Kingman Reef
no economic activity

Kiribati
A remote country of 33 scattered coral atolls, Kiribati has
few natural resources. Commercially viable phosphate deposits were
exhausted at the time of independence from the UK in 1979. Copra and
fish now represent the bulk of production and exports. The economy
has fluctuated widely in recent years. Economic development is
constrained by a shortage of skilled workers, weak infrastructure,
and remoteness from international markets. Tourism provides more
than one-fifth of GDP. The financial sector is at an early stage of
development as is the expansion of private sector initiatives.
Foreign financial aid from UK, Japan, Australia, New Zealand, and
China equals about 20% of GDP. Remittances from seamen on merchant
ships abroad account for more than $5 million each year. Kiribati
receives around $15 million annually for the government budget from
an Australian trust fund.

Korea, North
North Korea, one of the world's most centrally planned
and isolated economies, faces desperate economic conditions.
Industrial capital stock is nearly beyond repair as a result of
years of underinvestment and shortages of spare parts. Industrial
and power output have declined in parallel. Despite an increased
harvest in 2005 because of more stable weather conditions,
fertilizer assistance from South Korea, and an extraordinary
mobilization of the population to help with agricultural production,
the nation has suffered its 11th year of food shortages because of
on-going systemic problems, including a lack of arable land,
collective farming practices, and chronic shortages of tractors and
fuel. Massive international food aid deliveries have allowed the
people of North Korea to escape mass starvation since famine
threatened in 1995, but the population continues to suffer from
prolonged malnutrition and poor living conditions. Large-scale
military spending eats up resources needed for investment and
civilian consumption. In 2004, the regime formalized an arrangement
whereby private "farmers markets" were allowed to begin selling a
wider range of goods. It also permitted some private farming on an
experimental basis in an effort to boost agricultural output. In
October 2005, the regime reversed some of these policies by
forbidding private sales of grains and reinstituting a centralized
food rationing system. In December 2005, the regime confirmed that
it intended to carry out earlier threats to terminate all
international humanitarian assistance operations in the DPRK
(calling instead for developmental assistance only) and to restrict
the activities of international and non-governmental aid
organizations such as the World Food Program. Firm political control
remains the Communist government's overriding concern, which will
likely inhibit the loosening of economic regulations.

Korea, South
Since the early 1960s, South Korea has achieved an
incredible record of growth and integration into the high-tech
modern world economy. Four decades ago, GDP per capita was
comparable with levels in the poorer countries of Africa and Asia.
In 2004, South Korea joined the trillion dollar club of world
economies. Today its GDP per capita is equal to the lesser economies
of the EU. This success through the late 1980s was achieved by a
system of close government/business ties, including directed credit,
import restrictions, sponsorship of specific industries, and a
strong labor effort. The government promoted the import of raw
materials and technology at the expense of consumer goods and
encouraged savings and investment over consumption. The Asian
financial crisis of 1997-99 exposed longstanding weaknesses in South
Korea's development model, including high debt/equity ratios,
massive foreign borrowing, and an undisciplined financial sector.
GDP plunged by 6.9% in 1998, then recovered 9.5% in 1999 and 8.5% in
2000. Growth fell back to 3.3% in 2001 because of the slowing global
economy, falling exports, and the perception that much-needed
corporate and financial reforms had stalled. Led by consumer
spending and exports, growth in 2002 was an impressive 7%, despite
anemic global growth. Between 2003 and 2005, growth moderated to
about 4%. A downturn in consumer spending was offset by rapid export
growth. In 2005, the government proposed labor reform legislation
and a corporate pension scheme to help make the labor market more
flexible, and new real estate policies to cool property speculation.
Moderate inflation, low unemployment, an export surplus, and fairly
equal distribution of income characterize this solid economy.

Kuwait
Kuwait is a small, rich, relatively open economy with
self-reported crude oil reserves of about 96 billion barrels - 10%
of world reserves. Petroleum accounts for nearly half of GDP, 95% of
export revenues, and 80% of government income. Kuwait's climate
limits agricultural development. Consequently, with the exception of
fish, it depends almost wholly on food imports. About 75% of potable
water must be distilled or imported. Kuwait continues its
discussions with foreign oil companies to develop fields in the
northern part of the country.

