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 US.
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 most densely
populated and least developed countries. The economy is
predominately agricultural with about 85% of the population living
in rural areas. Agriculture accounts for more than one-third of GDP
and 90% of export revenues. The performance of the tobacco sector is
key to short-term growth as tobacco accounts for more than half of
exports. The economy depends on substantial inflows of economic
assistance from the IMF, the World Bank, and individual donor
nations. In December 2007, the US granted Malawi eligibility status
to receive financial support within the Millennium Challenge
Corporation (MCC) initiative. Malawi will now begin a consultative
process to develop a five-year program before funding can begin. In
2006, Malawi was approved for relief under the Heavily Indebted Poor
Countries (HIPC) program. The government faces many 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. Since 2005
President MUTHARIKA'S government has exhibited improved financial
discipline under the guidance of Finance Minister Goodall GONDWE and
signed a three year Poverty Reduction and Growth Facility worth $56
million with the IMF. Improved relations with the IMF lead other
international donors to resume aid as well.
Malaysia
Malaysia, a middle-income country, has transformed itself
since the 1970s from a producer of raw materials into an emerging
multi-sector economy. Since coming to office in 2003, Prime Minister
ABDULLAH has tried to move the economy farther up the value-added
production chain by attracting investments in high technology
industries, medical technology, and pharmaceuticals. The Government
of Malaysia is continuing efforts to boost domestic demand to wean
the economy off of its dependence on exports. Nevertheless, exports
- particularly of electronics - remain a significant driver of the
economy. As an oil and gas exporter, Malaysia has profited from
higher world energy prices, although the rising cost of domestic
gasoline and diesel fuel forced Kuala Lumpur to reduce government
subsidies. Malaysia "unpegged" the ringgit from the US dollar in
2005 and the currency appreciated 6% per year against the dollar in
2006-07. Although this has helped to hold down the price of imports,
inflationary pressures began to build in 2007. Healthy foreign
exchange reserves and a small external debt greatly reduce the risk
that Malaysia will experience a financial crisis over the near term
similar to the one in 1997. The government presented its five-year
national development agenda in April 2006 through the Ninth Malaysia
Plan, a comprehensive blueprint for the allocation of the national
budget from 2006-10. With national elections expected within the
year, ABDULLAH has unveiled a series of ambitious development
schemes for several regions that have had trouble attracting
business investment. Real GDP growth has averaged about 6% per year
under ABDULLAH, but regions outside of Kuala Lumpur and the
manufacturing hub Penang have not fared as well.
Maldives
Tourism, Maldives' largest industry, accounts for 28% of
GDP and more than 60% of the Maldives' foreign exchange receipts.
Over 90% of government tax revenue comes from import duties and
tourism-related taxes. Fishing is the second leading sector.
Agriculture and manufacturing continue to play a lesser role in the
economy, constrained by the limited availability of cultivable land
and the shortage of domestic labor. Most staple foods must be
imported. Industry, which consists mainly of garment production,
boat building, and handicrafts, accounts for about 7% of GDP. The
Maldivian Government began an economic reform program in 1989
initially by lifting import quotas and opening some exports to the
private sector. Subsequently, it has liberalized regulations to
allow more foreign investment. Real GDP growth averaged over 7.5%
per year for more than a decade. In late December 2004, a major
tsunami left more than 100 dead, 12,000 displaced, and property
damage exceeding $300 million. As a result of the tsunami, the GDP
contracted by about 3.6% in 2005. A rebound in tourism, post-tsunami
reconstruction, and development of new resorts helped the economy
recover quickly. The trade deficit has expanded sharply as a result
of high oil prices and imports of construction material.
Diversifying beyond tourism and fishing and increasing employment
are the major challenges facing the government. Over the longer term
Maldivian authorities worry about the impact of erosion and possible
global warming on their low-lying country; 80% of the area is 1
meter or less above sea level.
