Economic overview In 36 editions of 36.

In 1989 the World economy grew at an estimated 3.0%, somewhat lower than the estimated 3.4% for 1988. The technologically advanced areas--North America, Japan, and Western Europe--together account for 65% of the gross world product (GWP) of $20.3 trillion; these developed areas grew in the aggregate at 3.5%. In contrast, the Communist (Second World) countries typically grew at between 0% and 2%, accounting for 23% of GWP. Experience in the developing countries continued mixed, with the newly industrializing countries generally maintaining their rapid growth, and many others struggling with debt, inflation, and inadequate investment.

The year 1989 ended with remarkable political upheavals in the Communist countries, which presumably will dislocate economic production still further. The addition of nearly 100 million people a year to an already overcrowded globe will exacerbate the problems of pollution, desertification, underemployment, and poverty throughout the 1990s.

The exploitation of oil and natural gas products forms the backbone of the economy. Algeria depends on hydrocarbons for nearly all of its export receipts, about 30% of government revenues, and nearly 25% of GDP. In 1973-74 the sharp increase in oil prices led to a booming economy that helped to finance an ambitious program of industrialization. Plunging oil and gas prices, combined with the mismanagement of Algeria's highly centralized economy, have brought the nation to its most serious social and economic crisis since independence.

The government has promised far-reaching reforms, including giving public sector companies more autonomy, encouraging private-sector activity, boosting gas and nonhydrocarbon exports, and a major overhaul of the banking and financial systems. In 1988 the government started to implement a new economic policy to dismantle large state farms into privately operated units.

Subsistence agriculture provides the main livelihood for 80-90% of the population, but accounts for only 10-20% of GDP. Oil production is the most lucrative sector of the economy, contributing about 50% to GDP. In recent years, however, the impact of fighting an internal war has severely affected the economy and food has to be imported.

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Benin is one of the least developed countries in the world because of limited natural resources and a poorly developed infrastructure. Agriculture accounts for almost 45% of GDP, employs about 60% of the labor force, and generates a major share of foreign exchange earnings. The industrial sector contributes only about 15% to GDP and employs 2% of the work force. Persistently low prices in recent years have limited hard currency earnings from Benin's major exports of agricultural products and crude oil.

The economy has historically been based on cattle raising and crops. Agriculture today provides a livelihood for over 80% of the population, but produces only about 50% of food needs and contributes a small 5% to GDP. The driving force behind the rapid economic growth of the 1970s and 1980s has been the mining industry. This sector, mostly on the strength of diamonds, has gone from generating 25% of GDP in 1980 to over 50% in 1988.

No other sector has experienced such growth, especially not that of the agricultural sector, which is plagued by erratic rainfall and poor soils. The unemployment rate remains a problem at 25%. A scarce resource base limits diversification into labor-intensive industries.

One of the poorest countries in the world, Burkina has a high population density, few natural resources, and relatively infertile soil. Economic development is hindered by a poor communications network within a landlocked country. Agriculture provides about 40% of GDP and is entirely of a subsistence nature. Industry, dominated by unprofitable government-controlled corporations, accounted for 13% of GDP in 1985.

A landlocked, resource-poor country in an early stage of economic development, Burundi is predominately agricultural with only a few basic industries. Its economic health is dependent on the coffee crop, which accounts for an average 90% of foreign exchange earnings each year. The ability to pay for imports therefore continues to rest largely on the vagaries of the climate and the international coffee market.

Cape Verde's low per capita GDP reflects a poor natural resource base, a 17-year drought, and a high birth rate. The economy is service oriented, with commerce, transport, and public services accounting for 60% of GDP during the period 1984-86. Although nearly 70% of the population lives in rural areas, agriculture's share of GDP is only 16%; the fishing and manufacturing sectors are 4% each. About 90% of food must be imported.

The fishing potential of the islands is not fully exploited (the fish catch--mostly lobster and tuna--came to only 10,000 tons in 1985). Cape Verde annually runs a high trade deficit, financed by remittances from emigrants, cash grants, food aid, and foreign loans.

Over the past decade the economy has registered a remarkable performance because of the development of an offshore oil industry. Real GDP growth annually averaged 10% from 1978 to 1985. In 1986 Cameroon had one of the highest levels of income per capita in tropical Africa, with oil revenues picking up the slack as growth in other sectors softened. Because of the sharp drop in oil prices, however, the economy is now experiencing serious budgetary difficulties and balance-of-payments disequalibrium.

Oil reserves currently being exploited will be depleted in the early 1990s, so ways must be found to boost agricultural and industrial exports in the medium term. The Sixth Cameroon Development Plan (1986-91) stresses balanced development and designates agriculture as the basis of the country's economic future.

The Central African Republic (CAR) is one of the poorest countries in Africa, with a per capita income of roughly $450 in 1988. Subsistence agriculture, including forestry, is the backbone of the economy, with over 70% of the population living in the countryside. In 1988 the agricultural sector generated about 40% of GDP, mining and manufacturing 14%, utilities and construction 4%, and services 41%. Agricultural products accounted for about 60% of export earnings and the diamond industry for 30%. Important constraints to economic development include the CAR's landlocked position, a poor transportation infrastructure, and a weak human resource base. Multilateral and bilateral development assistance plays a major role in providing capital for new investment.

The climate, geographic location, and lack of infrastructure and natural resources potential make Chad one of the most underdeveloped countries in the world. Its economy is slowly recovering from the ravaging effects of prolonged civil war, conflict with Libya, drought, and food shortages. In 1986 real GDP returned to its 1977 level, with cotton, the major cash crop, accounting for 43% of exports. Over 80% of the work force is employed in subsistence farming and fishing.