Kyrgyzstan
Kyrgyzstan is a poor, mountainous country with a
predominantly agricultural economy. Cotton, tobacco, wool, and meat
are the main agricultural products, although only tobacco and cotton
are exported in any quantity. Industrial exports include gold,
mercury, uranium, natural gas, and electricity. Kyrgyzstan has been
progressive in carrying out market reforms, such as an improved
regulatory system and land reform. Kyrgyzstan was the first CIS
country to be accepted into the World Trade Organization. Much of
the government's stock in enterprises has been sold. Drops in
production had been severe after the breakup of the Soviet Union in
December 1991, but by mid-1995, production began to recover and
exports began to increase. Kyrgyzstan has distinguished itself by
adopting relatively liberal economic policies. The drop in output at
the Kumtor gold mine sparked a 0.5% decline in GDP in 2002, but GDP
growth bounced back in 2003-05. The government has made steady
strides in controlling its substantial fiscal deficit and reduced
the deficit to 1% of GDP in 2005. The government and international
financial institutions have been engaged in a comprehensive
medium-term poverty reduction and economic growth strategy, and in
2005 agreed to pursue much-needed tax reform. Progress fighting
corruption, further restructuring of domestic industry, and success
in attracting foreign investment are keys to future growth.

Laos
The government of Laos, one of the few remaining official
Communist states, began decentralizing control and encouraging
private enterprise in 1986. The results, starting from an extremely
low base, were striking - growth averaged 6% in 1988-2004 except
during the short-lived drop caused by the Asian financial crisis
beginning in 1997. Despite this high growth rate, Laos remains a
country with a primitive infrastructure. It has no railroads, a
rudimentary road system, and limited external and internal
telecommunications, though the government is sponsoring major
improvements in the road system with possible support from Japan.
Electricity is available in only a few urban areas. Subsistence
agriculture, dominated by rice, accounts for about half of GDP and
provides 80% of total employment. The economy will continue to
benefit from aid by the IMF and other international sources and from
new foreign investment in food processing and mining. Construction
will be another strong economic driver, especially as hydroelectric
dam and road projects gain steam. In late 2004, Laos gained Normal
Trade Relations status with the US, allowing Laos-based producers to
face lower tariffs on exports. This new status may help spur growth.
In addition, the European Union has agreed to provide $1 million to
the Lao Government for technical assistance in preparations for WTO
membership. If the avian flu worsens and spreads in the region,
however, prospects for tourism could dim.

Latvia
Latvia's transitional economy recovered from the 1998 Russian
financial crisis, largely due to the government's budget stringency
and a gradual reorientation of exports toward EU countries,
lessening Latvia's trade dependency on Russia. The majority of
companies, banks, and real estate have been privatized, although the
state still holds sizable stakes in a few large enterprises. Latvia
officially joined the World Trade Organization in February 1999. EU
membership, a top foreign policy goal, came in May 2004. The current
account deficit - 11.5% of GDP in 2005 - remains a major concern. A
growing perception that many of Latvia's banks facilitate illicit
activity could damage the country's vibrant financial sector.

Lebanon
The 1975-91 civil war seriously damaged Lebanon's economic
infrastructure, cut national output by half, and all but ended
Lebanon's position as a Middle Eastern entrepot and banking hub. In
the years since, Lebanon has rebuilt much of its war-torn physical
and financial infrastructure by borrowing heavily - mostly from
domestic banks. In an attempt to reduce the ballooning national
debt, the Rafiq HARIRI government began an austerity program,
reining in government expenditures, increasing revenue collection,
and privatizing state enterprises. In November 2002, the government
met with international donors at the Paris II conference to seek
bilateral assistance in restructuring its massive domestic debt at
lower interest rates. Substantial receipts from donor nations
stabilized government finances in 2003, but did little to reduce the
debt, which stands at nearly 170% of GDP. In 2004 the HARIRI
government issued Eurobonds in an effort to manage maturing debt.
The downturn in economic activity that followed the assassination of
Rafiq al-HARIRI has eased, but has yet to be reversed. Tourism
remains below the level of 2004. The new Prime Minister, Fuad
SINIORA, has pledged to push ahead with economic reform, including
privatization and more efficient government. The Core Group of
nations has announced plans to hold a Donor's Conference in early
2006 to assist the government of Lebanon in restructuring its debt
and increasing foreign investment.

Lesotho
Small, landlocked, and mountainous, Lesotho relies on
remittances from miners employed in South Africa and customs duties
from the Southern Africa Customs Union for the majority of
government revenue. However, the government has recently
strengthened its tax system to reduce dependency on customs duties.
Completion of a major hydropower facility in January 1998 now
permits the sale of water to South Africa, also generating royalties
for Lesotho. As the number of mineworkers has declined steadily over
the past several years, a small manufacturing base has developed
based on farm products that support the milling, canning, leather,
and jute industries, as well as a rapidly expanding apparel-assembly
sector. The latter has grown significantly, mainly due to Lesotho
qualifying for the trade benefits contained in the Africa Growth and
Opportunity Act. The economy is still primarily based on subsistence
agriculture, especially livestock, although drought has decreased
agricultural activity. The extreme inequality in the distribution of
income remains a major drawback. Lesotho has signed an Interim
Poverty Reduction and Growth Facility with the IMF.