Howland Island
no economic activity
Hungary
Hungary has made the transition from a centrally planned to
a market economy, with a per capita income one-half that of the Big
Four European nations. Hungary continues to demonstrate strong
economic growth and to work toward accession to the European Union
in May 2004. The private sector accounts for over 80% of GDP.
Foreign ownership of and investment in Hungarian firms are
widespread, with cumulative foreign direct investment totaling more
than $23 billion since 1989. Hungarian sovereign debt was upgraded
in 2000 to the second-highest rating among all the Central European
transition economies. Inflation has declined substantially, from 14%
in 1998 to 4.7% in 2003; unemployment has persisted around the 6%
level. Germany is by far Hungary's largest economic partner.
Short-term issues include the reduction of the public sector deficit
to 3% in 2004 and avoiding unjustified increases in wages.
Iceland
Iceland's Scandinavian-type economy is basically
capitalistic, yet with an extensive welfare system (including
generous housing subsidies), low unemployment, and remarkably even
distribution of income. In the absence of other natural resources
(except for abundant hydrothermal and geothermal power), the economy
depends heavily on the fishing industry, which provides 70% of
export earnings and employs 12% of the work force. The economy
remains sensitive to declining fish stocks as well as to
fluctuations in world prices for its main exports: fish and fish
products, aluminum, and ferrosilicon. Government policies include
reducing the budget and current account deficits, limiting foreign
borrowing, containing inflation, revising agricultural and fishing
policies, diversifying the economy, and privatizing state-owned
industries. The government remains opposed to EU membership,
primarily because of Icelanders' concern about losing control over
their fishing resources. Iceland's economy has been diversifying
into manufacturing and service industries in the last decade, and
new developments in software production, biotechnology, and
financial services are taking place. The tourism sector is also
expanding, with the recent trends in ecotourism and whale watching.
Growth had been remarkably steady in 1996-2001 at 3%-5%, but could
not be sustained in 2002 in an environment of global recession.
Growth resumed in 2003, and inflation dropped back from 5% to 2%.
India
India's economy encompasses traditional village farming,
modern agriculture, handicrafts, a wide range of modern industries,
and a multitude of support services. Overpopulation severely
handicaps the economy and about a quarter of the population is too
poor to be able to afford an adequate diet. Government controls have
been reduced on imports and foreign investment, and privatization of
domestic output has proceeded slowly. The economy has posted an
excellent average growth rate of 6% since 1990, reducing poverty by
about 10 percentage points. India has large numbers of well-educated
people skilled in the English language; India is a major exporter of
software services and software workers; the information technology
sector leads the strong growth pattern. The World Bank and others
worry about the continuing public-sector budget deficit, running at
approximately 10% of GDP in 1997-2002. In 2003 the state-owned
Indian Bank substantially reduced non-performing loans, attracted
new customers, and turned a profit. Deep-rooted problems remain,
notably conflicts among political and cultural groups.
Indian Ocean
The Indian Ocean provides major sea routes connecting
the Middle East, Africa, and East Asia with Europe and the Americas.
It carries a particularly heavy traffic of petroleum and petroleum
products from the oilfields of the Persian Gulf and Indonesia. Its
fish are of great and growing importance to the bordering countries
for domestic consumption and export. Fishing fleets from Russia,
Japan, South Korea, and Taiwan also exploit the Indian Ocean, mainly
for shrimp and tuna. Large reserves of hydrocarbons are being tapped
in the offshore areas of Saudi Arabia, Iran, India, and western
Australia. An estimated 40% of the world's offshore oil production
comes from the Indian Ocean. Beach sands rich in heavy minerals and
offshore placer deposits are actively exploited by bordering
countries, particularly India, South Africa, Indonesia, Sri Lanka,
and Thailand.
Indonesia
Indonesia, a vast polyglot nation, faces severe economic
development problems stemming from secessionist movements and the
low level of security in the regions; the lack of reliable legal
recourse in contract disputes; corruption; weaknesses in the banking
system; and strained relations with the IMF. Investor confidence
will remain low and few new jobs will be created under these
circumstances. In November 2001, Indonesia agreed with the IMF on a
series of economic reforms in 2002, thus enabling further IMF
disbursements. Negotiations with the IMF and bilateral donors
continued in 2002. Keys to future growth remain internal reform, the
build-up of the confidence of international donors and investors,
and a strong comeback in the global economy.