Mali
Mali is among the poorest countries in the world, with 65% of
its land area desert or semidesert and with a highly unequal
distribution of income. Economic activity is largely confined to the
riverine area irrigated by the Niger. About 10% of the population is
nomadic and some 80% of the labor force is engaged in farming and
fishing. Industrial activity is concentrated on processing farm
commodities. Mali is heavily dependent on foreign aid and vulnerable
to fluctuations in world prices for cotton, its main export, along
with gold. The government has continued its successful
implementation of an IMF-recommended structural adjustment program
that is helping the economy grow, diversify, and attract foreign
investment. Mali's adherence to economic reform and the 50%
devaluation of the CFA franc in January 1994 have pushed up economic
growth to a 5% average in 1996-2007. Worker remittances and external
trade routes for the landlocked country have been jeopardized by
continued unrest in neighboring Cote d'Ivoire.
Malta
Major resources are limestone, a favorable geographic
location, and a productive labor force. Malta produces only about
20% of its food needs, has limited fresh water supplies, and has few
domestic energy sources. The economy is dependent on foreign trade,
manufacturing (especially electronics and pharmaceuticals), and
tourism. Economic recovery of the European economy has lifted
exports, tourism, and overall growth. Malta adopted the euro on 1
January 2008.
Marshall Islands
US Government assistance is the mainstay of this
tiny island economy. The Marshall Islands received more than $1
billion in aid from the US from 1986-2002. Agricultural production,
primarily subsistence, is concentrated on small farms; the most
important commercial crops are coconuts and breadfruit. Small-scale
industry is limited to handicrafts, tuna processing, and copra. The
tourist industry, now a small source of foreign exchange employing
less than 10% of the labor force, remains the best hope for future
added income. The islands have few natural resources, and imports
far exceed exports. Under the terms of the Amended Compact of Free
Association, the US will provide millions of dollars per year to the
Marshall Islands (RMI) through 2023, at which time a Trust Fund made
up of US and RMI contributions will begin perpetual annual payouts.
Government downsizing, drought, a drop in construction, the decline
in tourism, and less income from the renewal of fishing vessel
licenses have held GDP growth to an average of 1% over the past
decade.
Mauritania
Half the population still depends on agriculture and
livestock for a livelihood, even though many of the nomads and
subsistence farmers were forced into the cities by recurrent
droughts in the 1970s and 1980s. Mauritania has extensive deposits
of iron ore, which account for nearly 40% of total exports. The
nation's coastal waters are among the richest fishing areas in the
world, but overexploitation by foreigners threatens this key source
of revenue. The country's first deepwater port opened near
Nouakchott in 1986. In the past, drought and economic mismanagement
resulted in a buildup of foreign debt, which now stands at more than
three times the level of annual exports. In February 2000,
Mauritania qualified for debt relief under the Heavily Indebted Poor
Countries (HIPC) initiative and in December 2001 received strong
support from donor and lending countries at a triennial Consultative
Group review. A new investment code approved in December 2001
improved the opportunities for direct foreign investment. Ongoing
negotiations with the IMF involve problems of economic reforms and
fiscal discipline. In 2001, exploratory oil wells in tracts 80 km
offshore indicated potential extraction at current world oil prices.
Oil prospects, while initially promising, have failed to
materialize. Meantime the government emphasizes reduction of
poverty, improvement of health and education, and promoting
privatization of the economy.
Mauritius
Since independence in 1968, Mauritius has developed from a
low-income, agriculturally based economy to a middle-income
diversified economy with growing industrial, financial, and tourist
sectors. For most of the period, annual growth has been in the order
of 5% to 6%. This remarkable achievement has been reflected in more
equitable income distribution, increased life expectancy, lowered
infant mortality, and a much-improved infrastructure. The economy
rests on sugar, tourism, textiles and apparel, and financial
services, and is expanding into fish processing, information and
communications technology, and hospitality and property development.
Sugarcane is grown on about 90% of the cultivated land area and
accounts for 15% of export earnings. The government's development
strategy centers on creating vertical and horizontal clusters of
development in these sectors. Mauritius has attracted more than
32,000 offshore entities, many aimed at commerce in India, South
Africa, and China. Investment in the banking sector alone has
reached over $1 billion. Mauritius, with its strong textile sector,
has been well poised to take advantage of the Africa Growth and
Opportunity Act (AGOA).
Mayotte
Economic activity is based primarily on the agricultural
sector, including fishing and livestock raising. Mayotte is not
self-sufficient and must import a large portion of its food
requirements, mainly from France. The economy and future development
of the island are heavily dependent on French financial assistance,
an important supplement to GDP. Mayotte's remote location is an
obstacle to the development of tourism.