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.
Mexico
Mexico has a free market economy in the trillion dollar
class. It contains a mixture of modern and outmoded industry and
agriculture, increasingly dominated by the private sector. Recent
administrations have expanded competition in seaports, railroads,
telecommunications, electricity generation, natural gas
distribution, and airports. Per capita income is roughly one-third
that of the US; income distribution remains highly unequal. Trade
with the US and Canada has nearly tripled since the implementation
of NAFTA in 1994. Mexico has 12 free trade agreements with over 40
countries including, Guatemala, Honduras, El Salvador, the European
Free Trade Area, and Japan, putting more than 90% of trade under
free trade agreements. In 2007, during its first year in office, the
Felipe CALDERON administration was able to garner support from the
opposition to successfully pass a pension and a fiscal reform. The
administration continues to face many economic challenges including
the need to upgrade infrastructure, modernize labor laws, and allow
private investment in the energy sector. CALDERON has stated that
his top economic priorities remain reducing poverty and creating
jobs.
Micronesia, Federated States of
Economic activity consists primarily
of subsistence farming and fishing. The islands have few mineral
deposits worth exploiting, except for high-grade phosphate. The
potential for a tourist industry exists, but the remote location, a
lack of adequate facilities, and limited air connections hinder
development. Under the original terms of the Compact of Free
Association, the US provided $1.3 billion in grant aid during the
period 1986-2001; the level of aid has been subsequently reduced.
The Amended Compact of Free Association with the US guarantees the
Federated States of Micronesia (FSM) millions of dollars in annual
aid through 2023, and establishes a Trust Fund into which the US and
the FSM make annual contributions in order to provide annual payouts
to the FSM in perpetuity after 2023. The country's medium-term
economic outlook appears fragile due not only to the reduction in US
assistance but also to the current slow growth of the private sector.
Moldova
Moldova remains one of the poorest countries in Europe
despite recent progress from its small economic base. It enjoys a
favorable climate and good farmland but has no major mineral
deposits. As a result, the economy depends heavily on agriculture,
featuring fruits, vegetables, wine, and tobacco. Moldova must import
almost all of its energy supplies. Moldova's dependence on Russian
energy was underscored at the end of 2005, when a Russian-owned
electrical station in Moldova's separatist Transnistria region cut
off power to Moldova and Russia's Gazprom cut off natural gas in
disputes over pricing, and again in January 2009, during a similar
dispute. Russia's decision to ban Moldovan wine and agricultural
products, coupled with its decision to double the price Moldova paid
for Russian natural gas, slowed GDP growth in 2006-07. However, in
2008 growth exceeded the 6% level Moldova had achieved in 2000-05,
boosted by Russia's partial removal of the bans, solid fixed capital
investment, and strong domestic demand driven by remittances from
abroad. Economic reforms have been slow because of corruption and
strong political forces backing government controls. Nevertheless,
the government's primary goal of EU integration has resulted in some
market-oriented progress. The granting of EU trade preferences and
increased exports to Russia will encourage higher growth rates, but
the agreements are unlikely to serve as a panacea, given the extent
to which export success depends on higher quality standards and
other factors. The economy remains vulnerable to higher fuel prices,
poor agricultural weather, and the skepticism of foreign investors.
Also, the presence of an illegal separatist regime in Moldova's
Transnistria region continues to be a drag on the Moldovan economy.
The deteriorating global economic crisis did not seriously effect
the Moldovan economy in 2008 due to its low exposure to the
international financial system, but a global economic slowdown,
particularly in the EU and Russia, could hurt the economy in 2009 as
Moldova relies heavily on remittances from Moldovans abroad.
Monaco
Monaco, bordering France on the Mediterranean coast, is a
popular resort, attracting tourists to its casino and pleasant
climate. The principality also is a major banking center and has
successfully sought to diversify into services and small,
high-value-added, nonpolluting industries. The state has no income
tax and low business taxes and thrives as a tax haven both for
individuals who have established residence and for foreign companies
that have set up businesses and offices. The state retains
monopolies in a number of sectors, including tobacco, the telephone
network, and the postal service. Living standards are high, roughly
comparable to those in prosperous French metropolitan areas.
Mongolia
Economic activity in Mongolia has traditionally been based
on herding and agriculture. Mongolia has extensive mineral deposits.
