Bolivia
Bolivia, long one of the poorest and least developed Latin
American countries, reformed its economy after suffering a
disastrous economic crisis in the early 1980s. The reforms spurred
real GDP growth, which averaged 4% in the 1990s, and poverty rates
fell. Economic growth, however, lagged again beginning in 1999
because of a global slowdown and homegrown factors such as political
turmoil, civil unrest, and soaring fiscal deficits, all of which
hurt investor confidence. In 2003, violent protests against the
pro-foreign investment economic policies of President SANCHEZ DE
LOZADA led to his resignation and the cancellation of plans to
export Bolivia's newly discovered natural gas reserves to large
northern hemisphere markets. In 2005, the government passed a
controversial natural gas law that imposes on the oil and gas firms
significantly higher taxes as well as new contracts that give the
state control of their operations. Bolivian officials are in the
process of implementing the law; meanwhile, foreign investors have
stopped investing and have taken the first legal steps to secure
their investments. Real GDP growth in 2003-06 - helped by increased
demand for natural gas in neighboring Brazil - was positive, but
still below the levels seen during the 1990s. Bolivia's fiscal
position has improved in recent years, but the country remains
dependent on foreign aid from multilateral lenders and foreign
governments to meet budget shortfalls. In 2005, the G8 announced a
$2 billion debt-forgiveness plan over the next few decades that
should help reduce some fiscal pressures on the government in the
near term.
Bosnia and Herzegovina
Bosnia and Herzegovina ranked next to
Macedonia as the poorest republic in the old Yugoslav federation.
Although agriculture is almost all in private hands, farms are small
and inefficient, and the republic traditionally is a net importer of
food. Industry remains greatly overstaffed, a holdover from the
socialist economic structure of Yugoslavia. TITO had pushed the
development of military industries in the republic with the result
that Bosnia was saddled with a host of industrial firms with little
commercial potential. The interethnic warfare in Bosnia caused
production to plummet by 80% from 1992 to 1995 and unemployment to
soar. With an uneasy peace in place, output recovered in 1996-99 at
high percentage rates from a low base; but output growth slowed in
2000-02. Part of the lag in output was made up in 2003-06.
National-level statistics are limited and do not capture the large
share of black market activity. The konvertibilna marka (convertible
mark or BAM)- the national currency introduced in 1998 - is pegged
to the euro, and confidence in the currency and the banking sector
has increased. Implementation of privatization, however, has been
slow, and local entities only reluctantly support national-level
institutions. Banking reform accelerated in 2001 as all the
Communist-era payments bureaus were shut down; foreign banks,
primarily from Western Europe, now control most of the banking
sector. A sizeable current account deficit and high unemployment
rate remain the two most serious economic problems. The country
receives substantial amounts of reconstruction assistance and
humanitarian aid from the international community but will have to
prepare for an era of declining assistance.
Botswana
Botswana has maintained one of the world's highest economic
growth rates since independence in 1966. Through fiscal discipline
and sound management, Botswana has transformed itself from one of
the poorest countries in the world to a middle-income country with a
per capita GDP of $11,200 in 2006. Two major investment services
rank Botswana as the best credit risk in Africa. Diamond mining has
fueled much of the expansion and currently accounts for more than
one-third of GDP and for 70-80% of export earnings. Tourism,
financial services, subsistence farming, and cattle raising are
other key sectors. On the downside, the government must deal with
high rates of unemployment and poverty. Unemployment officially was
23.8% in 2004, but unofficial estimates place it closer to 40%.
HIV/AIDS infection rates are the second highest in the world and
threaten Botswana's impressive economic gains. An expected leveling
off in diamond mining production overshadows long-term prospects.
Bouvet Island
no economic activity; declared a nature reserve
Brazil
Characterized by large and well-developed agricultural,
mining, manufacturing, and service sectors, Brazil's economy
outweighs that of all other South American countries and is
expanding its presence in world markets. From 2001-03 real wages
fell and Brazil's economy grew, on average only 2.2% per year, as
the country absorbed a series of domestic and international economic
shocks. That Brazil absorbed these shocks without financial collapse
is a tribute to the resiliency of the Brazilian economy and the
economic program put in place by former President CARDOSO and
strengthened by President LULA DA SILVA. Since 2004, Brazil has
enjoyed more robust growth that yielded increases in employment and
real wages. The three pillars of the economic program are a floating
exchange rate, an inflation-targeting regime, and tight fiscal
policy, all reinforced by a series of IMF programs. The currency
depreciated sharply in 2001 and 2002, which contributed to a
dramatic current account adjustment; from 2003 to 2006, Brazil ran
record trade surpluses and recorded its first current account
surpluses since 1992. Productivity gains - particularly in
agriculture - also contributed to the surge in exports. While
economic management has been good, there remain important economic
vulnerabilities. The most significant are debt-related: the
government's largely domestic debt increased steadily from 1994 to
2003 - straining government finances - before falling as a
percentage of GDP in 2005. Brazil has improved its debt profile over
the past year by shifting its debt burden toward real denominated
and domestically held instruments. LULA DA SILVA restated his
commitment to fiscal austerity by maintaining the country's primary
surplus during the 2006 election and plans to pass a package of
further economic reforms upon entering office for his second term.
