Juan de Nova Island
Up to 12,000 tons of guano are mined per year.
Kazakhstan
Kazakhstan, the largest of the former Soviet republics in
territory, excluding Russia, possesses enormous fossil fuel reserves
and plentiful supplies of other minerals and metals. It also has a
large agricultural sector featuring livestock and grain.
Kazakhstan's industrial sector rests on the extraction and
processing of these natural resources and also on a growing
machine-building sector specializing in construction equipment,
tractors, agricultural machinery, and some defense items. The
breakup of the USSR in December 1991 and the collapse in demand for
Kazakhstan's traditional heavy industry products resulted in a
short-term contraction of the economy, with the steepest annual
decline occurring in 1994. In 1995-97, the pace of the government
program of economic reform and privatization quickened, resulting in
a substantial shifting of assets into the private sector. Kazakhstan
enjoyed double-digit growth in 2000-01 - 8% or more per year in
2002-06 - thanks largely to its booming energy sector, but also to
economic reform, good harvests, and foreign investment. The opening
of the Caspian Consortium pipeline in 2001, from western
Kazakhstan's Tengiz oilfield to the Black Sea, substantially raised
export capacity. Kazakhstan in 2006 completed the Atasu-Alashankou
portion of an oil pipeline to China that is planned to extend from
the country's Caspian coast eastward to the Chinese border in future
construction. The country has embarked upon an industrial policy
designed to diversify the economy away from overdependence on the
oil sector by developing light industry. The policy aims to reduce
the influence of foreign investment and foreign personnel. The
government has engaged in several disputes with foreign oil
companies over the terms of production agreements; tensions
continue. Upward pressure on the local currency continued in 2006
due to massive oil-related foreign-exchange inflows.
Kenya
The regional hub for trade and finance in East Africa, Kenya
has been hampered by corruption and by reliance upon several primary
goods whose prices have remained low. In 1997, the IMF suspended
Kenya's Enhanced Structural Adjustment Program due to the
government's failure to maintain reforms and curb corruption. A
severe drought from 1999 to 2000 compounded Kenya's problems,
causing water and energy rationing and reducing agricultural output.
As a result, GDP contracted by 0.2% in 2000. The IMF, which had
resumed loans in 2000 to help Kenya through the drought, again
halted lending in 2001 when the government failed to institute
several anticorruption measures. Despite the return of strong rains
in 2001, weak commodity prices, endemic corruption, and low
investment limited Kenya's economic growth to 1.2%. Growth lagged at
1.1% in 2002 because of erratic rains, low investor confidence,
meager donor support, and political infighting up to the elections.
In the key December 2002 elections, Daniel Arap MOI's 24-year-old
reign ended, and a new opposition government took on the formidable
economic problems facing the nation. In 2003, progress was made in
rooting out corruption and encouraging donor support. Since then,
however, the KIBAKI government has been rocked by high-level graft
scandals. The World Bank suspended aid for most of 2006, and the IMF
has delayed loans pending further action by the government on
corruption. The scandals have not seemed to affect growth, with GDP
growing more than 5% in 2006.
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 more than 10% 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. Due in part to severe
summer flooding followed by dry weather conditions in the fall of
2006, the nation has suffered its 12th 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. By December 2005, the regime terminated most
international humanitarian assistance operations in the DPRK
(calling instead for developmental assistance only) and restricted
the activities of remaining 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 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
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 2006,
growth moderated to about 4-5%. A downturn in consumer spending was
offset by rapid export growth. 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. High oil prices in recent years have
helped build Kuwait's budget and trade surpluses and foreign
reserves. As a result of this positive fiscal situation, the need
for economic reforms is less urgent and the government has not
earnestly pushed through new initiatives.
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. Following
independence Kyrgyzstan was progressive in carrying out market
reforms, such as an improved regulatory system and land reform, but
political instability during 2005-06 has undercut the investment
climate. 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. The
economy is heavily weighted toward gold export and a drop in output
at the main Kumtor gold mine sparked a 0.5% decline in GDP in 2002,
but GDP growth bounced back the following year. In 2005 Kyrgyzstan
again experienced a decline in GDP, this time 0.6%. The government
has made steady strides in controlling its substantial fiscal
deficit, virtually balancing revenues and expenditures in 2006. The
government and international financial institutions have been
engaged in a comprehensive medium-term poverty reduction and
economic growth strategy; in 2005 Bishkek agreed to pursue
much-needed tax reform and in 2006 became eligible for the heavily
indebted poor countries (HIPC) initiative. 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% per year in 1988-2006
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 hydropower and mining.
Construction will be another strong economic driver, especially as
hydroelectric dam and road projects gain steam. Several policy
changes since 2004 may help spur growth. In late 2004, Laos gained
Normal Trade Relations status with the US, allowing Laos-based
producers to benefit from lower tariffs on exports. Laos is taking
steps to join the World Trade Organization in the next few years;
the resulting trade policy reforms will improve the business
environment. On the fiscal side, a value-added tax (VAT) regime,
slated to begin in 2008, will streamline the government's
inefficient tax system.