 2007. In 2008, growth slowed sharply
as a result of the global economic downturn, US housing slump,
plunging auto sector demand, and a drop in world commodity prices.
Public finances, too, are set to deteriorate for the first time in a
decade. Tight global credit conditions have further restrained
business and housing investment, despite the conservative lending
practices and strong capitalization that made Canada's major banks
among the most stable in the world.
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 are estimated at 1.5 billion barrels.
Oil production came on stream in late 2003. Chad began to export oil
in 2004. Cotton, cattle, and gum arabic provide the bulk of Chad's
non-oil export earnings.
Chile
Chile has a market-oriented economy characterized by a high
level of foreign trade and a reputation for strong financial
institutions and sound policy that have given it the strongest
sovereign bond rating in South America. Exports account for 40% of
GDP, with commodities making up some three-quarters of total
exports. Copper alone provides one-third of government revenue.
During the early 1990s, Chile's reputation as a role model for
economic reform was strengthened when the democratic government of
Patricio AYLWIN - which took over from the military in 1990 -
deepened the economic reform initiated by the military government.
Growth in real GDP averaged 8% during 1991-97, but fell to half that
level in 1998 because of tight monetary policies implemented to keep
the current account deficit in check and because of lower export
earnings - the latter a product of the global financial crisis. A
severe drought exacerbated the situation in 1999, reducing crop
yields and causing hydroelectric shortfalls and electricity
rationing, and Chile experienced negative economic growth for the
first time in more than 15 years. In the years since then, growth
has averaged 4% per year. Chile deepened its longstanding commitment
to trade liberalization with the signing of a free trade agreement
with the US, which took effect on 1 January 2004. Chile claims to
have more bilateral or regional trade agreements than any other
country. It has 57 such agreements (not all of them full free trade
agreements), including with the European Union, Mercosur, China,
India, South Korea, and Mexico. Over the past five years, foreign
direct investment inflows have quadrupled to some $17 billion in
2008. The Chilean government conducts a rule-based countercyclical
fiscal policy, accumulating surpluses in sovereign wealth funds
during periods of high copper prices and economic growth, and
allowing deficit spending only during periods of low copper prices
and growth. As of September 2008, those sovereign wealth funds -
kept mostly outside the country and separate from Central Bank
reserves - amounted to more than $20 billion.
China
China's economy during the past 30 years has changed from a
centrally planned system that was largely closed to international
trade to a more market-oriented economy that has a rapidly growing
private sector and is a major player in the global economy. Reforms
started in the late 1970s with the phasing out of collectivized
agriculture, and expanded to include the gradual liberalization of
prices, fiscal decentralization, increased autonomy for state
enterprises, the foundation of a diversified banking system, the
development of stock markets, the rapid growth of the non-state
sector, and the opening to foreign trade and investment. Annual
inflows of foreign direct investment rose to nearly $84 billion in
2007. China has generally implemented reforms in a gradualist or
piecemeal fashion. In recent years, China has re-invigorated its
support for leading state-owned enterprises in sectors it considers
important to "economic security," explicitly looking to foster
globally competitive national champions. After keeping its currency
tightly linked to the US dollar for years, China in July 2005
revalued its currency by 2.1% against the US dollar and moved to an
exchange rate system that references a basket of currencies.
Cumulative appreciation of the renminbi against the US dollar since
the end of the dollar peg was more than 20% by late 2008, but the
exchange rate has changed little since the onset of the global
financial crisis. The restructuring of the economy and resulting
efficiency gains have contributed to a more than tenfold increase in
GDP since 1978. Measured on a purchasing power parity (PPP) basis
that adjusts for price differences, China in 2008 stood as the
second-largest economy in the world after the US, although in per
capita terms the country is still lower middle-income. The Chinese
government faces numerous economic development challenges,
including: (a) strengthening its social safety net, including
pension and health system reform, to counteract a high domestic
savings rate and correspondingly low domestic demand; (b) sustaining
adequate job growth for tens of millions of migrants, new entrants
to the work force, and workers laid off from state-owned enterprises
deemed not worth saving; (c) reducing corruption and other economic
crimes; and (d) containing environmental damage and social strife
related to the economy's rapid transformation. Economic development
has been more rapid in coastal provinces than in the interior, and
approximately 200 million rural laborers and their dependents have
relocated to urban areas to find work - in recent years many have
returned to their villages. One demographic consequence of the "one
child" policy is that China is now one of the most rapidly aging
countries in the world. Deterioration in the environment - notably
air pollution, soil erosion, and the steady fall of the water table,
especially in the north - is another long-term problem. China
continues to lose arable land because of erosion and economic
development. In 2007 China intensified government efforts to improve
environmental conditions, tying the evaluation of local officials to
environmental targets, publishing a national climate change policy,
and establishing a high level leading group on climate change,
headed by Premier WEN Jiabao. The Chinese government seeks to add
energy production capacity from sources other than coal and oil. In
late 2008, as China commemorated the 30th anniversary of its
historic economic reforms, the global economic downturn began to
slow foreign demand for Chinese exports for the first time in many
years. The government vowed to continue reforming the economy and
emphasized the need to increase domestic consumption in order to
make China less dependent on foreign exports for GDP growth in the
future.
Christmas Island
Phosphate mining had been the only significant
economic activity, but in December 1987 the Australian government
closed the mine. In 1991, the mine was reopened. With the support of
the government, a $34 million casino opened in 1993, but closed in
1998. The Australian government in 2001 agreed to support the
creation of a commercial space-launching site on the island expected
to begin operations in the near future.
Clipperton Island
Although 115 species of fish have been identified
in the territorial waters of Clipperton Island, the only economic
activity is tuna fishing.
Cocos (Keeling) Islands
Grown throughout the islands, coconuts are
the sole cash crop. Small local gardens and fishing contribute to
the food supply, but additional food and most other necessities must
be imported from Australia. There is a small tourist industry.