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. Higher oil
revenue, strong liquidity, and cheap credit in 2005 led to a surge
in asset prices (shares and real estate) and consumer inflation. Any
sharp correction to the UAE's equity markets could damage investor
and consumer sentiment and affect bank asset quality. 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 quintet 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, but fell in 2005, to 1.7%. Despite slower
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 public opinion polls show a majority of
Britons are 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 and a widening public deficit.
United States
The US has the largest and most technologically
powerful economy in the world, with a per capita GDP of $42,000. 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 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 enter their
rivals' home markets than foreign firms face entering 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 and 2005 was
undergirded by substantial gains in labor productivity. Hurricane
Katrina caused extensive damage in the Gulf Coast region in August
2005, but had a small impact on overall GDP growth for the year.
Soaring oil prices in 2005 and 2006 threatened inflation and
unemployment, yet the economy continued to grow through mid-2006.
Imported oil accounts for about two-thirds of US consumption.
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.
United States Pacific Island Wildlife Refuges
no economic activity
Uruguay
Uruguay's well-to-do economy is characterized by an
export-oriented agricultural sector, a well-educated work force, 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 Argentina made massive withdrawals of dollars
deposited in Uruguayan banks, which led to a plunge in the Uruguayan
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
banking crisis. The unemployment rate rose to nearly 20% in 2002,
inflation surged, and the burden of external debt doubled.
Cooperation with the IMF helped stem the damage. A debt swap with
private-sector creditors in 2003 extended the maturity dates on
nearly half of Uruguay's then $11.3 billion of public debt and
helped restore public confidence. The economy grew about 10% in 2004
as a result of high commodity prices for Uruguayan exports, a
competitive peso, growth in the region, and low international
interest rates, but slowed to 6.1% in 2005.
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 and
fifth largest producer; it relies heavily on cotton production as
the major source of export earnings. Other major export earners
include gold, natural gas, and oil. Following independence in
September 1991, the government sought to prop up its Soviet-style
command economy with subsidies and tight controls on production and
prices. While aware of the need to improve the investment climate,
the government still sponsors measures that often increase, not
decrease, its 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. The Central Bank often
delays or restricts convertibility, especially for consumer goods.
Potential investment by Russia and China in Uzbekistan's gas and oil
industry would increase economic growth prospects. In November 2005,
Russian President Vladimir PUTIN and Uzbekistan President KARIMOV
signed an "alliance" treaty, which included provisions for economic
and business cooperation. Russian businesses have shown increased
interest in Uzbekistan, especially in mining, telecom, and oil and
gas. In December 2005, the Russians opened a "Trade House" to
support and develop Russian-Uzbek business and economic ties.
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. Government revenue also has been bolstered by increased
tax collection, which has surpassed its 2005 collection goal by
almost 50%. Tax revenue is the primary source of non-oil revenue,
which accounts for 53% of the 2006 budget. 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.
Output recovered strongly in 2004-2005, aided by high oil prices and
strong consumption growth. Venezuela continues to be an important
source of crude oil for the US market. Both inflation and
unemployment remain fundamental problems.
Vietnam
Vietnam is a densely-populated, developing country that in
the last 30 years has had to recover from the ravages of war, the
loss of financial support from the old Soviet Bloc, and the
rigidities of a centrally-planned economy. Substantial progress was
achieved from 1986 to 1997 in moving forward from an extremely low
level of development and significantly reducing poverty. Growth
averaged around 9% per year from 1993 to 1997. The 1997 Asian
financial crisis highlighted the problems in the Vietnamese economy
and temporarily allowed opponents of reform to slow progress toward
a market-oriented economy. GDP growth averaged 6.8% per year from
1997 to 2004 even against the background of the Asian financial
crisis and a global recession, and growth hit 8% in 2005. Since
2001, however, Vietnamese authorities have reaffirmed their
commitment to economic liberalization and international integration.
They have moved to implement the structural reforms needed to
modernize the economy and to produce more competitive, export-driven
industries. Vietnam's membership in the ASEAN Free Trade Area (AFTA)
and entry into force of the US-Vietnam Bilateral Trade Agreement in
December 2001 have led to even more rapid changes in Vietnam's trade
and economic regime. Vietnam's exports to the US doubled in 2002 and
again in 2003. Vietnam hopes to become a member of the WTO in 2006.
Among other benefits, accession would allow Vietnam to take
advantage of the phase out of the Agreement on Textiles and
Clothing, which eliminated quotas on textiles and clothing for WTO
partners on 1 January 2005. Agriculture's share of economic output
has continued to shrink, from about 25% in 2000 to 21% in 2005. Deep
poverty, defined as a percent of the population living under $1 per
day, has declined significantly and is now smaller than that of
China, India, and the Philippines. Vietnam is working to promote job
creation to keep up with the country's high population growth rate.
However, high levels of inflation have prompted Vietnamese
authorities to tighten monetary and fiscal policies.
Virgin Islands
Tourism is the primary economic activity, accounting
for 80% of GDP and employment. The islands normally host 2 million
visitors a year. The manufacturing sector consists of petroleum
refining, textiles, electronics, pharmaceuticals, and watch
assembly. The agricultural sector is small, with most food being
imported. International business and financial services are small
but growing components of the economy. One of the world's largest
petroleum refineries is at Saint Croix. The islands are subject to
substantial damage from storms. The government is working to improve
fiscal discipline, to support construction projects in the private
sector, to expand tourist facilities, to reduce crime, and to
protect the environment.