Liberia
Civil war and misgovernment have destroyed much of Liberia's
economy, especially the infrastructure in and around Monrovia. Many
businessmen have fled the country, taking capital and expertise with
them. Some have returned, many will not. Richly endowed with water,
mineral resources, forests, and a climate favorable to agriculture,
Liberia had been a producer and exporter of basic products -
primarily raw timber and rubber. Local manufacturing, mainly foreign
owned, had been small in scope. The departure of the former
president, Charles TAYLOR, to Nigeria in August 2003, the
establishment of the all-inclusive National Transition Government of
Liberia (NTGL), and the arrival of a UN mission are all encouraging
signs that the political crisis is coming to an end. The restoration
of infrastructure and the raising of incomes in this ravaged economy
depend on the implementation of sound macro- and micro-economic
policies, including the encouragement of foreign investment, and
generous support from donor countries.
Libya
The Libyan economy depends primarily upon revenues from the
oil sector, which contribute practically all export earnings and
about one-quarter of GDP. These oil revenues and a small population
give Libya one of the highest per capita GDPs in Africa, but little
of this income flows down to the lower orders of society. Libyan
officials in the past three years have made progress on economic
reforms as part of a broader campaign to reintegrate the country
into the international fold. This effort picked up steam after UN
sanctions were lifted in September 2003 and as Libya announced in
December 2003 that it would abandon programs to build weapons of
mass destruction. Libya faces a long road ahead in liberalizing the
socialist-oriented economy, but initial steps - including applying
for WTO membership, reducing some subsidies, and announcing plans
for privatization - are laying the groundwork for a transition to a
more market-based economy. The non-oil manufacturing and
construction sectors, which account for about 20% of GDP, have
expanded from processing mostly agricultural products to include the
production of petrochemicals, iron, steel, and aluminum. Climatic
conditions and poor soils severely limit agricultural output, and
Libya imports about 75% of its food.
Liechtenstein
Despite its small size and limited natural resources,
Liechtenstein has developed into a prosperous, highly
industrialized, free-enterprise economy with a vital financial
service sector and living standards on a par with its large European
neighbors. The Liechtenstein economy is widely diversified with a
large number of small businesses. Low business taxes - the maximum
tax rate is 20% - and easy incorporation rules have induced many
holding or so-called letter box companies to establish nominal
offices in Liechtenstein, providing 30% of state revenues. The
country participates in a customs union with Switzerland and uses
the Swiss franc as its national currency. It imports more than 90%
of its energy requirements. Liechtenstein has been a member of the
European Economic Area (an organization serving as a bridge between
the European Free Trade Association (EFTA) and the EU) since May
1995. The government is working to harmonize its economic policies
with those of an integrated Europe.
Lithuania
Lithuania, the Baltic state that has conducted the most
trade with Russia, has slowly rebounded from the 1998 Russian
financial crisis. Unemployment remains high, still 10.7% in 2003,
but is improving. Growing domestic consumption and increased
investment have furthered recovery. Trade has been increasingly
oriented toward the West. Lithuania has gained membership in the
World Trade Organization and has moved ahead with plans to join the
EU. Privatization of the large, state-owned utilities, particularly
in the energy sector, is nearing completion. Overall, more than 80%
of enterprises have been privatized. Foreign government and business
support have helped in the transition from the old command economy
to a market economy.
Luxembourg
This stable, high-income economy features solid growth,
low inflation, and low unemployment. The industrial sector,
initially dominated by steel, has become increasingly diversified to
include chemicals, rubber, and other products. Growth in the
financial sector, which now accounts for about 22% of GDP, has more
than compensated for the decline in steel. Most banks are
foreign-owned and have extensive foreign dealings. Agriculture is
based on small family-owned farms. The economy depends on foreign
and trans-border workers for more than 30% of its labor force.
Although Luxembourg, like all EU members, has suffered from the
global economic slump, the country has maintained a fairly strong
growth rate and enjoys an extraordinarily high standard of living.