Iran
Iran's economy is a mixture of central planning, state
ownership of oil and other large enterprises, village agriculture,
and small-scale private trading and service ventures. President
KHATAMI has continued to follow the market reform plans of former
President RAFSANJANI and has indicated that he will pursue
diversification of Iran's oil-reliant economy although he has made
little progress toward that goal. Relatively high oil prices in
recent years have enabled Iran to amass some $15 billion in foreign
exchange reserves, but have not solved Iran's structural economic
problems, including high unemployment and inflation.
Iraq
Iraq's economy is dominated by the oil sector, which has
traditionally provided about 95% of foreign exchange earnings. In
the 1980s financial problems caused by massive expenditures in the
eight-year war with Iran and damage to oil export facilities by Iran
led the government to implement austerity measures, borrow heavily,
and later reschedule foreign debt payments; Iraq suffered economic
losses from the war of at least $100 billion. After hostilities
ended in 1988, oil exports gradually increased with the construction
of new pipelines and restoration of damaged facilities. Iraq's
seizure of Kuwait in August 1990, subsequent international economic
sanctions, and damage from military action by an international
coalition beginning in January 1991 drastically reduced economic
activity. Although government policies supporting large military and
internal security forces and allocating resources to key supporters
of the regime have hurt the economy, implementation of the UN's
oil-for-food program beginning in December 1996 helped improve
conditions for the average Iraqi citizen. Iraq was allowed to export
limited amounts of oil in exchange for food, medicine, and some
infrastructure spare parts. In December 1999 the UN Security Council
authorized Iraq to export under the program as much oil as required
to meet humanitarian needs. Oil exports have recently been more than
three-quarters prewar level. However, 28% of Iraq's export revenues
under the program have been deducted to meet UN Compensation Fund
and UN administrative expenses. The drop in GDP in 2001-02 was
largely the result of the global economic slowdown and lower oil
prices. Per capita food imports increased significantly, while
medical supplies and health care services steadily improved. Per
capita output and living standards were still well below the prewar
level, but any estimates have a wide range of error. The military
victory of the US-led coalition in March-April 2003 resulted in the
shutdown of much of the central economic administrative structure
and the loss of a comparatively small amount of capital plant.
Ireland
Ireland is a small, modern, trade-dependent economy with
growth averaging a robust 8% in 1995-2002. The global slowdown,
especially in the information technology sector, pressed growth down
to 2.7% in 2003. Agriculture, once the most important sector, is now
dwarfed by industry and services. Industry accounts for 46% of GDP
and about 80% of exports and employs 28% of the labor force.
Although exports remain the primary engine for Ireland's growth, the
economy has also benefited from a rise in consumer spending,
construction, and business investment. Per capita GDP is 10% above
that of the four big European economies. Over the past decade, the
Irish Government has implemented a series of national economic
programs designed to curb inflation, reduce government spending,
increase labor force skills, and promote foreign investment. Ireland
joined in launching the euro currency system in January 1999 along
with 10 other EU nations.
Israel
Israel has a technologically advanced market economy with
substantial government participation. It depends on imports of crude
oil, grains, raw materials, and military equipment. Despite limited
natural resources, Israel has intensively developed its agricultural
and industrial sectors over the past 20 years. Israel imports
significant quantities of grain but is largely self-sufficient in
other agricultural products. Cut diamonds, high-technology
equipment, and agricultural products (fruits and vegetables) are the
leading exports. Israel usually posts sizable current account
deficits, which are covered by large transfer payments from abroad
and by foreign loans. Roughly half of the government's external debt
is owed to the US, which is its major source of economic and
military aid. The influx of Jewish immigrants from the former USSR
during the period 1989-99, coupled with the opening of new markets
at the end of the Cold War, energized Israel's economy, which grew
rapidly in the early 1990s; growth began moderating in 1996 when the
government imposed tighter fiscal and monetary policies and the
immigration bonus petered out. Growth was a strong 7.2% in 2000, but
the bitter Israeli-Palestinian conflict, difficulties in the
high-technology, construction, and tourist sectors, and fiscal
austerity in the face of growing inflation led to small declines in
GDP in 2001 and 2002.