Kingman Reef
no economic activity

Kiribati
A remote country of 33 scattered coral atolls, Kiribati has
few natural resources. Commercially viable phosphate deposits were
exhausted at the time of independence from the UK in 1979. Copra and
fish now represent the bulk of production and exports. The economy
has fluctuated widely in recent years. Economic development is
constrained by a shortage of skilled workers, weak infrastructure,
and remoteness from international markets. Tourism provides more
than one-fifth of GDP. The financial sector is at an early stage of
development as is the expansion of private sector initiatives.
Foreign financial aid from UK, Japan, Australia, New Zealand, and
China equals 25%-50% of GDP. Remittances from workers abroad account
for more than $5 million each year.

Korea, North
North Korea, one of the world's most centrally planned
and isolated economies, faces desperate economic conditions.
Industrial capital stock is nearly beyond repair as a result of
years of underinvestment and spare parts shortages. Industrial and
power output have declined in parallel. The nation has suffered its
tenth year of food shortages because of a lack of arable land,
collective farming, weather-related problems, and chronic shortages
of fertilizer and fuel. Massive international food aid deliveries
have allowed the regime to escape mass starvation since 1995-96, but
the population remains the victim of prolonged malnutrition and
deteriorating living conditions. Large-scale military spending eats
up resources needed for investment and civilian consumption. In
2003, heightened political tensions with key donor countries and
general donor fatigue threatened the flow of desperately needed food
aid and fuel aid as well. Black market prices continued to rise
following the increase in official prices and wages in the summer of
2002, leaving some vulnerable groups, such as the elderly and
unemployed, less able to buy goods. The regime, however, relaxed
restrictions on farmers' market activities in spring 2003, leading
to an expansion of market activity.

Korea, South
Since the early 1960s, South Korea has achieved an
incredible record of growth and integration into the high-tech
modern world economy. Four decades ago GDP per capita was comparable
with levels in the poorer countries of Africa and Asia. Today its
GDP per capita is 18 times North Korea's and equal to the lesser
economies of the European Union. This success through the late 1980s
was achieved by a system of close government/business ties,
including directed credit, import restrictions, sponsorship of
specific industries, and a strong labor effort. The government
promoted the import of raw materials and technology at the expense
of consumer goods and encouraged savings and investment over
consumption. The Asian financial crisis of 1997-99 exposed
longstanding weaknesses in South Korea's development model,
including high debt/equity ratios, massive foreign borrowing, and an
undisciplined financial sector. Growth plunged to a negative 6.6% in
1998, then strongly recovered to 10.8% in 1999 and 9.2% in 2000.
Growth fell back to 3.3% in 2001 because of the slowing global
economy, falling exports, and the perception that much-needed
corporate and financial reforms had stalled. Led by consumer
spending and exports, growth in 2002 was an impressive 6.2%, despite
anemic global growth, followed by moderate 2.8% growth in 2003. In
2003 the National Assembly approved legislation reducing the six-day
work week to five days.

Kuwait
Kuwait is a small, rich, relatively open economy with proved
crude oil reserves of about 98 billion barrels - 10% of world
reserves. Petroleum accounts for nearly half of GDP, 95% of export
revenues, and 80% of government income. Kuwait's climate limits
agricultural development. Consequently, with the exception of fish,
it depends almost wholly on food imports. About 75% of potable water
must be distilled or imported. Kuwait continues its discussions with
foreign oil companies to develop fields in the northern part of the
country.

Kyrgyzstan
Kyrgyzstan is a poor, mountainous country with a
predominantly agricultural economy. Cotton, tobacco, wool, and meat
are the main agricultural products, although only tobacco and cotton
are exported in any quantity. Industrial exports include gold,
mercury, uranium, and natural gas and electricity. Kyrgyzstan has
been fairly progressive in carrying out market reforms, such as an
improved regulatory system and land reform. Kyrgyzstan was the first
CIS country to be accepted into the World Trade Organization. With
fits and starts, inflation has been lowered to an estimated 7% in
2001, 2.1% in 2002, and 4.0% in 2003. Much of the government's stock
in enterprises has been sold. Drops in production had been severe
after the breakup of the Soviet Union in December 1991, but by
mid-1995 production began to recover and exports began to increase.
Kyrgyzstan has distinguished itself by adopting relatively liberal
economic policies. The drop in output at the Kumtor gold mine
sparked a 0.5% decline in GDP in 2002, but GDP growth bounced back
to 6% in 2003. The government has made steady strides in controlling
its substantial fiscal deficit and aims to reduce the deficit to 4.4
percent of GDP in 2004. The government and the international
financial institutions have been engaged in a comprehensive
medium-term poverty reduction and economic growth strategy. Further
restructuring of domestic industry and success in attracting foreign
investment are keys to future growth.

