Iles Eparses
no economic activity
India
India's diverse economy encompasses traditional village
farming, modern agriculture, handicrafts, a wide range of modern
industries, and a multitude of services. Services are the major
source of economic growth, accounting for half of India's output
with less than one quarter of its labor force. About three-fifths of
the work-force is in agriculture, leading the UPA government to
articulate an economic reform program that includes developing basic
infrastructure to improve the lives of the rural poor and boost
economic performance. Government controls on foreign trade and
investment have been reduced in some areas, but high tariffs
(averaging 20% on non-agricultural items in 2004) and limits on
foreign direct investment are still in place. The government in 2005
liberalized investment in the civil aviation, telecom, and
construction sectors. Privatization of government-owned industries
essentially came to a halt in 2005, and continues to generate
political debate; continued social, political, and economic
rigidities hold back needed initiatives. The economy has posted an
average growth rate of more than 7% in the decade since 1994,
reducing poverty by about 10 percentage points. India achieved 7.6%
GDP growth in 2005, significantly expanding manufacturing. India is
capitalizing on its large numbers of well-educated people skilled in
the English language to become a major exporter of software services
and software workers. Despite strong growth, the World Bank and
others worry about the combined state and federal budget deficit,
running at approximately 9% of GDP; government borrowing has kept
interest rates high. Economic deregulation would help attract
additional foreign capital and lower interest rates. The huge and
growing population is the fundamental social, economic, and
environmental problem.
Indian Ocean
The Indian Ocean provides major sea routes connecting
the Middle East, Africa, and East Asia with Europe and the Americas.
It carries a particularly heavy traffic of petroleum and petroleum
products from the oilfields of the Persian Gulf and Indonesia. Its
fish are of great and growing importance to the bordering countries
for domestic consumption and export. Fishing fleets from Russia,
Japan, South Korea, and Taiwan also exploit the Indian Ocean, mainly
for shrimp and tuna. Large reserves of hydrocarbons are being tapped
in the offshore areas of Saudi Arabia, Iran, India, and western
Australia. An estimated 40% of the world's offshore oil production
comes from the Indian Ocean. Beach sands rich in heavy minerals and
offshore placer deposits are actively exploited by bordering
countries, particularly India, South Africa, Indonesia, Sri Lanka,
and Thailand.
Indonesia
Indonesia, a vast polyglot nation, has struggled to
overcome the Asian financial crisis, and still grapples with high
unemployment, a fragile banking sector, endemic corruption,
inadequate infrastructure, a poor investment climate, and unequal
resource distribution among regions. Indonesia became a net oil
importer in 2004 because of declining production and lack of new
exploration investment. In late December 2004, the Indian Ocean
tsunami took 131,000 lives with another 37,000 missing, left some
570,000 displaced persons, and caused an estimated $4.5 billion in
damages and losses. The cost of subsidizing domestic fuel placed
increasing strain on the budget in 2005, and combined with
indecisive monetary policy, contributed to a run on the currency in
August 2005, prompting the government to enact a 126% average fuel
price hike in October. The resulting inflation and interest rate
hikes dampened growth prospects in 2006. However, in October 2006,
Jakarta paid off its outstanding IMF debt, incurred during the
1997-98 Asian financial crisis, four years ahead of schedule. Keys
to future growth remain internal reform, building up the confidence
of international and domestic investors, and strong global economic
growth.
Iran
Iran's economy is marked by a bloated, inefficient state
sector, over reliance on the oil sector, and statist policies that
create major distortions throughout. Most economic activity is
controlled by the state. Private sector activity is typically
small-scale - workshops, farming, and services. President Mahmud
AHMADI-NEJAD has continued to follow the market reform plans of
former President RAFSANJANI, with limited progress. Relatively high
oil prices in recent years have enabled Iran to amass some $40
billion in foreign exchange reserves, but have not eased economic
hardships such as high unemployment and inflation. The proportion of
the economy devoted to the development of weapons of mass
destruction remains a contentious issue with leading Western nations.
Iraq
Iraq's economy is dominated by the oil sector, which has
traditionally provided about 95% of foreign exchange earnings.
