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 euro. 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 $37,800. 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, to lay off surplus workers, and
to 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; 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 2.4%. 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 the
military. In 2003, growth in output and productivity and the
recovery of the stock market to above 10,000 for the Dow Jones
Industrial Average were promising signs. Unemployment stayed at the
6% level, however, and began to decline only at the end of the year.
Long-term problems include inadequate investment in economic
infrastructure, rapidly rising medical and pension costs of an aging
population, sizable trade and budget deficits, and stagnation of
family income in the lower economic groups.
Uruguay
Uruguay's well-to-do 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 the spillover effects of the
economic problems of its large neighbors, Argentina and Brazil. For
instance, in 2001-02 massive withdrawals by Argentina of dollars
deposited in Uruguayan banks led to a plunge in the Uruguyan peso
and a massive rise in unemployment. Total GDP in these four years
dropped by nearly 20%, with 2002 the worst year due to the serious
banking crisis. 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. The debt swap with
private creditors carried out in 2003, which extended the maturity
dates on nearly half of Uruguay's $11.3 billion in public debt,
substantially alleviated the country's amortization burden in the
coming years and restored public confidence. The economy is expected
to resume growth in 2004 (perhaps 4% or more) as a result of high
commodity prices for Uruguayan exports, the weakness of the dollar
against the euro, growth in the region, low international interest
rates, and greater export competitiveness. On the negative side, in
December 2003 the electorate voted to repeal the law permitting a
cautious liberalization of the energy industry.
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. In 2003, the government accepted the
obligations of Article VIII under the International Monetary Fund
(IMF), providing for full currency convertibility. However, strict
currency controls and tightening of borders have lessened the
effects of convertibility and have also lead to some shortages which
have further stifled economic activity.
Vanuatu
This South Pacific island economy is based primarily on
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. Agriculture,
especially livestock farming, is a second target for growth.
Australia and New Zealand are the main suppliers of tourists and
foreign aid. Growth expanded moderately in 2003.
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
disastrous two-month national oil strike from December 2002 to
February 2003, temporarily halted economic activity. The economy
remained in depression in 2003, declining by 9.2% after an 8.9% fall
in 2002. In late 2003, President CHAVEZ committed himself to $1
billion in new social programs, money the government does not have.
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. Since the Party elected new leadership in 2001,
Vietnamese authorities have reaffirmed their commitment to economic
liberalization and 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 80% of GDP and 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, to support construction projects in the private
sector, to expand tourist facilities, to reduce crime, and to
protect the environment.
Wake Island
Economic activity is limited to providing services to
contractors located on the island. All food and manufactured goods
must be imported.