Tuvalu
Tuvalu consists of a densely populated, scattered group of
nine coral atolls with poor soil. The country has no known mineral
resources and few exports. Subsistence farming and fishing are the
primary economic activities. Fewer than 1,000 tourists, on average,
visit Tuvalu annually. Government revenues largely come from the
sale of stamps and coins and worker remittances. About 1,000
Tuvaluans work in Nauru in the phosphate mining industry. Nauru has
begun repatriating Tuvaluans, however, as phosphate resources
decline. Substantial income is received annually from an
international trust fund established in 1987 by Australia, NZ, and
the UK and supported also by Japan and South Korea. Thanks to wise
investments and conservative withdrawals, this fund has grown from
an initial $17 million to over $35 million in 1999. The US
government is also a major revenue source for Tuvalu because of
payments from a 1988 treaty on fisheries. In an effort to reduce its
dependence on foreign aid, the government is pursuing public sector
reforms, including privatization of some government functions and
personnel cuts of up to 7%. In 1998, Tuvalu began deriving revenue
from use of its area code for "900" lines and in 2000, from the
lease of its ".tv" Internet domain name. Royalties from these new
technology sources could increase substantially over the next
decade. With merchandise exports only a fraction of merchandise
imports, continued reliance must be placed on fishing and
telecommunications license fees, remittances from overseas workers,
official transfers, and income from overseas investments.
Uganda
Uganda has substantial natural resources, including fertile
soils, regular rainfall, and sizable mineral deposits of copper and
cobalt. Agriculture is the most important sector of the economy,
employing over 80% of the work force. Coffee accounts for the bulk
of export revenues. Since 1986, the government - with the support of
foreign countries and international agencies - has acted to
rehabilitate and stabilize the economy by undertaking currency
reform, raising producer prices on export crops, increasing prices
of petroleum products, and improving civil service wages. The policy
changes are especially aimed at dampening inflation and boosting
production and export earnings. During 1990-2001, the economy turned
in a solid performance based on continued investment in the
rehabilitation of infrastructure, improved incentives for production
and exports, reduced inflation, gradually improved domestic
security, and the return of exiled Indian-Ugandan entrepreneurs.
Corruption within the government and slippage in the government's
determination to press reforms raise doubts about the continuation
of strong growth. In 2000, Uganda qualified for enhanced Highly
Indebted Poor Countries (HIPC) debt relief worth $1.3 billion and
Paris Club debt relief worth $145 million. These amounts combined
with the original HIPC debt relief added up to about $2 billion.
Growth for 2001-02 was solid despite continued decline in the price
of coffee, Uganda's principal export. Solid growth in 2003-04
reflected an upturn in Uganda's export markets.
Ukraine
After Russia, the Ukrainian republic was far and away the
most important economic component of the former Soviet Union,
producing about four times the output of the next-ranking republic.
Its fertile black soil generated more than one-fourth of Soviet
agricultural output, and its farms provided substantial quantities
of meat, milk, grain, and vegetables to other republics. Likewise,
its diversified heavy industry supplied the unique equipment (for
example, large diameter pipes) and raw materials to industrial and
mining sites (vertical drilling apparatus) in other regions of the
former USSR. Ukraine depends on imports of energy, especially
natural gas, to meet some 85% of its annual energy requirements.
Shortly after independence in December 1991, the Ukrainian
Government liberalized most prices and erected a legal framework for
privatization, but widespread resistance to reform within the
government and the legislature soon stalled reform efforts and led
to some backtracking. Output by 1999 had fallen to less than 40% of
the 1991 level. Loose monetary policies pushed inflation to
hyperinflationary levels in late 1993. Ukraine's dependence on
Russia for energy supplies and the lack of significant structural
reform have made the Ukrainian economy vulnerable to external
shocks. Ukrainian government officials have taken some steps to
reform the country's Byzantine tax code, such as the implementation
of lower tax rates aimed at bringing more economic activity out of
Ukraine's large shadow economy, but more improvements are needed,
including closing tax loopholes and eliminating tax privileges and
exemptions. Reforms in the more politically sensitive areas of
structural reform and land privatization are still lagging. Outside
institutions - particularly the IMF - have encouraged Ukraine to
quicken the pace and scope of reforms. GDP in 2000 showed strong
export-based growth of 6% - the first growth since independence -
and industrial production grew 12.9%. The economy continued to
expand in 2001 as real GDP rose 9% and industrial output grew by
over 14%. Growth of 4.6% in 2002 was more moderate, in part a
reflection of faltering growth in the developed world. In general,
growth has been undergirded by strong domestic demand, low
inflation, and solid consumer and investor confidence. Growth was a
sturdy 9.3% in 2003 and a remarkable 12% in 2004, despite a loss of
momentum in needed economic reforms.
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 30% of GDP), and the fortunes of
the economy fluctuate with the prices of those commodities. Since
the discovery of oil in the UAE more than 30 years ago, 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. In April
2004, the UAE signed a Trade and Investment Framework Agreement
(TIFA) with Washington and in November 2004 agreed to undertake
negotiations toward a Free Trade Agreement (FTA) with the US.
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 less
than 2% 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. Output recovered in
2004, to 3.2% growth. 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 that the
economy is doing well outside of EMU, and they cite 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.
United States
The US has the largest and most technologically
powerful economy in the world, with a per capita GDP of $40,100. 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
response to the terrorist attacks of 11 September 2001 showed the
remarkable resilience of the economy. The war in March/April 2003
between a US-led coalition and Iraq, and the subsequent occupation
of Iraq, required major shifts in national resources to the
military. The rise in GDP in 2004 was undergirded by substantial
gains in labor productivity. The economy suffered from a sharp
increase in energy prices in the second half of 2004. 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 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 grew about 10% in 2004 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.
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 led to some shortages that
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 2004, 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. 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.
Venezuela
Venezuela continues to be highly dependent on the
petroleum sector, accounting for roughly one-third of GDP, around
80% of export earnings, and over half of government operating
revenues. 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. Despite continued domestic instability, output
recovered strongly in 2004, aided by high oil prices. Both inflation
and unemployment remain fundamental problems.