Mauritius
Since independence in 1968, Mauritius has developed from a
low-income, agriculturally based economy to a middle-income
diversified economy with growing industrial, financial, and tourist
sectors. For most of the period, annual growth has been in the order
of 5% to 6%. This remarkable achievement has been reflected in more
equitable income distribution, increased life expectancy, lowered
infant mortality, and a much-improved infrastructure. Sugarcane is
grown on about 90% of the cultivated land area and accounts for 25%
of export earnings. The government's development strategy centers on
expanding local financial institutions and building a domestic
information telecommunications industry. Mauritius has attracted
more than 9,000 offshore entities, many aimed at commerce in India
and South Africa, and investment in the banking sector alone has
reached over $1 billion. Mauritius, with its strong textile sector,
has been well poised to take advantage of the Africa Growth and
Opportunity Act (AGOA).
Mayotte
Economic activity is based primarily on the agricultural
sector, including fishing and livestock raising. Mayotte is not
self-sufficient and must import a large portion of its food
requirements, mainly from France. The economy and future development
of the island are heavily dependent on French financial assistance,
an important supplement to GDP. Mayotte's remote location is an
obstacle to the development of tourism.
Mexico
Mexico has a free market economy that recently entered the
trillion dollar class. It contains a mixture of modern and outmoded
industry and agriculture, increasingly dominated by the private
sector. Recent administrations have expanded competition in
seaports, railroads, telecommunications, electricity generation,
natural gas distribution, and airports. Per capita income is
one-fourth that of the US; income distribution remains highly
unequal. Trade with the US and Canada has tripled since the
implementation of NAFTA in 1994. Mexico has 12 free trade agreements
with over 40 countries including, Guatemala, Honduras, El Salvador,
the European Free Trade Area, and Japan, putting more than 90% of
trade under free trade agreements. The government is cognizant of
the need to upgrade infrastructure, modernize the tax system and
labor laws, and provide incentives to invest in the energy sector,
but progress is slow.
Micronesia, Federated States of Economic activity consists primarily of subsistence farming and fishing. The islands have few mineral deposits worth exploiting, except for high-grade phosphate. The potential for a tourist industry exists, but the remote location, a lack of adequate facilities, and limited air connections hinder development. The Amended Compact of Free Association with the US guarantees the Federated States of Micronesia (FSM) millions of dollars in annual aid through 2023, and establishes a Trust Fund into which the US and the FSM make annual contributions in order to provide annual payouts to the FSM in perpetuity after 2023. The country's medium-term economic outlook appears fragile due not only to the reduction in US assistance but also to the slow growth of the private sector. Geographical isolation and a poorly developed infrastructure remain major impediments to long-term growth.
Midway Islands
The economy is based on providing support services
for the national wildlife refuge activities located on the islands.
All food and manufactured goods must be imported.
Moldova
Moldova remains one of the poorest countries in Europe
despite recent progress from its small economic base. It enjoys a
favorable climate and good farmland but has no major mineral
deposits. As a result, the economy depends heavily on agriculture,
featuring fruits, vegetables, wine, and tobacco. Moldova must import
almost all of its energy supplies from Russia. Energy shortages
contributed to sharp production declines after the breakup of the
Soviet Union in December 1991. As part of an ambitious reform effort
after independence, Moldova introduced a convertible currency, freed
prices, stopped issuing preferential credits to state enterprises,
backed steady land privatization, removed export controls, and freed
interest rates. The government entered into agreements with the
World Bank and the IMF to promote growth and reduce poverty. The
economy returned to positive growth of 2.1% in 2000, 6.1% in 2001,
7.2% in 2002, 6.3% in 2003, and 6.8% in 2004. Further reforms will
come slowly because of strong political forces backing government
controls. The economy remains vulnerable to higher fuel prices, poor
agricultural weather, and the skepticism of foreign investors.
