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. 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 in 2000, and has remained at or
above 6% every year since. 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.
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 because of
reform-embracing, free-market economics and extensive privatization
of the formerly state-run economy. Severe winters and summer
droughts in 2000-2002 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 was 10.6% in 2004 and 5.5% in 2005, largely
because of high copper prices and new gold production. Mongolia's
economy continues to be heavily influenced 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, but the former's actual size 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 are sizeable, and money laundering is a
growing concern. Mongolia settled its $11 billion debt with Russia
at the end of 2003 on 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.
Montenegro
The republic of Montenegro severed its economy from
federal control and from Serbia during the MILOSEVIC era and
continues to maintain its own central bank, uses the euro instead of
the Yugoslav dinar as official currency, collects customs tariffs,
and manages its own budget. The dissolution of the loose political
union between Serbia and Montenegro in 2006 led to separate
membership in several international financial institutions, such as
the IMF, World Bank, and the European Bank for Reconstruction and
Development. Montenegro is pursuing its own membership in the World
Trade Organization as well as negotiating a Stabilization and
Association agreement with the European Union in anticipation of
eventual membership. Severe unemployment remains a key political and
economic problem for this entire region. Montenegro has privatized
its large aluminum complex - the dominant industry - as well as most
of its financial sector, and has begun to attract foreign direct
investment in the tourism sector.
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 volcanic activity 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
Moroccan economic policies brought macroeconomic stability
to the country in the early 1990s but have not spurred growth
sufficient to reduce unemployment that nears 20% in urban areas.
Poverty has actually increased due to the volatile nature of GDP,
Morocco's continued dependence on foreign energy, and its inability
to promote the growth of small and medium size enterprises. 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 and Morocco's financial sector is rudimentary.
Moroccan authorities understand that reducing poverty and providing
jobs is key to domestic security and development. 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. The Free Trade agreement went into effect
in January 2006. In 2005, GDP growth slipped to 1.2% and the budget
deficit rose sharply - to 7.5% of GDP - 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, which the government hopes to achieve
by increasing tourist arrivals and boosting competitiveness in
textiles.
Mozambique
At independence in 1975, Mozambique was one of the
world's poorest countries. Socialist mismanagement and a brutal
civil war from 1977-92 exacerbated the situation. In 1987, the
government embarked on a series of macroeconomic reforms designed to
stabilize the economy. These steps, combined with donor assistance
and with political stability since the multi-party elections in
1994, have led to dramatic improvements in the country's growth
rate. Inflation was reduced to single digits during the late 1990s
although it returned to double digits in 2000-03. Fiscal reforms,
including the introduction of a value-added tax and reform of the
customs service, have improved the government's revenue collection
abilities. In spite of these gains, Mozambique remains dependent
upon foreign assistance for much of its annual budget, and the
majority of the population remains below the poverty line.
Subsistence agriculture continues to employ the vast majority of the
country's work force. A substantial trade imbalance persists
although the opening of the Mozal aluminum smelter, the country's
largest foreign investment project to date, has increased export
earnings. In late 2005, and after years of negotiations, the
government signed an agreement to gain Portugal's majority share of
the Cahora Bassa Hydroelectricity (HCB) company, a dam that was not
transferred to Mozambique at independence because of the ensuing
civil war and unpaid debts. More power is needed for additional
investment projects in titanium extraction and processing and
garment manufacturing that could further close the import/export
gap. Mozambique's once substantial foreign debt has been reduced
through forgiveness and rescheduling under the IMF's Heavily
Indebted Poor Countries (HIPC) and Enhanced HIPC initiatives, and is
now at a manageable level.
Namibia
The economy is heavily dependent on the extraction and
processing of minerals for export. Mining accounts for 20% of GDP.
Rich alluvial diamond deposits make Namibia a primary source for
gem-quality diamonds. Namibia is the fourth-largest exporter of
nonfuel minerals in Africa, the world's fifth-largest producer of
uranium, and the producer of large quantities of lead, zinc, tin,
silver, and tungsten. The mining sector employs only about 3% of the
population while about half of the population depends on subsistence
agriculture for its livelihood. Namibia normally imports about 50%
of its cereal requirements; in drought years food shortages are a
major problem in rural areas. A high per capita GDP, relative to the
region, hides the world's worst inequality of income distribution.
The Namibian economy is closely linked to South Africa with the
Namibian dollar pegged one-to-one to the South African rand.
Privatization of several enterprises in coming years may stimulate
long-run foreign investment. Increased fish production and mining of
zinc, copper, uranium, and silver spurred growth in 2003-05.
Nauru
Revenues of this tiny island have traditionally come from
exports of phosphates, now significantly depleted. An Australian
company in 2005 entered into an agreement intended to exploit
remaining supplies. Few other resources exist with most necessities
being imported, mainly from Australia, its former occupier and later
major source of support. The rehabilitation of mined land and the
replacement of income from phosphates are serious long-term
problems. In anticipation of the exhaustion of Nauru's phosphate
deposits, substantial amounts of phosphate income were invested in
trust funds to help cushion the transition and provide for Nauru's
economic future. As a result of heavy spending from the trust funds,
the government faces virtual bankruptcy. To cut costs the government
has frozen wages and reduced overstaffed public service departments.
In 2005, the deterioration in housing, hospitals, and other capital
plant continued, and the cost to Australia of keeping the government
and economy afloat continued to climb. Few comprehensive statistics
on the Nauru economy exist, with estimates of Nauru's GDP varying
widely.