Macau
Macau's well-to-do economy has remained one of the most open
in the world since its reversion to China in 1999. The territory's
net exports of goods and services account for roughly 41% of GDP
with tourism and apparel exports as the mainstays. Although the
territory was hit hard by the 1998 Asian financial crisis and the
global downturn in 2001, its economy grew 9.5% in 2002. A rapid rise
in the number of mainland visitors because of China's easing of
restrictions on travel drove the recovery. The budget also returned
to surplus in 2002 because of the surge in visitors from China and a
hike in taxes on gambling profits, which generated about 70% of
government revenue. The liberalization of Macao's gambling monopoly
contributes to GDP growth, as the three companies awarded gambling
licenses have pledged to invest $2.2 billion in the territory. Much
of Macau's textile industry may move to the mainland as the
Multi-Fiber Agreement is phased out. The territory may have to rely
more on gambling and trade-related services to generate growth. The
government estimated GDP growth at 4% in 2003 with the drop in large
measure due to concerns over the Severe Acute Respiratory Syndrome
(SARS), but private sector analysts think the figure may have been
higher because of the continuing boom in tourism.
Macedonia
At independence in September 1991, Macedonia was the least
developed of the Yugoslav republics, producing a mere 5% of the
total federal output of goods and services. The collapse of
Yugoslavia ended transfer payments from the center and eliminated
advantages from inclusion in a de facto free trade area. An absence
of infrastructure, UN sanctions on Yugoslavia, one of its largest
markets, and a Greek economic embargo over a dispute about the
country's constitutional name and flag hindered economic growth
until 1996. GDP subsequently rose each year through 2000. However,
the leadership's commitment to economic reform, free trade, and
regional integration was undermined by the ethnic Albanian
insurgency of 2001. The economy shrank 4.5% because of decreased
trade, intermittent border closures, increased deficit spending on
security needs, and investor uncertainty. Growth barely recovered in
2002 to 0.9%, then rose to 2.8% in 2003. Unemployment at one-third
of the workforce remains the most critical economic problem. The
gray economy is estimated at around 40% of GDP. Politically, the
country is more stable than in 2002.
Madagascar
Having discarded past socialist economic policies,
Madagascar has since the mid 1990s followed a World Bank and IMF led
policy of privatization and liberalization. This strategy has placed
the country on a slow and steady growth path from an extremely low
level. Agriculture, including fishing and forestry, is a mainstay of
the economy, accounting for more than one-fourth of GDP and
employing four-fifths of the population. Exports of apparel have
boomed in recent years primarily due to duty-free access to the
United States. Deforestation and erosion, aggravated by the use of
firewood as the primary source of fuel are serious concerns.
President RAVALOMANANA has worked aggressively to revive the economy
following the 2002 political crisis, which triggered a 12% drop in
GDP that year. Poverty reduction and combating corruption will be
the centerpieces of economic policy for the next few years.
Malawi
Landlocked Malawi ranks among the world's least developed
countries. The economy is predominately agricultural, with about 90%
of the population living in rural areas. Agriculture accounted for
nearly 40% of GDP and 88% of export revenues in 2001. The economy
depends on substantial inflows of economic assistance from the IMF,
the World Bank, and individual donor nations. In late 2000, Malawi
was approved for relief under the Heavily Indebted Poor Countries
(HIPC) program. In November 2002 the World Bank approved a $50
million drought recovery package, which is to be used for famine
relief. The government faces strong challenges, e.g., to fully
develop a market economy, to improve educational facilities, to face
up to environmental problems, to deal with the rapidly growing
problem of HIV/AIDS, and to satisfy foreign donors that fiscal
discipline is being tightened. The performance of the tobacco sector
is key to short-term growth as tobacco accounts for over 50% of
exports.
Malaysia
Malaysia, a middle-income country, transformed itself from
1971 through the late 1990s from a producer of raw materials into an
emerging multi-sector economy. Growth was almost exclusively driven
by exports - particularly of electronics. As a result Malaysia was
hard hit by the global economic downturn and the slump in the
information technology (IT) sector in 2001 and 2002. GDP in 2001
grew only 0.5% due to an estimated 11% contraction in exports, but a
substantial fiscal stimulus package equal to US $1.9 billion
mitigated the worst of the recession and the economy rebounded in
2002 with a 4.1% increase. The economy grew 4.9% in 2003,
notwithstanding a difficult first half, when external pressures from
SARS and the Iraq War led to caution in the business community.
Healthy foreign exchange reserves and a relatively small external
debt make it unlikely that Malaysia will experience a crisis similar
to the one in 1997, but the economy remains vulnerable to a more
protracted slowdown in Japan and the US, top export destinations and
key sources of foreign investment. The Malaysian ringgit is pegged
to the dollar, and the Japanese central bank continues to intervene
and prop up the yen against the dollar.