Laos
The government of Laos - one of the few remaining official
Communist states - began decentralizing control and encouraging
private enterprise in 1986. The results, starting from an extremely
low base, were striking - growth averaged 7% in 1988-2001 except
during the short-lived drop caused by the Asian financial crisis
beginning in 1997. Despite this high growth rate, Laos remains a
country with a primitive infrastructure; it has no railroads, a
rudimentary road system, and limited external and internal
telecommunications. Electricity is available in only a few urban
areas. Subsistence agriculture accounts for half of GDP and provides
80% of total employment. The economy will continue to benefit from
aid from the IMF and other international sources and from new
foreign investment in food processing and mining.

Latvia
Latvia's transitional economy recovered from the 1998 Russian
financial crisis, largely due to the SKELE government's budget
stringency and a gradual reorientation of exports toward EU
countries, lessening Latvia's trade dependency on Russia. The
majority of companies, banks, and real estate have been privatized,
although the state still holds sizable stakes in a few large
enterprises. Latvia officially joined the World Trade Organization
in February 1999. Preparing for EU membership continues as a top
foreign policy goal. The current account and internal government
deficits remain major concerns, but the government's efforts to
increase efficiency in revenue collection may lessen the budget
deficit.

Lebanon
The 1975-91 civil war seriously damaged Lebanon's economic
infrastructure, cut national output by half, and all but ended
Lebanon's position as a Middle Eastern entrepot and banking hub.
Peace enabled the central government to restore control in Beirut,
begin collecting taxes, and regain access to key port and government
facilities. Economic recovery was helped by a financially sound
banking system and resilient small- and medium-scale manufacturers.
Family remittances, banking services, manufactured and farm exports,
and international aid provided the main sources of foreign exchange.
Lebanon's economy made impressive gains since the launch in 1993 of
"Horizon 2000," the government's $20 billion reconstruction program.
Real GDP grew 8% in 1994, 7% in 1995, 4% in 1996 and in 1997, but
slowed to 1.2% in 1998, -1.6% in 1999, -0.6% in 2000, 0.8% in 2001,
1.5% in 2002, and 3% in 2003. During the 1990s, annual inflation
fell to almost 0% from more than 100%. Lebanon has rebuilt much of
its war-torn physical and financial infrastructure. The government
nonetheless faces serious challenges in the economic arena. It has
funded reconstruction by borrowing heavily - mostly from domestic
banks. In order to reduce the ballooning national debt, the
re-installed HARIRI government began an economic austerity program
to rein in government expenditures, increase revenue collection, and
privatize state enterprises. The HARIRI government met with
international donors at the Paris II conference in November 2002 to
seek bilateral assistance restructuring its domestic debt at lower
rates of interest. While privatization of state-owned enterprises
had not occurred by the end of 2003, massive receipts from donor
nations stabilized government finances in 2002-04.

Lesotho
Small, landlocked, and mountainous, Lesotho relies on
remittances from miners employed in South Africa and customs duties
from the Southern Africa Customs Union for the majority of
government revenue, but the government has strengthened its tax
system to reduce dependency on customs duties. Completion of a major
hydropower facility in January 1998 now permits the sale of water to
South Africa, also generating royalties for Lesotho. As the number
of mineworkers has declined steadily over the past several years, a
small manufacturing base has developed based on farm products that
support the milling, canning, leather, and jute industries and a
rapidly growing apparel-assembly sector. The economy is still
primarily based on subsistence agriculture, especially livestock,
although drought has decreased agricultural activity. The extreme
inequality in the distribution of income remains a major drawback.
Lesotho has signed an Interim Poverty Reduction and Growth Facility
with the IMF.