Iraq's seizure of Kuwait in August 1990, subsequent international
economic sanctions, and damage from military action by an
international coalition beginning in January 1991 drastically
reduced economic activity. Although government policies supporting
large military and internal security forces and allocating resources
to key supporters of the regime hurt the economy, implementation of
the UN's oil-for-food program, which began in December 1996, helped
improve conditions for the average Iraqi citizen. Iraq was allowed
to export limited amounts of oil in exchange for food, medicine, and
some infrastructure spare parts. In December 1999, the UN Security
Council authorized Iraq to export under the program as much oil as
required to meet humanitarian needs. Per capita food imports
increased significantly, while medical supplies and health care
services steadily improved. Per capita output and living standards
were still well below the pre-1991 level, but any estimates have a
wide range of error. The military victory of the US-led coalition in
March-April 2003 resulted in the shutdown of much of the central
economic administrative structure. Although a comparatively small
amount of capital plant was damaged during the hostilities, looting,
insurgent attacks, and sabotage have undermined efforts to rebuild
the economy. Attacks on key economic facilities - especially oil
pipelines and infrastructure - have prevented Iraq from reaching
projected export volumes, but total government revenues have been
higher than anticipated due to high oil prices. Despite political
uncertainty, Iraq has established the institutions needed to
implement economic policy, has successfully concluded a three-stage
debt reduction agreement with the Paris Club, and is working toward
a Standby Arrangement with the IMF. The Standby Arrangement would
clear the way for continued debt relief from the Paris Club.
Ireland
Ireland is a small, modern, trade-dependent economy with
growth averaging a robust 7% in 1995-2004. Agriculture, once the
most important sector, is now dwarfed by industry and services.
Industry accounts for 46% of GDP, about 80% of exports, and 29% of
the labor force. Although exports remain the primary engine for
Ireland's growth, the economy has also benefited from a rise in
consumer spending, construction, and business investment. Per capita
GDP is 10% above that of the four big European economies and the
second highest in the EU behind Luxembourg. Over the past decade,
the Irish Government has implemented a series of national economic
programs designed to curb price and wage inflation, reduce
government spending, increase labor force skills, and promote
foreign investment. Ireland joined in circulating the euro on 1
January 2002 along with 11 other EU nations.
Isle of Man
Offshore banking, manufacturing, and tourism are key
sectors of the economy. The government offers incentives to
high-technology companies and financial institutions to locate on
the island; this has paid off in expanding employment opportunities
in high-income industries. As a result, agriculture and fishing,
once the mainstays of the economy, have declined in their shares of
GDP. Trade is mostly with the UK. The Isle of Man enjoys free access
to EU markets.
Israel
Israel has a technologically advanced market economy with
substantial government participation. It depends on imports of crude
oil, grains, raw materials, and military equipment. Despite limited
natural resources, Israel has intensively developed its agricultural
and industrial sectors over the past 20 years. Israel imports
substantial quantities of grain, but is largely self-sufficient in
other agricultural products. Cut diamonds, high-technology
equipment, and agricultural products (fruits and vegetables) are the
leading exports. Israel usually posts sizable current account
deficits, which are covered by large transfer payments from abroad
and by foreign loans. Roughly half of the government's external debt
is owed to the US, which is its major source of economic and
military aid. The bitter Israeli-Palestinian conflict; difficulties
in the high-technology, construction, and tourist sectors; and
fiscal austerity in the face of growing inflation led to small
declines in GDP in 2001 and 2002. The economy rebounded in 2003 and
2004, growing at a 4% rate each year, as the government tightened
fiscal policy and implemented structural reforms to boost
competition and efficiency in the markets. In 2005, rising consumer
confidence, tourism, and foreign direct investment - as well as
higher demand for Israeli exports - boosted GDP by 4.7%.
Italy
Italy has a diversified industrial economy with roughly the
same total and per capita output as France and the UK. This
capitalistic economy remains divided into a developed industrial
north, dominated by private companies, and a less-developed,
welfare-dependent, agricultural south, with 20% unemployment. Most
raw materials needed by industry and more than 75% of energy
requirements are imported. Over the past decade, Italy has pursued a
tight fiscal policy in order to meet the requirements of the
Economic and Monetary Unions and has benefited from lower interest
and inflation rates. The current government has enacted numerous
short-term reforms aimed at improving competitiveness and long-term
growth. Italy has moved slowly, however, on implementing needed
structural reforms, such as lightening the high tax burden and
overhauling Italy's rigid labor market and over-generous pension
system, because of the current economic slowdown and opposition from
labor unions. But the leadership faces a severe economic constraint:
the budget deficit has breached the 3% EU ceiling. The economy
experienced almost no growth in 2005, and unemployment remained at a
high level.