Bolivia
Bolivia, long one of the poorest and least developed Latin
American countries, reformed its economy after suffering a
disastrous economic crisis in the early 1980s. The reforms spurred
real GDP growth, which averaged 4 percent in the 1990s, and poverty
rates fell. Economic growth, however, lagged again beginning in 1999
because of a global slowdown and homegrown factors such as political
turmoil, civil unrest, and soaring fiscal deficits, all of which
hurt investor confidence. In 2003, violent protests against the
pro-foreign investment economic policies of President SANCHEZ DE
LOZADA led to his resignation and the cancellation of plans to
export Bolivia's newly discovered natural gas reserves to large
northern hemisphere markets. Foreign investment dried up as
companies adopted a wait-and-see attitude regarding new President
Carlos MESA's willingness to protect investor rights in the face of
increased demands by radical groups that the government expropriate
foreign-owned assets. Real GDP growth in 2003 and 2004 - helped by
increased demand for natural gas in neighboring Brazil - was
positive, but still below the levels seen during the 1990s. Bolivia
remains dependent on foreign aid from multilateral lenders and
foreign governments.
Bosnia and Herzegovina
Bosnia and Herzegovina ranked next to
Macedonia as the poorest republic in the old Yugoslav federation.
Although agriculture is almost all in private hands, farms are small
and inefficient, and the republic traditionally is a net importer of
food. Industry has been greatly overstaffed, one reflection of the
socialist economic structure of Yugoslavia. TITO had pushed the
development of military industries in the republic with the result
that Bosnia hosted a number of Yugoslavia's defense plants. The
interethnic warfare in Bosnia caused production to plummet by 80%
from 1992 to 1995 and unemployment to soar. With an uneasy peace in
place, output recovered in 1996-99 at high percentage rates from a
low base; but output growth slowed in 2000-02. Part of the lag in
output was made up in 2003-2004. National-level statistics are
limited and do not capture the large share of black market activity.
The konvertibilna marka (convertible mark or BAM)- the national
currency introduced in 1998 - is now pegged to the euro, and the
Central Bank of Bosnia and Herzegovina has dramatically increased
its reserve holdings. Implementation of privatization, however, has
been slow, and local entities only reluctantly support
national-level institutions. Banking reform accelerated in 2001 as
all the Communist-era payments bureaus were shut down. A sizeable
current account deficit and high unemployment rate remain the two
most serious economic problems. The country receives substantial
amounts of reconstruction assistance and humanitarian aid from the
international community but will have to prepare for an era of
declining assistance.
Botswana
Botswana has maintained one of the world's highest economic
growth rates since independence in 1966. Through fiscal discipline
and sound management, Botswana has transformed itself from one of
the poorest countries in the world to a middle-income country with a
per capita GDP of $9,200 in 2004. Two major investment services rank
Botswana as the best credit risk in Africa. Diamond mining has
fueled much of the expansion and currently accounts for more than
one-third of GDP and for 70-80% of export earnings. Tourism,
financial services, subsistence farming, and cattle raising are
other key sectors. On the downside, the government must deal with
high rates of unemployment and poverty. Unemployment officially is
23.8%, but unofficial estimates place it closer to 40%. HIV/AIDS
infection rates are the second highest in the world and threaten
Botswana's impressive economic gains. An expected leveling off in
diamond mining production overshadow long-term prospects.
Bouvet Island
no economic activity; declared a nature reserve
Brazil
Possessing large and well-developed agricultural, mining,
manufacturing, and service sectors, Brazil's economy outweighs that
of all other South American countries and is expanding its presence
in world markets. From 2001-03 real wages fell and Brazil's economy
grew, on average, only 2.2% per year, as the country absorbed a
series of domestic and international economic shocks. That Brazil
absorbed these shocks without financial collapse is a tribute to the
resiliency of the Brazilian economy and the economic program put in
place by former President CARDOSO and strengthened by President LULA
DA SILVA. In 2004, Brazil enjoyed more robust growth that yielded
increases in employment and real wages. The three pillars of the
economic program are a floating exchange rate, an
inflation-targeting regime, and tight fiscal policy, all reinforced
by a series of IMF programs. The currency depreciated sharply in
2001 and 2002, which contributed to a dramatic current account
adjustment: in 2003 and 2004, Brazil ran record trade surpluses and
recorded its first current account surpluses since 1992.
