Niue
The economy suffers from the typical Pacific island problems of
geographic isolation, few resources, and a small population.
Government expenditures regularly exceed revenues, and the shortfall
is made up by critically needed grants from New Zealand that are
used to pay wages to public employees. Niue has cut government
expenditures by reducing the public service by almost half. The
agricultural sector consists mainly of subsistence gardening,
although some cash crops are grown for export. Industry consists
primarily of small factories to process passion fruit, lime oil,
honey, and coconut cream. The sale of postage stamps to foreign
collectors is an important source of revenue. The island in recent
years has suffered a serious loss of population because of
emigration to New Zealand. Efforts to increase GDP include the
promotion of tourism and a financial services industry, although the
International Banking Repeal Act of 2002 resulted in the termination
of all offshore banking licenses. Economic aid from New Zealand in
2002 was US$2.6 million. Niue suffered a devastating typhoon in
January 2004, which decimated nascent economic programs. While in
the process of rebuilding, Niue has been dependent on foreign aid.
Norfolk Island
Tourism, the primary economic activity, has steadily
increased over the years and has brought a level of prosperity
unusual among inhabitants of the Pacific islands. The agricultural
sector has become self-sufficient in the production of beef,
poultry, and eggs.
Northern Mariana Islands
The economy benefits substantially from
financial assistance from the US. The rate of funding has declined
as locally generated government revenues have grown. The key tourist
industry employs about 50% of the work force and accounts for
roughly one-fourth of GDP. Japanese tourists predominate. Annual
tourist entries have exceeded one-half million in recent years, but
financial difficulties in Japan have caused a temporary slowdown.
The agricultural sector is made up of cattle ranches and small farms
producing coconuts, breadfruit, tomatoes, and melons. Garment
production is by far the most important industry with the employment
of 17,500 mostly Chinese workers and sizable shipments to the US
under duty and quota exemptions.
Norway
The Norwegian economy is a prosperous bastion of welfare
capitalism, featuring a combination of free market activity and
government intervention. The government controls key areas, such as
the vital petroleum sector, through large-scale state enterprises.
The country is richly endowed with natural resources - petroleum,
hydropower, fish, forests, and minerals - and is highly dependent on
its oil production and international oil prices, with oil and gas
accounting for one-third of exports. Only Saudi Arabia and Russia
export more oil than Norway. Norway opted to stay out of the EU
during a referendum in November 1994; nonetheless, as a member of
the European Economic Area, it contributes sizably to the EU budget.
The government has moved ahead with privatization. Although
Norwegian oil production peaked in 2000, natural gas production is
still rising. Norwegians realize that once their gas production
peaks they will eventually face declining oil and gas revenues;
accordingly, Norway has been saving its oil-and-gas-boosted budget
surpluses in a Government Petroleum Fund, which is invested abroad
and now is valued at more than $250 billion. After lackluster growth
of less than 1% in 2002-03, GDP growth picked up to 3-5% in 2004-07,
partly due to higher oil prices. Norway's economy remains buoyant.
Domestic economic activity is, and will continue to be, the main
driver of growth, supported by high consumer confidence and strong
investment spending in the offshore oil and gas sector. Norway's
record high budget surplus and upswing in the labor market in 2007
highlight the strength of its economic position going into 2008.
Oman
Oman is a middle-income economy that is heavily dependent on
dwindling oil resources, but sustained high oil prices in recent
years have helped build Oman's budget and trade surpluses and
foreign reserves. Oman joined the World Trade Organization in
November 2000 and continues to liberalize its markets. It ratified a
free trade agreement with the US in September 2006, and, through the
Gulf Cooperation Council, seeks similar agreements with the EU,
China and Japan. As a result of its dwindling oil resources, Oman is
actively pursuing a development plan that focuses on
diversification, industrialization, and privatization, with the
objective of reducing the oil sector's contribution to GDP to 9
percent by 2020. Muscat is attempting to "Omanize" the labor force
by replacing foreign expatriate workers with local workers. Oman
actively seeks private foreign investors, especially in the
industrial, information technology, tourism, and higher education
fields. Industrial development plans focus on gas resources, metal
manufacturing, petrochemicals, and international transshipment ports.
