The 2001 CIA World Factbook

by United States. Central Intelligence Agency

Lesotho:
Small, landlocked, and mountainous, Lesotho's primary
natural resource is water. Its economy is based on subsistence
agriculture, livestock, and remittances from miners employed in
South Africa. The number of such mineworkers has declined steadily
over the past several years. A small manufacturing base depends
largely on farm products that support the milling, canning, leather,
and jute industries. Agricultural products are exported primarily to
South Africa. Proceeds from membership in a common customs union
with South Africa form the majority of government revenue. Although
drought has decreased agricultural activity over the past few years,
completion of a major hydropower facility in January 1998 now
permits the sale of water to South Africa, generating royalties for
Lesotho. The pace of substantial privatization has increased in
recent years. In December 1999, the government embarked on a
nine-month IMF staff-monitored program aimed at structural
adjustment and stabilization of macroeconomic fundamentals. The
government is in the process of applying for a three-year successor
program with the IMF under its Poverty Reduction and Growth Facility.

Liberia:
A civil war in 1989-96 destroyed much of Liberia's economy,
especially the infrastructure in and around Monrovia. Many
businessmen fled the country, taking capital and expertise with
them. Some returned during 1997. Many will not return. Richly
endowed with water, mineral resources, forests, and a climate
favorable to agriculture, Liberia had been a producer and exporter
of basic products, while local manufacturing, mainly foreign owned,
had been small in scope. The democratically elected government,
installed in August 1997, inherited massive international debts and
currently relies on revenues from its maritime registry to provide
the bulk of its foreign exchange earnings. The restoration of the
infrastructure and the raising of incomes in this ravaged economy
depend on the implementation of sound macro- and micro-economic
policies of the new government, including the encouragement of
foreign investment. Recent growth has been from a low base, and
continued growth will require major policy successes.

Libya:
The socialist-oriented economy depends primarily upon
revenues from the oil sector, which contributes practically all
export earnings and about one-quarter of GDP. These oil revenues and
a small population give Libya one of the highest per capita GDPs in
Africa, but little of this income flows down to the lower orders of
society. In this statist society, import restrictions and
inefficient resource allocations have led to periodic shortages of
basic goods and foodstuffs. The nonoil manufacturing and
construction sectors, which account for about 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 requirements. Higher oil prices
in 1999 and 2000 led to an increase in export revenues, which
improved macroeconomic balances and helped to stimulate the economy.
Following the suspension of UN sanctions in 1999, Libya has been
trying to increase its attractiveness to foreign investors, and
several foreign companies have visited in search of contracts.

Liechtenstein:
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 the urban areas of
its large European neighbors. Low business taxes - the maximum tax
rate is 18% - and easy incorporation rules have induced 73,700
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
European Free Trade Association (EFTA) and EU) since May 1995. The
government is working to harmonize its economic policies with those
of an integrated Europe.

Lithuania:
Lithuania, the Baltic state that has conducted the most
trade with Russia, has been slowly rebounding from the 1998 Russian
financial crisis. High unemployment and weak consumption have held
back recovery. GDP growth for 2000 - estimated at 2.9% - fell behind
that of Estonia and Latvia, and unemployment is estimated at 10.8%,
the country's highest since regaining independence in 1990. For
2001, Lithuanians forecast 3.2% growth, 1.8% inflation, and a fiscal
deficit of 3.3%. In early 2001, the Lithuanian Government announced
that it will repeg its currency, the litas, to the euro (the litas
is currently pegged to the dollar) some time in 2002. Lithuania must
ratify 25 agreements along with other legal documents and
obligations by 1 May 2001 before gaining World Trade Organization
membership. Lithuania was invited to the Helsinki summit in December
1999 and began EU accession talks in early 2000. Privatization of
the large, state-owned utilities, particularly in the energy sector,
remains a key challenge for 2001.

Luxembourg:
The stable, high-income economy 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 has more than compensated for the decline in steel.
Services, especially banking, account for a substantial proportion
of the economy. Agriculture is based on small family-owned farms.
The economy depends on foreign and trans-border workers for 30% of
its labor force. Luxembourg has a custom union with Belgium and the
Netherlands, and, as a member of the EU, enjoys the advantages of
the open European market. It joined with 10 other EU members to
launch the euro on 1 January 1999.

Macau:
The economy is based largely on tourism (including gambling)
and textile and fireworks manufacturing. Efforts to diversify have
spawned other small industries - toys, artificial flowers, and
electronics. The tourist sector has accounted for roughly 25% of
GDP, and the clothing industry has provided about three-fourths of
export earnings; the gambling industry probably represents over 40%
of GDP. More than 8 million tourists visited Macau in 2000. Macau
depends on China for most of its food, fresh water, and energy
imports. Japan and Hong Kong are the main suppliers of raw materials
and capital goods. Output dropped 5% in 1998 and 3% in 1999, with a
small 2% gain in 2000. Macau reverted to Chinese administration on
20 December 1999. Gang violence, a dark spot in the economy,
probably will be reduced in 2000-01 to the advantage of the tourism
sector.

Macedonia, The Former Yugoslav Republic of:
At independence in
November 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 center and eliminated advantages from inclusion in a de
facto free trade area. An absence of infrastructure, UN sanctions on
its largest market Yugoslavia, and a Greek economic embargo hindered
economic growth until 1996. GDP has subsequently increased each
year, rising by 5% in 2000. Successful privatization in 2000 boosted
the country's reserves to over $700 million. Also, the leadership
demonstrated a continuing commitment to economic reform, free trade,
and regional integration. Inflation jumped to 11% in 2000, largely
due to higher oil prices.

Madagascar:
Madagascar faces problems of chronic malnutrition,
underfunded health and education facilities, a roughly 3% annual
population growth rate, and severe loss of forest cover, accompanied
by erosion. Agriculture, including fishing and forestry, is the
mainstay of the economy, accounting for 30% of GDP and contributing
more than 70% to export earnings. Industry features textile
manufacturing and the processing of agricultural products. Growth in
output in 1992-97 averaged less than the growth rate of the
population. Growth has been held back by antigovernment strikes and
demonstrations, a decline in world coffee prices, and the erratic
commitment of the government to economic reform. The extent of
government reforms, outside financial aid, and foreign investment
will be key determinants of future growth. For 2001, growth should
again be about 5%.

Malawi:
Landlocked Malawi ranks among the world's least developed
countries. The economy is predominately agricultural, with about 90%
of the population living in rural areas. Agriculture accounts for
37% of GDP and 85% of export revenues. The economy depends on
substantial inflows of economic assistance from the IMF, the World
Bank, and individual donor nations. In late 2000, Malawi was
approved for relief under the Heavily Indebted Poor Countries (HIPC)
program. The government faces strong challenges, e.g., to fully
develop a market economy, to improve educational facilities, to face
up to environmental problems, and to deal with the rapidly growing
problem of HIV/AIDS.