Ukraine
After Russia, the Ukrainian republic was far and away the
most important economic component of the former Soviet Union,
producing about four times the output of the next-ranking republic.
Its fertile black soil generated more than one-fourth of Soviet
agricultural output, and its farms provided substantial quantities
of meat, milk, grain, and vegetables to other republics. Likewise,
its diversified heavy industry supplied the unique equipment (for
example, large diameter pipes) and raw materials to industrial and
mining sites (vertical drilling apparatus) in other regions of the
former USSR. Ukraine depends on imports of energy, especially
natural gas, to meet some 85% of its annual energy requirements.
Shortly after independence in December 1991, the Ukrainian
Government liberalized most prices and erected a legal framework for
privatization, but widespread resistance to reform within the
government and the legislature soon stalled reform efforts and led
to some backtracking. Output by 1999 had fallen to less than 40% of
the 1991 level. Loose monetary policies pushed inflation to
hyperinflationary levels in late 1993. Ukraine's dependence on
Russia for energy supplies and the lack of significant structural
reform have made the Ukrainian economy vulnerable to external
shocks. Now in his second term, President KUCHMA has pledged to
reduce the number of government agencies, streamline the regulatory
process, create a legal environment to encourage entrepreneurs, and
enact a comprehensive tax overhaul. Reforms in the more politically
sensitive areas of structural reform and land privatization are
still lagging. Outside institutions - particularly the IMF - have
encouraged Ukraine to quicken the pace and scope of reforms. GDP in
2000 showed strong export-based growth of 6% - the first growth
since independence - and industrial production grew 12.9%. The
economy continued to expand in 2001 as real GDP rose 9% and
industrial output grew by over 14%. Growth of 4.1% in 2002 was more
moderate, in part a reflection of faltering growth in the developed
world. In general, growth has been undergirded by strong domestic
demand, low inflation, and solid consumer and investor confidence.
Growth was a sturdy 6% in 2003 despite a loss of mementum in needed
economic reforms.
United Arab Emirates
The UAE has an open economy with a high per
capita income and a sizable annual trade surplus. Its wealth is
based on oil and gas output (about 33% of GDP), and the fortunes of
the economy fluctuate with the prices of those commodities. Since
1973, the UAE has undergone a profound transformation from an
impoverished region of small desert principalities to a modern state
with a high standard of living. At present levels of production, oil
and gas reserves should last for more than 100 years. The government
has increased spending on job creation and infrastructure expansion
and is opening up its utilities to greater private sector
involvement.
United Kingdom
The UK, a leading trading power and financial center,
is one of the quartet of trillion dollar economies of Western
Europe. Over the past two decades the government has greatly reduced
public ownership and contained the growth of social welfare
programs. Agriculture is intensive, highly mechanized, and efficient
by European standards, producing about 60% of food needs with only
1% of the labor force. The UK has large coal, natural gas, and oil
reserves; primary energy production accounts for 10% of GDP, one of
the highest shares of any industrial nation. Services, particularly
banking, insurance, and business services, account by far for the
largest proportion of GDP while industry continues to decline in
importance. GDP growth slipped in 2001-03 as the global downturn,
the high value of the pound, and the bursting of the "new economy"
bubble hurt manufacturing and exports. Still, the economy is one of
the strongest in Europe; inflation, interest rates, and unemployment
remain low. The relatively good economic performance has complicated
the BLAIR government's efforts to make a case for Britain to join
the European Economic and Monetary Union (EMU). Critics point out,
however, that the economy is doing well outside of EMU, and they
point to public opinion polls that continue to show a majority of
Britons opposed to the single currency. Meantime, the government has
been speeding up the improvement of education, transport, and health
services, at a cost in higher taxes. The war in March-April 2003
between a US-led coalition and Iraq, together with the subsequent
problems of restoring the economy and the polity, involve a heavy
commitment of British military forces.
United States
The US has the largest and most technologically
powerful economy in the world, with a per capita GDP of $37,600. In
this market-oriented economy, private individuals and business firms
make most of the decisions, and the federal and state governments
buy needed goods and services predominantly in the private
marketplace. US business firms enjoy considerably greater
flexibility than their counterparts in Western Europe and Japan in
decisions to expand capital plant, lay off surplus workers, and
develop new products. At the same time, they face higher barriers to
entry in their rivals' home markets than the barriers to entry of
foreign firms in US markets. US firms are at or near the forefront
in technological advances, especially in computers and in medical,
aerospace, and military equipment, although their advantage has
narrowed since the end of World War II. The onrush of technology
largely explains the gradual development of a "two-tier labor
market" in which those at the bottom lack the education and the
professional/technical skills of those at the top and, more and
more, fail to get comparable pay raises, health insurance coverage,
and other benefits. Since 1975, practically all the gains in
household income have gone to the top 20% of households. The years
1994-2000 witnessed solid increases in real output, low inflation
rates, and a drop in unemployment to below 5%. The year 2001 saw the
end of boom psychology and performance, with output increasing only
0.3% and unemployment and business failures rising substantially.
