Mexico:
Mexico has a free market economy with a mixture of modern
and outmoded industry and agriculture, increasingly dominated by the
private sector. The number of state-owned enterprises in Mexico has
fallen from more than 1,000 in 1982 to fewer than 200 in 2000. The
ZEDILLO administration privatized and expanded competition in
seaports, railroads, telecommunications, electricity, natural gas
distribution, and airports. A strong export sector helped to cushion
the economy's decline in 1995 and led the recovery in 1996-2000.
Private consumption became the leading driver of growth in 2000,
accompanied by increased employment and higher real wages. Mexico
still needs to overcome many structural problems as it strives to
modernize its economy and raise living standards. Income
distribution is very unequal, with the top 20% of income earners
accounting for 55% of income. Trade with the US and Canada has
tripled since NAFTA was implemented in 1994. Mexico completed free
trade agreements with the EU, Israel, El Salvador, Honduras, and
Guatemala in 2000, and is pursuing additional trade agreements with
countries in Latin America and Asia to lessen its dependence on the
US.
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 remoteness of
the location and a lack of adequate facilities hinder development.
In 1996, the country experienced a 20% reduction in revenues from
the Compact of Free Association - the agreement between the US and
Micronesia in which Micronesia receives $1.3 billion in financial
and technical assistance over a 15-year period until 2001 - as a
result of the second step-down under the agreement. Since these
revenues accounted for 57% of consolidated government revenues,
reduced Compact funding resulted in a severe depression. While
Micronesia's economy appears to have bottomed out in 1999, the
country's medium-term economic outlook remains fragile due to likely
further reductions in external grants made under the US Compact
funding. Geographical isolation and a poorly developed
infrastructure remain major impediments to long-term growth.
Midway Islands:
The economy is based on providing support services
for the national wildlife refuge activities located on the islands.
All food and manufactured goods must be imported.
Moldova:
Moldova 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 all of its supplies of oil, coal, and
natural gas, largely from Russia. Energy shortages contributed to
sharp production declines after the breakup of the Soviet Union in
1991. As part of an ambitious reform effort, Moldova introduced a
convertible currency, freed all prices, stopped issuing preferential
credits to state enterprises, backed steady land privatization,
removed export controls, and freed interest rates. Yet these efforts
could not offset the impact of political and economic difficulties,
both internal and regional. In 1998, the economic troubles of
Russia, by far Moldova's leading trade partner, were a major cause
of the 8.6% drop in GDP. In 1999, GDP fell again, by 4.4%, the fifth
drop in the past seven years; exports were down, and energy supplies
continued to be erratic. GDP declined slightly in 2000, with a
serious drought hurting agriculture. Growth should turn positive in
2001.
Monaco:
Monaco, situated on the French Mediterranean coast, is a
popular resort, attracting tourists to its casino and pleasant
climate. The Principality 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. Monaco does not publish national income figures; the
estimates below are extremely rough.
Mongolia:
Economic activity traditionally has been based on
agriculture and breeding of livestock. Mongolia also has extensive
mineral deposits: copper, coal, molybdenum, tin, tungsten, and gold
account for a large part of industrial production. Soviet
assistance, at its height one-third of GDP, disappeared almost
overnight in 1990-91, at the time of the dismantlement of the USSR.
Mongolia was driven into deep recession, which was prolonged by the
Mongolian People's Revolutionary Party's (MPRP) reluctance to
undertake serious economic reform. The Democratic Coalition (DC)
government has embraced free-market economics, easing price
controls, liberalizing domestic and international trade, and
attempting to restructure the banking system and the energy sector.
Major domestic privatization programs were undertaken, as well as
the fostering of foreign investment through international tender of
the oil distribution company, a leading cashmere company, and banks.