Another challenge is maintaining economic growth over a period of
time to generate employment and make the government debt burden more
manageable.
British Indian Ocean Territory
All economic activity is concentrated
on the largest island of Diego Garcia, where joint UK-US defense
facilities are located. Construction projects and various services
needed to support the military installations are done by military
and contract employees from the UK, Mauritius, the Philippines, and
the US. There are no industrial or agricultural activities on the
islands. When the Ilois return, they plan to reestablish sugarcane
production and fishing. The country makes money by selling fishing
licenses and postage stamps.
British Virgin Islands
The economy, one of the most stable and
prosperous in the Caribbean, is highly dependent on tourism,
generating an estimated 45% of the national income. An estimated
350,000 tourists, mainly from the US, visited the islands in 1998.
Tourism suffered in 2002 because of the lackluster US economy. In
the mid-1980s, the government began offering offshore registration
to companies wishing to incorporate in the islands, and
incorporation fees now generate substantial revenues. Roughly
400,000 companies were on the offshore registry by yearend 2000. The
adoption of a comprehensive insurance law in late 1994, which
provides a blanket of confidentiality with regulated statutory
gateways for investigation of criminal offenses, made the British
Virgin Islands even more attractive to international business.
Livestock raising is the most important agricultural activity; poor
soils limit the islands' ability to meet domestic food requirements.
Because of traditionally close links with the US Virgin Islands, the
British Virgin Islands has used the US dollar as its currency since
1959.
Brunei
This small, well-to-do economy encompasses a mixture of
foreign and domestic entrepreneurship, government regulation,
welfare measures, and village tradition. Crude oil and natural gas
production account for nearly half of GDP and more than 90% of
government revenues. Per capita GDP is far above most other Third
World countries, and substantial income from overseas investment
supplements income from domestic production. The government provides
for all medical services and free education through the university
level and subsidizes rice and housing. Brunei's leaders are
concerned that steadily increased integration in the world economy
will undermine internal social cohesion. Plans for the future
include upgrading the labor force, reducing unemployment,
strengthening the banking and tourist sectors, and, in general,
further widening the economic base beyond oil and gas.
Bulgaria
Bulgaria, a former communist country that entered the
European Union on 1 January 2007, has experienced macroeconomic
stability and strong growth since a major economic downturn in 1996
led to the fall of the then socialist government. As a result, the
government became committed to economic reform and responsible
fiscal planning. Minerals, including coal, copper, and zinc, play an
important role in industry. In 1997, macroeconomic stability was
reinforced by the imposition of a fixed exchange rate of the lev
against the German D-mark - the currency is now fixed against the
euro - and the negotiation of an IMF standby agreement. Low
inflation and steady progress on structural reforms improved the
business environment; Bulgaria has averaged 5.1% growth since 2000
and has begun to attract significant amounts of foreign direct
investment. Corruption in the public administration, a weak
judiciary, and the presence of organized crime remain the largest
challenges for Bulgaria.
Burkina Faso
One of the poorest countries in the world, landlocked
Burkina Faso has few natural resources and a weak industrial base.
About 90% of the population is engaged in subsistence agriculture,
which is vulnerable to periodic drought. Cotton is the main cash
crop and the government has joined with three other cotton producing
countries in the region - Mali, Niger, and Chad - to lobby for
improved access to Western markets. GDP growth has largely been
driven by increases in world cotton prices. Industry remains
dominated by unprofitable government-controlled corporations.
Following the CFA franc currency devaluation in January 1994, the
government updated its development program in conjunction with
international agencies; exports and economic growth have increased.
The government devolved macroeconomic policy and inflation targeting
to the West African regional central bank (BCEAO), but maintains
control over fiscal and microeconomic policies, including
implementing reforms to encourage private investment. The bitter
internal crisis in neighboring Cote d'Ivoire continues to hurt trade
and industrial prospects and deepens the need for international
assistance. Burkina Faso is eligible for a Millenium Challenge
Account grant, which would increase investment in the country's
human capital.