The response to the terrorist attacks of 11 September 2001 showed
the remarkable resilience of the economy. Moderate recovery took
place in 2002, with the GDP growth rate rising to 2.45%. A major
short-term problem in first half 2002 was a sharp decline in the
stock market, fueled in part by the exposure of dubious accounting
practices in some major corporations. The war in March/April 2003
between a US-led coalition and Iraq shifted resources to military
industries and introduced uncertainties about investment and
employment in other sectors of the economy. Long-term problems
include inadequate investment in economic infrastructure, rapidly
rising medical and pension costs of an aging population, sizable
trade deficits, and stagnation of family income in the lower
economic groups.
Uruguay
Uruguay's economy is characterized by an export-oriented
agricultural sector, a well-educated workforce, and high levels of
social spending. After averaging growth of 5% annually during
1996-98, in 1999-2002 the economy suffered a major downturn,
stemming largely from lower demand in Argentina and Brazil, which
together account for nearly half of Uruguay's exports. Total GDP in
these four years dropped by nearly 20%, with 2002 the worst year.
Unemployment rose to nearly 20% in 2002, inflation surged, and the
burden of external debt doubled. Cooperation with the IMF and the US
has limited the damage, which is still extensive. Moves to
reschedule debt and promote economic recovery may help limit a
further decline in output in 2003.
Uzbekistan
Uzbekistan is a dry, landlocked country of which 11%
consists of intensely cultivated, irrigated river valleys. More than
60% of its population lives in densely populated rural communities.
Uzbekistan is now the world's second-largest cotton exporter, a
large producer of gold and oil, and a regionally significant
producer of chemicals and machinery. Following independence in
December 1991, the government sought to prop up its Soviet-style
command economy with subsidies and tight controls on production and
prices. Uzbekistan responded to the negative external conditions
generated by the Asian and Russian financial crises by emphasizing
import substitute industrialization and by tightening export and
currency controls within its already largely closed economy. The
government, while aware of the need to improve the investment
climate, sponsors measures that often increase, not decrease, the
government's control over business decisions. A sharp increase in
the inequality of income distribution has hurt the lower ranks of
society since independence.
Vanuatu
The economy is based primarily on subsistence or small-scale
agriculture, which provides a living for 65% of the population.
Fishing, offshore financial services, and tourism, with about 50,000
visitors in 1997, are other mainstays of the economy. Mineral
deposits are negligible; the country has no known petroleum
deposits. A small light industry sector caters to the local market.
Tax revenues come mainly from import duties. Economic development is
hindered by dependence on relatively few commodity exports,
vulnerability to natural disasters, and long distances from main
markets and between constituent islands. A severe earthquake in
November 1999 followed by a tsunami, caused extensive damage to the
northern island of Pentecote and left thousands homeless. Another
powerful earthquake in January 2002 caused extensive damage in the
capital, Port-Vila, and surrounding areas, and also was followed by
a tsunami. GDP growth rose less than 3% on average in the 1990s. In
response to foreign concerns, the government has promised to tighten
regulation of its offshore financial center. In mid-2002 the
government stepped up efforts to boost tourism. Australia and New
Zealand are the main suppliers of foreign aid.
Venezuela
Venezuela continues to be highly dependent on the
petroleum sector, which accounts for roughly one-third of GDP,
around 80% of export earnings, and more than half of government
operating revenues. Despite higher oil prices at the end of 2002 and
into 2003, domestic political instability, culminating in a
two-month national oil strike from December 2002 to February 2003,
temporarily halted economic activity. The economy is likely to
remain in a recession in 2003, after sinking an estimated 8.9
percent in 2002.
Vietnam
Vietnam is a poor, densely-populated country that has had to
recover from the ravages of war, the loss of financial support from
the old Soviet Bloc, and the rigidities of a centrally planned
economy. Substantial progress was achieved from 1986 to 1996 in
moving forward from an extremely low starting point - growth
averaged around 9% per year from 1993 to 1997. The 1997 Asian
financial crisis highlighted the problems in the Vietnamese economy
but, rather than prompting reform, reaffirmed the government's
belief that shifting to a market-oriented economy would lead to
disaster. GDP growth of 8.5% in 1997 fell to 6% in 1998 and 5% in
1999. Growth then rose to 6% to 7% in 2000-02 even against the
background of global recession. These numbers mask some major
difficulties in economic performance. Many domestic industries,
including coal, cement, steel, and paper, have reported large
stockpiles of inventory and tough competition from more efficient
foreign producers. Meanwhile, Vietnamese authorities have moved to
implement the structural reforms needed to modernize the economy and
to produce more competitive, export-driven industries. The
US-Vietnam Bilateral Trade Agreement entered into force near the end
of 2001 and is expected to significantly increase Vietnam's exports
to the US. The US is assisting Vietnam with implementing the legal
and structural reforms called for in the agreement.
Virgin Islands
Tourism is the primary economic activity, accounting
for more than 70% of GDP and 70% of employment. The islands normally
host 2 million visitors a year. The manufacturing sector consists of
petroleum refining, textiles, electronics, pharmaceuticals, and
watch assembly. The agricultural sector is small, with most food
being imported. International business and financial services are a
small but growing component of the economy. One of the world's
largest petroleum refineries is at Saint Croix. The islands are
subject to substantial damage from storms. The government is working
to improve fiscal discipline, support construction projects in the
private sector, expand tourist facilities, reduce crime, and protect
the environment.