Costa Rica
Costa Rica's basically stable economy depends on tourism,
agriculture, and electronics exports. Poverty has been substantially
reduced over the past 15 years, and a strong social safety net has
been put into place. At the same time, distribution of income
remains severely unequal. Foreign investors remain attracted by the
country's political stability and high education levels, and tourism
continues to bring in foreign exchange. However, traditional export
sectors have not kept pace. Low coffee prices and an overabundance
of bananas have hurt the agricultural sector. The government
continues to grapple with its large deficit and massive internal
debt, with the need to modernize the state-owned electricity and
telecommunications sector, and with the problem of bringing down
inflation.
Cote d'Ivoire
Cote d'Ivoire is among the world's largest producers
and exporters of coffee, cocoa beans, and palm oil. Consequently,
the economy is highly sensitive to fluctuations in international
prices for these products and to weather conditions. Despite
government attempts to diversify the economy, it is still largely
dependent on agriculture and related activities, which engage
roughly 68% of the population. After several years of lagging
performance, the Ivorian economy began a comeback in 1994, due to
the 50% devaluation of the CFA franc and improved prices for cocoa
and coffee, growth in nontraditional primary exports such as
pineapples and rubber, limited trade and banking liberalization,
offshore oil and gas discoveries, and generous external financing
and debt rescheduling by multilateral lenders and France. Moreover,
government adherence to donor-mandated reforms led to a jump in
growth to 5% annually during 1996-99. Growth was negative in 2000-02
because of the difficulty of meeting the conditions of international
donors, continued low prices of key exports, and severe civil war
fighting.
Croatia
Before the dissolution of Yugoslavia, the Republic of
Croatia, after Slovenia, was the most prosperous and industrialized
area, with a per capita output perhaps one-third above the Yugoslav
average. The economy emerged from its mild recession in 2000 with
tourism the main factor, but massive structural unemployment remains
a key negative element. The government's failure to press the
economic reforms needed to spur growth is largely the result of
coalition politics and public resistance, particularly from the
trade unions. Opponents fear reforms would cut jobs, wages, and
social benefits. The government has a heavy backload of civil cases,
many involving tenure land. The country is likely to experience only
moderate growth without disciplined fiscal and structural reform.
Cuba
The government continues to balance the need for economic
loosening against a desire for firm political control. It has
undertaken limited reforms in recent years to increase enterprise
efficiency and alleviate serious shortages of food, consumer goods,
and services but is unlikely to implement extensive changes. A major
feature of the economy is the dichotomy between relatively efficient
export enclaves and inefficient domestic sectors. The average
Cuban's standard of living remains at a lower level than before the
severe economic depression of the early 1990s, which was caused by
the loss of Soviet aid and domestic inefficiencies. High oil import
prices, recessions in key export markets, damage from Hurricanes
Isidore and Lili, and the tourist slump after 11 September 2001
hampered growth in 2002.
Cyprus
The Greek Cypriot economy is prosperous but highly
susceptible to external shocks. Erratic growth rates over the past
decade reflect the economy's vulnerability to swings in tourist
arrivals, caused by political instability in the region and
fluctuations in economic conditions in Western Europe. Economic
policy is focused on meeting the criteria for admission to the EU.
As in the Turkish sector, water shortages are a perennial problem; a
few desalination plants are now online. The Turkish Cypriot economy
has roughly one-third of the per capita GDP of the south. Because it
is recognized only by Turkey, it has had much difficulty arranging
foreign financing and investment. It remains heavily dependent on
agriculture and government service, which together employ about half
of the work force. To compensate for the economy's weakness, Turkey
provides grants and loans to support economic development. Ankara
provided $200 million in 2002 and pledged $450 million for the
2003-05 period. Future events throughout the island will be highly
influenced by the outcome of negotiations on the UN-sponsored
agreement to unite the Greek and Turkish areas and by the
arrangements under which the island joins the EU.
Czech Republic
One of the most stable and prosperous of the
post-Communist states, the Czech Republic has been recovering from
recession since mid-1999. Growth in 2000-03 was supported by exports
to the EU, primarily to Germany, and a near doubling of foreign
direct investment. Domestic demand is playing an ever more important
role in underpinning growth as interest rates drop and the
availability of credit cards and mortgages increases. High current
account deficits - averaging around 5% of GDP in the last several
years - could be a persistent problem. Inflation is under control.
The EU put the Czech Republic just behind Poland and Hungary in
preparations for accession, which will give further impetus and
direction to structural reform. Moves to complete banking,
telecommunications, and energy privatization will encourage
additional foreign investment, while intensified restructuring among
large enterprises and banks and improvements in the financial sector
should strengthen output growth. But revival in the European
economies remains essential to stepped-up growth.
Denmark
This thoroughly modern market economy features high-tech
agriculture, up-to-date small-scale and corporate industry,
extensive government welfare measures, comfortable living standards,
a stable currency, and high dependence on foreign trade. Denmark is
a net exporter of food and energy and enjoys a comfortable balance
of payments surplus. Government objectives include streamlining the
bureaucracy and further privatization of state assets. The
government has been successful in meeting, and even exceeding, the
economic convergence criteria for participating in the third phase
(a common European currency) of the European Economic and Monetary
Union (EMU), but Denmark has decided not to join the 12 other EU
members in the euro; even so, the Danish Krone remains pegged to the
euro. Given the sluggish state of the European economy, growth in
2003 was a mere 1.1%.
Djibouti
The economy is based on service activities connected with
the country's strategic location and status as a free trade zone in
northeast Africa. Two-thirds of the inhabitants live in the capital
city, the remainder being mostly nomadic herders. Scanty rainfall
limits crop production to fruits and vegetables, and most food must
be imported. Djibouti provides services as both a transit port for
the region and an international transshipment and refueling center.
It has few natural resources and little industry. The nation is,
therefore, heavily dependent on foreign assistance to help support
its balance of payments and to finance development projects. An
unemployment rate of 50% continues to be a major problem. Inflation
is not a concern, however, because of the fixed tie of the franc to
the US dollar. Per capita consumption dropped an estimated 35% over
the last seven years because of recession, civil war, and a high
population growth rate (including immigrants and refugees). Faced
with a multitude of economic difficulties, the government has fallen
in arrears on long-term external debt and has been struggling to
meet the stipulations of foreign aid donors. Another factor limiting
growth is the negative impact on port activity now that Ethiopia has
more trade route options.
Dominica
The Dominican economy depends on agriculture, primarily
bananas, and remains highly vulnerable to climatic conditions and
international economic developments. Hurricane Luis devastated the
country's banana crop in 1995 after tropical storms wiped out a
quarter of the 1994 crop. The economy subsequently has been fueled
by increases in construction, soap production, and tourist arrivals.
Development of the tourism industry remains difficult however,
because of the rugged coastline, lack of beaches, and the absence of
an international airport. Economic growth is sluggish, and
unemployment is greater than 20%. The government has been attempting
to develop an offshore financial sector in order to diversify the
island's production base.
Dominican Republic
The Dominican Republic's economy experienced
dramatic growth over the last decade, even though the economy was
hit hard by Hurricane Georges in 1998. Although the country has long
been viewed primarily as an exporter of sugar, coffee, and tobacco,
in recent years the service sector has overtaken agriculture as the
economy's largest employer, due to growth in tourism and free trade
zones. The country suffers from marked income inequality; the
poorest half of the population receives less than one-fifth of GNP,
while the richest 10% enjoy nearly 40% of national income. Growth
probably will slow in 2003 with reduced tourism and expected low
growth in the US economy, the source of 87% of export revenues.