Productivity gains - particularly in agriculture - also contributed
to the surge in exports, and Brazil in 2004 surpassed the previous
year's record export level and again posted a current account
surplus. While economic management has been good, there remain
important economic vulnerabilities. The most significant are
debt-related: the government's largely domestic debt increased
steadily from 1994 to 2003 - straining government finances - before
falling as a percentage of GDP in 2004, while Brazil's foreign debt
(a mix of private and public debt) is large in relation to Brazil's
small (but growing) export base. Another challenge is maintaining
economic growth over a period of time to generate employment and
make the government debt burden more manageable.
British Indian Ocean Territory All economic activity is concentrated on the largest island of Diego Garcia, where joint UK-US defense facilities are located. Construction projects and various services needed to support the military installations are done by military and contract employees from the UK, Mauritius, the Philippines, and the US. There are no industrial or agricultural activities on the islands. When the Ilois return, they plan to reestablish sugarcane production and fishing.
British Virgin Islands
The economy, one of the most stable and
prosperous in the Caribbean, is highly dependent on tourism,
generating an estimated 45% of the national income. An estimated
350,000 tourists, mainly from the US, visited the islands in 1998.
Tourism suffered in 2002 because of the lackluster US economy. In
the mid-1980s, the government began offering offshore registration
to companies wishing to incorporate in the islands, and
incorporation fees now generate substantial revenues. Roughly
400,000 companies were on the offshore registry by yearend 2000. The
adoption of a comprehensive insurance law in late 1994, which
provides a blanket of confidentiality with regulated statutory
gateways for investigation of criminal offenses, is expected to make
the British Virgin Islands even more attractive to international
business. Livestock raising is the most important agricultural
activity; poor soils limit the islands' ability to meet domestic
food requirements. Because of traditionally close links with the US
Virgin Islands, the British Virgin Islands has used the dollar as
its currency since 1959.
Brunei
This small, well-to-do economy encompasses a mixture of
foreign and domestic entrepreneurship, government regulation,
welfare measures, and village tradition. Crude oil and natural gas
production account for nearly half of GDP. Per capita GDP is far
above most other Third World countries, and substantial income from
overseas investment supplements income from domestic production. The
government provides for all medical services and free education
through the university level and subsidizes rice and housing.
Brunei's leaders are concerned that steadily increased integration
in the world economy will undermine internal social cohesion,
although it became a more prominent player by serving as chairman
for the 2000 APEC (Asian Pacific Economic Cooperation) forum. Plans
for the future include upgrading the labor force, reducing
unemployment, strengthening the banking and tourist sectors, and, in
general, further widening the economic base beyond oil and gas.
Bulgaria
Bulgaria, a former communist country striving to enter the
European Union, has experienced macroeconomic stability and strong
growth since a major economic downturn in 1996 led to the fall of
the then socialist government. As a result, the government became
committed to economic reform and responsible fiscal planning.
Minerals, including coal, copper, and zinc play an important role in
industry. In 1997, macroeconomic stability was reinforced by the
imposition of a fixed exchange rate of the lev against the German
D-mark and the negotiation of an IMF standby agreement. Low
inflation and steady progress on structural reforms improved the
business environment; Bulgaria has averaged 4% growth since 2000 and
has begun to attract significant amounts of foreign direct
investment. Corruption in the public administration, a weak
judiciary, and the presence of organized crime remain the largest
challenges for Bulgaria.
Burkina Faso
One of the poorest countries in the world, landlocked
Burkina Faso has few natural resources and a weak industrial base.
About 90% of the population is engaged in subsistence agriculture,
which is vulnerable to harsh climatic conditions. Cotton is the key
crop and the government has joined with other cotton producing
countries in the region to lobby for improved access to Western
markets. GDP growth has largely been driven by increases in world
cotton prices. Industry remains dominated by unprofitable
government-controlled corporations. Following the African franc
currency devaluation in January 1994 the government updated its
development program in conjunction with international agencies;
exports and economic growth have increased. The government devolved
macroeconomic policy and inflation targeting to the West African
regional central bank (BCEAO), but maintains control over
microeconomic policies, including reducing the trade deficit and
implementing reforms to encourage private investment. The bitter
internal crisis in neighboring Cote d'Ivoire continues to hurt trade
and industrial prospects and deepens the need for international
assistance.