Reform was held back by the ex-communist MPRP opposition and by the
political instability brought about through four successive
governments under the DC. Economic growth picked up in 1997-99 after
stalling in 1996 due to a series of natural disasters and declines
in world prices of copper and cashmere. In August and September
1999, the economy suffered from a temporary Russian ban on exports
of oil and oil products, and Mongolia remains vulnerable in this
sector. Mongolia joined the World Trade Organization (WTrO) in 1997.
The international donor community pledged over $300 million per year
at the last Consultative Group Meeting, held in Ulaanbaatar in June
1999. The MPRP government, elected in July 2000, is anxious to
improve the investment climate; it must also deal with a heavy
burden of external debt.
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 volcano and on public sector construction activity.
The UK committed to a three year $125 million aid program in 1999 to
help reconstruct the economy.
Morocco:
Morocco faces the problems typical of developing countries
- restraining government spending, reducing constraints on private
activity and foreign trade, and achieving sustainable economic
growth. Following structural adjustment programs supported by the
IMF, World Bank, and the Paris Club, the dirham is now fully
convertible for current account transactions, and reforms of the
financial sector have been implemented. Drought conditions depressed
activity in the key agricultural sector and contributed to a
stagnant economy in 1999 and 2000. During that time, however,
Morocco reported large foreign exchange inflows from the sale of a
mobile telephone license and partial privatization of the
state-owned telecommunications company. Favorable rainfalls have led
Morocco to predict a growth of 1% for 2001. Formidable long-term
challenges include: servicing the external debt; preparing the
economy for freer trade with the EU; and improving education and
attracting foreign investment to boost living standards and job
prospects for Morocco's youthful population.
Mozambique:
Before the peace accord of October 1992, Mozambique's
economy was devastated by a protracted civil war and socialist
mismanagement. In 1994, it ranked as one of the poorest countries in
the world. Since then, Mozambique has undertaken a series of
economic reforms. Almost all aspects of the economy have been
liberalized to some extent. More than 900 state enterprises have
been privatized. A value-added tax, introduced in 1999, launched the
government's comprehensive tax reform program. Pending are much
needed commercial code reform and greater private sector involvement
in the transportation, telecommunications, and energy sectors. Since
1996, inflation has been low and foreign exchange rates relatively
stable. Albeit from a small base, Mozambique's economy grew at an
annual 10% rate in 1997-99, one of the highest growth rates in the
world. Growth slowed and inflation rose in 2000 due to devastating
flooding in the early part of the year. Both indicators should
recover in 2001. The country depends on foreign assistance to
balance the budget and to pay for a trade imbalance in which imports
greatly outnumber exports. The trade situation should improve in the
medium term, however, as trade and transportation links to South
Africa and the rest of the region have been improved and sizeable
foreign investments are beginning to materialize. Among these
investments are metal production (aluminum, steel), natural gas,
power generation, agriculture, fishing, timber, and transportation
services. Mozambique has received a formal cancellation of a large
portion of its external debt through an IMF initiative and is
scheduled to receive additional relief.
Namibia:
The economy is heavily dependent on the extraction and
processing of minerals for export. Mining accounts for 20% of GDP.
Namibia is the fourth-largest exporter of nonfuel minerals in Africa
and the world's fifth-largest producer of uranium. Rich alluvial
diamond deposits make Namibia a primary source for gem-quality
diamonds. Namibia also produces large quantities of lead, zinc, tin,
silver, and tungsten. Half of the population depends on agriculture
(largely subsistence agriculture) for its livelihood. Namibia must
import some of its food. Although per capita GDP is four times the
per capita GDP of Africa's poorer countries, the majority of
Namibia's people live in pronounced poverty because of large-scale
unemployment, the great inequality of income distribution, and the
large amount of wealth going to foreigners. The Namibian economy has
close links to South Africa. GDP growth in 2000 was led by gains in
the diamond and fish sectors. Agreement has been reached on the
privatization of several more enterprises in coming years, which
should stimulate long-run foreign investment. Growth in 2001 could
be 5.5% provided the world economy remains stable.