Liberia
Civil war and government mismanagement have destroyed much
of Liberia's economy, especially the infrastructure in and around
Monrovia, while continued international sanctions on diamonds and
timber exports will limit growth prospects for the foreseeable
future. Many businessmen have fled the country, taking capital and
expertise with them. Some have returned, but many will not. Richly
endowed with water, mineral resources, forests, and a climate
favorable to agriculture, Liberia had been a producer and exporter
of basic products - primarily raw timber and rubber. Local
manufacturing, mainly foreign owned, had been small in scope. The
departure of the former president, Charles TAYLOR, to Nigeria in
August 2003, the establishment of the all-inclusive Transitional
Government, and the arrival of a UN mission have helped defuse the
political crisis, but have done little to encourage economic
development. Wealthy international donors, who are ready to assist
reconstruction efforts, are withholding funding until Liberia's
National Assembly signs onto a Governance and Economic Management
Action Plan (GEMAP). The Plan was created in October 2005 by the
International Contact Group for Liberia to help ensure transparent
revenue collection and allocation - something that was lacking under
the Transitional Government and that has limited Liberia's economic
recovery. The reconstruction of infrastructure and the raising of
incomes in this ravaged economy will largely depend on generous
financial support and technical assistance from donor countries.

Libya
The Libyan economy depends primarily upon revenues from the
oil sector, which contribute about 95% of export earnings, about
one-quarter of GDP, and 60% of public sector wages. Substantial
revenues from the energy sector coupled with a small population give
Libya one of the highest per capita GDPs in Africa, but little of
this income flows down to the lower orders of society. Libyan
officials in the past four years have made progress on economic
reforms as part of a broader campaign to reintegrate the country
into the international fold. This effort picked up steam after UN
sanctions were lifted in September 2003 and as Libya announced that
it would abandon programs to build weapons of mass destruction in
December 2003. Almost all US unilateral sanctions against Libya were
removed in April 2004, helping Libya attract more foreign direct
investment, mostly in the energy sector. Libya faces a long road
ahead in liberalizing the socialist-oriented economy, but initial
steps - including applying for WTO membership, reducing some
subsidies, and announcing plans for privatization - are laying the
groundwork for a transition to a more market-based economy. The
non-oil manufacturing and construction sectors, which account for
about 20% of GDP, have expanded from processing mostly agricultural
products to include the production of petrochemicals, iron, steel,
and aluminum. Climatic conditions and poor soils severely limit
agricultural output, and Libya imports about 75% of its food.

Liechtenstein
Despite its small size and limited natural resources,
Liechtenstein has developed into a prosperous, highly
industrialized, free-enterprise economy with a vital financial
service sector and living standards on a par with its large European
neighbors. The Liechtenstein economy is widely diversified with a
large number of small businesses. Low business taxes - the maximum
tax rate is 20% - and easy incorporation rules have induced many
holding or so-called letter box companies to establish nominal
offices in Liechtenstein, providing 30% of state revenues. The
country participates in a customs union with Switzerland and uses
the Swiss franc as its national currency. It imports more than 90%
of its energy requirements. Liechtenstein has been a member of the
European Economic Area (an organization serving as a bridge between
the European Free Trade Association (EFTA) and the EU) since May
1995. The government is working to harmonize its economic policies
with those of an integrated Europe.

Lithuania
Lithuania, the Baltic state that has conducted the most
trade with Russia, has slowly rebounded from the 1998 Russian
financial crisis. Unemployment dropped from 11% in 2003 to about 8%
in 2005. Growing domestic consumption and increased investment have
furthered recovery. Trade has been increasingly oriented toward the
West. Lithuania has gained membership in the World Trade
Organization and joined the EU in May 2004. Privatization of the
large, state-owned utilities, particularly in the energy sector, is
nearing completion. Overall, more than 80% of enterprises have been
privatized. Foreign government and business support have helped in
the transition from the old command economy to a market economy.

Luxembourg
This stable, high-income economy - benefitting from its
proximity to France, Belgium, and Germany - features solid growth,
low inflation, and low unemployment. The industrial sector,
initially dominated by steel, has become increasingly diversified to
include chemicals, rubber, and other products. Growth in the
financial sector, which now accounts for about 28% of GDP, has more
than compensated for the decline in steel. Most banks are
foreign-owned and have extensive foreign dealings. Agriculture is
based on small family-owned farms. The economy depends on foreign
and cross-border workers for more than 30% of its labor force.
Although Luxembourg, like all EU members, has suffered from the
global economic slump, the country enjoys an extraordinarily high
standard of living - GDP per capita ranks first in the world.