Copper, coal, gold, molybdenum, fluorspar, uranium, tin, and
tungsten account for a large part of industrial production and
foreign direct investment. Soviet assistance, at its height
one-third of GDP, disappeared almost overnight in 1990 and 1991 at
the time of the dismantlement of the USSR. The following decade saw
Mongolia endure both deep recession because of political inaction
and natural disasters, as well as economic growth because of
reform-embracing, free-market economics and extensive privatization
of the formerly state-run economy. Severe winters and summer
droughts in 2000-02 resulted in massive livestock die-off and zero
or negative GDP growth. This was compounded by falling prices for
Mongolia's primary sector exports and widespread opposition to
privatization. Growth averaged nearly 9% per year in 2004-08 largely
because of high copper prices and new gold production. Until late
2008 Mongolia experienced a soaring inflation rate with year-to-year
inflation reaching nearly 40% - the highest inflation rate in over a
decade. In late 2008 falling commodity prices in this import-reliant
country helped lower inflation but by that time, the country had
begun to feel the effects of the global financial crisis. Falling
prices for copper and other mineral exports have reduced government
revenues and are forcing cuts in spending. The global credit crisis
has stalled growth in key sectors, especially those that had been
fueled by foreign investment. Mongolia's economy continues to be
heavily influenced by its neighbors. Mongolia purchases 95% of its
petroleum products and a substantial amount of electric power from
Russia, leaving it vulnerable to price increases. Trade with China
represents more than half of Mongolia's total external trade - China
receives about 70% of Mongolia's exports. Remittances from
Mongolians working abroad both legally and illegally are sizable but
have fallen due to the economic crisis; money laundering is a
growing concern. Mongolia settled its $11 billion debt with Russia
at the end of 2003 on favorable terms. Mongolia, which joined the
World Trade Organization in 1997, seeks to expand its participation
and integration into Asian regional economic and trade regimes.
Montenegro
Montenegro severed its economy from federal control and
from Serbia during the MILOSEVIC era and maintained its own central
bank, adopted the Deutchmark, then the euro - rather than the
Yugoslav dinar - as official currency, collected customs tariffs,
and managed its own budget. The dissolution of the loose political
union between Serbia and Montenegro in 2006 led to separate
membership in several international financial institutions, such as
the European Bank for Reconstruction and Development. On 18 January
2007, Montenegro joined the World Bank and IMF. Montenegro is
pursuing its own membership in the World Trade Organization and
signed a Stabilization and Association agreement with the European
Union in October 2007. On December 15, 2008, Montenegro submitted an
EU membership application. Unemployment and regional disparities in
development are key political and economic problems. Montenegro has
privatized its large aluminum complex - the dominant industry - as
well as most of its financial sector, and has begun to attract
foreign direct investment in the tourism sector. The global
financial crisis is likely to have a significant negative impact on
the economy.
Montserrat
Severe volcanic activity, which began in July 1995, has
put a damper on this small, open economy. A catastrophic eruption in
June 1997 closed the airports and seaports, causing further economic
and social dislocation. Two-thirds of the 12,000 inhabitants fled
the island. Some began to return in 1998 but lack of housing limited
the number. The agriculture sector continued to be affected by the
lack of suitable land for farming and the destruction of crops.
Prospects for the economy depend largely on developments in relation
to the volcanic activity and on public sector construction activity.
The UK has launched a three-year $122.8 million aid program to help
reconstruct the economy. Half of the island is expected to remain
uninhabitable for another decade.
Morocco
Moroccan economic policies brought macroeconomic stability
to the country in the early 1990s but have not spurred growth
sufficient to reduce unemployment - nearing 20% in urban areas -
despite the Moroccan Government's ongoing efforts to diversify the
economy. Morocco's GDP growth rose to 5.9% in 2008, with the economy
recovering from a drought in 2007 that severely reduced agricultural
output and necessitated wheat imports at rising world prices.
Moroccan authorities understand that reducing poverty and providing
jobs are key to domestic security and development. In 2005, Morocco
launched the National Initiative for Human Development (INDH), a $2
billion social development plan to address poverty and unemployment
and to improve the living conditions of the country's urban slums.
Moroccan authorities are implementing reform efforts to open the
economy to international investors. Despite structural adjustment
programs supported by the IMF, the World Bank, and the Paris Club,
the dirham is only fully convertible for current account
transactions. In 2000, Morocco entered an Association Agreement with
the EU and, in 2006, entered a Free Trade Agreement (FTA) with the
US. Long-term challenges include improving education and job
prospects for Morocco's youth, and closing the income gap between
the rich and the poor, which the government hopes to achieve by
increasing tourist arrivals and boosting competitiveness in textiles.