Monaco
Monaco, bordering France on the Mediterranean coast, is a
popular resort, attracting tourists to its casino and pleasant
climate. In 2001, a major construction project extended the pier
used by cruise ships in the main harbor. The principality has
successfully sought to diversify into services and small,
high-value-added, nonpolluting industries. The state has no income
tax and low business taxes and thrives as a tax haven both for
individuals who have established residence and for foreign companies
that have set up businesses and offices. The state retains
monopolies in a number of sectors, including tobacco, the telephone
network, and the postal service. Living standards are high, roughly
comparable to those in prosperous French metropolitan areas. Monaco
does not publish national income figures; the estimates below are
extremely rough.
Mongolia
Economic activity in Mongolia has traditionally been based
on herding and agriculture. Mongolia has extensive mineral deposits;
copper, coal, molybdenum, tin, tungsten and gold account for a large
part of industrial production. Soviet assistance, at its height
one-third of GDP, disappeared almost overnight in 1990 and 1991 at
the time of the dismantlement of the USSR. The following decade saw
Mongolia endure both deep recession due to political inaction and
natural disasters, as well as economic growth due to reform
embracing free-market economics and extensive privatization of the
formerly state-run economy. Severe winters and summer droughts in
2000, 2001, and 2002 resulted in massive livestock die-off and zero
or negative GDP growth. This was compounded by falling prices for
Mongolia's primary sector exports and widespread opposition to
privatization. Growth improved from 2002 at 4% to 2003 at 5%, due
largely to high copper prices and new gold production, with the
government claiming a 10.6% growth rate for 2004 that is
unconfirmed. Mongolia's economy continues to be heavily impacted by
its neighbors. For example, Mongolia purchases 80% of its petroleum
products and a substantial amount of electric power from Russia,
leaving it vulnerable to price increases. China is Mongolia's chief
export partner and a main source of the "shadow" or "grey" economy.
The World Bank and other international financial institutions
estimate the grey economy to be at least equal to that of the
official economy. The actual size of this grey - largely cash -
economy is difficult to calculate since the money does not pass
through the hands of tax authorities or the banking sector.
Remittances from Mongolians working abroad both legally and
illegally constitute a sizeable portion. Money laundering is growing
as an accompanying concern. Mongolia settled its $11 billion debt
with Russia at the end of 2003 on very favorable terms. Mongolia,
which joined the World Trade Organization in 1997, seeks to expand
its participation and integration into Asian regional economic and
trade regimes.
Montserrat
Severe volcanic activity, which began in July 1995, has
put a damper on this small, open economy. A catastrophic eruption in
June 1997 closed the airports and seaports, causing further economic
and social dislocation. Two-thirds of the 12,000 inhabitants fled
the island. Some began to return in 1998, but lack of housing
limited the number. The agriculture sector continued to be affected
by the lack of suitable land for farming and the destruction of
crops. Prospects for the economy depend largely on developments in
relation to the volcano and on public sector construction activity.
The UK has launched a three-year $122.8 million aid program to help
reconstruct the economy. Half of the island is expected to remain
uninhabitable for another decade.
Morocco
Morocco faces problems typical for developing countries:
restraining government spending, reducing constraints on private
activity and foreign trade, and achieving sustainable growth.
Despite structural adjustment programs supported by the IMF, the
World Bank, and the Paris Club, the dirham is only fully convertible
for current account transactions. In 2004 Moroccan authorities
instituted measures to boost foreign direct investment and trade by
signing a free trade agreement with the US and selling government
shares in the state telecommunications company and in the largest
state-owned bank. Favorable rainfall over the past two years has
boosted agricultural output and GDP growth passed 4% in 2004. In
2005 the budget deficit is expected to rise sharply - from 1.9% of
GDP in 2004 - because of substantial increases in wages and oil
subsidies. Long-term challenges include preparing the economy for
freer trade with the US and European Union, improving education and
job prospects for Morocco's youth, and raising living standards.