Macau
Macau's well-to-do economy has remained one of the most open
in the world since its reversion to China in 1999. Apparel exports
and tourism are mainstays of the economy. Although the territory was
hit hard by the 1997-98 Asian financial crisis and the global
downturn in 2001, its economy grew 10.1% in 2002, 14.2% in 2003, and
28.6% in 2004. During the first three quarters of 2005, Macau
registered year-on-year GDP increases of 6.2%. A rapid rise in the
number of mainland visitors because of China's easing of travel
restrictions, increased public works expenditures, and significant
investment inflows associated with the liberalization of Macau's
gaming industry drove the four-year recovery. The budget also
returned to surplus since 2002 because of the surge in visitors from
China and a hike in taxes on gambling profits, which generated about
70% of government revenue. The three companies awarded gambling
licenses have pledged to invest $2.2 billion in the territory, which
will boost GDP growth. Much of Macau's textile industry may move to
the mainland as the Multi-Fiber Agreement is phased out. The
territory may have to rely more on gambling and trade-related
services to generate growth. Two new casinos were opened by new
foreign gambling licensees in 2004; development of new
infrastructure and facilities in preparation for Macau's hosting of
the 2005 East Asian Games led the construction sector. The Closer
Economic Partnership Agreement (CEPA) between Macau and mainland
China that came into effect on 1 January 2004 offers many Macau-made
products tariff-free access to the mainland, and the range of
products covered by CEPA was expanded on 1 January 2005.

Macedonia
At independence in September 1991, Macedonia was the least
developed of the Yugoslav republics, producing a mere 5% of the
total federal output of goods and services. The collapse of
Yugoslavia ended transfer payments from the central government and
eliminated advantages from inclusion in a de facto free trade area.
An absence of infrastructure, UN sanctions on the downsized
Yugoslavia, one of its largest markets, and a Greek economic embargo
over a dispute about the country's constitutional name and flag
hindered economic growth until 1996. GDP subsequently rose each year
through 2000. However, the leadership's commitment to economic
reform, free trade, and regional integration was undermined by the
ethnic Albanian insurgency of 2001. The economy shrank 4.5% because
of decreased trade, intermittent border closures, increased deficit
spending on security needs, and investor uncertainty. Growth barely
recovered in 2002 to 0.9%, then rose by 3.4% in 2003, 4.1% in 2004,
and 3.7% in 2005. Macedonia has maintained macroeconomic stability
with low inflation, but it has lagged the region in attracting
foreign investment and job growth has been anemic. Macedonia has an
extensive grey market, estimated to be more than 20 percent of GDP,
that falls outside official statistics.

Madagascar
Having discarded past socialist economic policies,
Madagascar has since the mid 1990s followed a World Bank- and
IMF-led policy of privatization and liberalization. This strategy
placed the country on a slow and steady growth path from an
extremely low level. Agriculture, including fishing and forestry, is
a mainstay of the economy, accounting for more than one-fourth of
GDP and employing 80% of the population. Exports of apparel have
boomed in recent years primarily due to duty-free access to the
United States. Deforestation and erosion, aggravated by the use of
firewood as the primary source of fuel, are serious concerns.
President RAVALOMANANA has worked aggressively to revive the economy
following the 2002 political crisis, which triggered a 12% drop in
GDP that year. Poverty reduction and combating corruption will be
the centerpieces of economic policy for the next few years.

Malawi
Landlocked Malawi ranks among the world's least developed
countries. The economy is predominately agricultural, with about 90%
of the population living in rural areas. Agriculture accounted for
nearly 36% of GDP and 80% of export revenues in 2005. The
performance of the tobacco sector is key to short-term growth as
tobacco accounts for over 60% of exports. The economy depends on
substantial inflows of economic assistance from the IMF, the World
Bank, and individual donor nations. In late 2000, Malawi was
approved for relief under the Heavily Indebted Poor Countries (HIPC)
program. The government faces strong challenges, including
developing a market economy, improving educational facilities,
facing up to environmental problems, dealing with the rapidly
growing problem of HIV/AIDS, and satisfying foreign donors that
fiscal discipline is being tightened. In 2005, President MUTHARIKA
championed an anticorruption campaign. Malawi's recent fiscal policy
performance has been very strong, but a serious drought in 2005 and
2006 will heighten pressure on the government to increase spending.

Malaysia
Malaysia, a middle-income country, transformed itself from
1971 through the late 1990s from a producer of raw materials into an
emerging multi-sector economy. Growth was almost exclusively driven
by exports - particularly of electronics. As a result, Malaysia was
hard hit by the global economic downturn and the slump in the
information technology (IT) sector in 2001 and 2002. GDP in 2001
grew only 0.5% because of an estimated 11% contraction in exports,
but a substantial fiscal stimulus package equal to US $1.9 billion
mitigated the worst of the recession, and the economy rebounded in
2002 with a 4.1% increase. The economy grew 4.9% in 2003,
notwithstanding a difficult first half, when external pressures from
Severe Acute Respiratory Syndrome (SARS) and the Iraq War led to
caution in the business community. Growth topped 7% in 2004 and 5%
in 2005. As an oil and gas exporter, Malaysia has profited from
higher world energy prices, although the cost of government
subsidies for domestic gasoline and diesel fuel has risen and offset
some of the benefit. Malaysia "unpegged" the ringgit from the US
dollar in 2005, but so far there has been little movement in the
exchange rate. Healthy foreign exchange reserves, low inflation, and
a small external debt are all strengths that make it unlikely that
Malaysia will experience a financial crisis over the near term
similar to the one in 1997. The economy remains dependent on
continued growth in the US, China, and Japan - top export
destinations and key sources of foreign investment.