Pacific Ocean
The Pacific Ocean is a major contributor to the world
economy and particularly to those nations its waters directly touch.
It provides low-cost sea transportation between East and West,
extensive fishing grounds, offshore oil and gas fields, minerals,
and sand and gravel for the construction industry. In 1996, over 60%
of the world's fish catch came from the Pacific Ocean. Exploitation
of offshore oil and gas reserves is playing an ever-increasing role
in the energy supplies of the US, Australia, NZ, China, and Peru.
The high cost of recovering offshore oil and gas, combined with the
wide swings in world prices for oil since 1985, has led to
fluctuations in new drillings.
Pakistan
Pakistan, an impoverished and underdeveloped country, has
suffered from decades of internal political disputes, low levels of
foreign investment, and a costly, ongoing confrontation with
neighboring India. However, since 2001, IMF-approved reforms - most
notably, privatization of the banking sector - bolstered by generous
foreign assistance and renewed access to global markets, have
generated macroeconomic recovery. Pakistan has experienced GDP
growth in the 6-8% range in 2004-07, spurred by gains in the
industrial and service sectors. Poverty levels have decreased by 10%
since 2001, and Islamabad has steadily raised development spending
in recent years, including a 52% real increase in the budget
allocation for development in FY07. In 2007 the fiscal deficit - a
result of chronically low tax collection and increased spending -
exceeded Islamabad's target of 4% of GDP. Inflation remains the top
concern among the public, jumping from 7.7% in 2007 to more than 11%
during the first few months of 2008, primarily because of rising
world commodity prices. The Pakistani rupee has depreciated since
the proclamation of emergency rule in November 2007.
Palau
The economy consists primarily of tourism, subsistence
agriculture, and fishing. The government is the major employer of
the work force relying heavily on financial assistance from the US.
The Compact of Free Association with the US, entered into after the
end of the UN trusteeship on 1 October 1994, provided Palau with up
to $700 million in US aid for the following 15 years in return for
furnishing military facilities. Business and tourist arrivals
numbered 63,000 in 2003. The population enjoys a per capita income
roughly 50% higher than that of the Philippines and much of
Micronesia. Long-run prospects for the key tourist sector have been
greatly bolstered by the expansion of air travel in the Pacific, the
rising prosperity of leading East Asian countries, and the
willingness of foreigners to finance infrastructure development.
Panama
Panama's dollarized economy rests primarily on a
well-developed services sector that accounts for two-thirds of GDP.
Services include operating the Panama Canal, banking, the Colon Free
Zone, insurance, container ports, flagship registry, and tourism.
Economic growth will be bolstered by the Panama Canal expansion
project that began in 2007 and should be completed by 2014 at a cost
of $5.3 billion (about 30% of current GDP). The expansion project
will more than double the Canal's capacity, enabling it to
accommodate ships that are now too large to transverse the
transoceanic crossway and should help to reduce the high
unemployment rate. The government has implemented tax reforms, as
well as social security reforms, and backs regional trade agreements
and development of tourism. Not a CAFTA signatory, Panama in
December 2006 independently negotiated a free trade agreement with
the US, which, when implemented, will help promote the country's
economic growth.
Papua New Guinea
Papua New Guinea is richly endowed with natural
resources, but exploitation has been hampered by rugged terrain and
the high cost of developing infrastructure. Agriculture provides a
subsistence livelihood for 85% of the population. Mineral deposits,
including copper, gold, and oil, account for nearly two-thirds of
export earnings. The government of Prime Minister SOMARE has
expended much of its energy remaining in power. He was the first
prime minister ever to serve a full five-year term. The government
also brought stability to the national budget, largely through
expenditure control; however, it relaxed spending constraints in
2006 and 2007 as elections approached. Numerous challenges still
face the government including regaining investor confidence,
restoring integrity to state institutions, promoting economic
efficiency by privatizing moribund state institutions, and balancing
relations with Australia, its former colonial ruler. Other
socio-cultural challenges could upend the economy including a
worsening HIV/AIDS epidemic and chronic law and order and land
tenure issues. Australia will supply more than $300 million in aid
in FY07/08, which accounts for nearly 20% of the national budget.