Industry is based almost entirely on the processing of agricultural products, including cotton, sugarcane, and cattle. Chad is still highly dependent on foreign aid, with its economy in trouble and many regions suffering from shortages.

One of the world's poorest countries, Comoros is made up of several islands that have poor transportation links, a young and rapidly increasing population, and few natural resources. The low educational level of the labor force contributes to a low level of economic activity, high unemployment, and a heavy dependence on foreign technical assistance. Agriculture, including fishing and forestry, is the leading sector of the economy.

It contributes about 40% to GDP, employs 80% of the labor force, and provides most of the exports. The country is not self-sufficient in food production, and rice, the main staple, accounts for 90% of imports. During the period 1982-86 the industrial sector grew at an annual average rate of 5.3%, but its contribution to GDP was less than 4% in 1986. Despite major investment in the tourist industry, which accounts for about 25% of GDP, growth has stagnated since 1983.

In 1988, in spite of large mineral resources and one of the most developed and diversified economies in Sub-Saharan Africa, Zaire had a GDP per capita of $195, one of the lowest on the continent. Agriculture, a key sector of the economy, employs 75% of the population but generates under 30% of GDP. The main impetus for economic development has been the extractive industries. Mining and mineral processing account for about one-third of GDP and two-thirds of total export earnings.

During the period 1983-88 the economy experienced slow growth, high inflation, a rising foreign debt, and a drop in foreign exchange earnings. Recent increases in foreign prices for copper--a key export earner--and other minerals offer some hope of reversing the economic decline. Zaire is the world's largest producer of diamonds.

Oil has supplanted forestry as the mainstay of the economy, providing about two-thirds of government revenues and exports. In the early 1980s rapidly rising oil revenues enabled Congo to finance large-scale development projects with growth averaging 5% annually, one of the highest rates in Africa. The world decline in oil prices, however, has forced the government to launch an austerity program to cope with declining receipts and mounting foreign debts.

The Ivory Coast is among the world's largest producers and exporters of coffee, cocoa beans, and palm-kernel oil. Consequently, the economy is highly sensitive to fluctuations in international prices for coffee and cocoa and to weather conditions. Despite attempts by the government to diversify, the economy is still largely dependent on agriculture and related industries. The agricultural sector accounts for over one-third of GDP and about 80% of export earnings and employs about 85% of the labor force. A collapse of world cocoa and coffee prices in 1986 threw the economy into a recession, from which the country had not recovered by 1989.

The economy is based on service activities connected with the country's strategic location and status as a free trade zone. Djibouti provides services as both a transit port for the region and an international transshipment and refueling center. It has few natural resources and little industry. The nation is, therefore, heavily dependent on foreign assistance to help support its balance of payments and to finance development projects. An unemployment rate of over 50% continues to be a major problem.

Egypt has one of the largest public sectors of all the Third World economies, most industrial plants being owned by the government. Overregulation holds back technical modernization and foreign investment. Even so, the economy grew rapidly during the late 1970s and early 1980s, but in 1986 the collapse of world oil prices and an increasingly heavy burden of debt servicing led Egypt to begin negotiations with the IMF for balance-of-payments support.

As part of the 1987 agreement with the IMF, the government agreed to institute a reform program to reduce inflation, promote economic growth, and improve its external position. The reforms have been slow in coming, however, and the economy has been largely stagnant for the past three years. With 1 million people being added every eight months to Egypt's population, urban growth exerts enormous pressure on the 5% of the total land area available for agriculture.

The economy, destroyed during the regime of former President Macias Nguema, is now based on agriculture, forestry, and fishing, which account for about 60% of GNP and nearly all exports. Subsistence agriculture predominates, with cocoa, coffee, and wood products providing income, foreign exchange, and government revenues. There is little industry. Commerce accounts for about 10% of GNP, and the construction, public works, and service sectors for about 34%. Undeveloped natural resources include titanium, iron ore, manganese, uranium, and alluvial gold. Oil exploration is taking place under concessions offered to US, French, and Spanish firms.

The economy is based on subsistence agriculture, which occupies much of the labor force and contributes about 25% to GDP. Manufacturing, which includes a number of agroprocessing factories, accounts for another 25% of GDP. Mining has declined in importance in recent years; high-grade iron ore deposits were depleted in 1978, and health concerns cut world demand for asbestos. Exports of sugar and forestry products are the main earners of hard currency.

Surrounded by South Africa, except for a short border with Mozambique, Swaziland is heavily dependent on South Africa, from which it receives 90% of its imports and to which it sends about one-third of its exports.

Ethiopia is one of the poorest and least developed countries in Africa. Its economy is based on subsistence agriculture, which accounts for about 45% of GDP, 90% of exports, and 80% of total employment; coffee generates over 60% of export earnings. The manufacturing sector is heavily dependent on inputs from the agricultural sector. The economy is centrally planned, and over 90% of large-scale industry is state run. Favorable agricultural weather largely explains the 4.5% growth in output in FY89.

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The economy, dependent on timber and manganese until the early 1970s, is now dominated by the oil sector. During the period 1981-85 oil accounted for about 46% of GDP, 83% of export earnings, and 65% of government revenues on average. The high oil prices of the early 1980s contributed to a substantial increase in per capita income, stimulated domestic demand, reinforced migration from rural to urban areas, and raised the level of real wages to among the highest in Sub-Saharan Africa.

The three-year slide of Gabon's economy, which began with falling oil prices in 1985, stabilized in 1989 because of a near doubling of oil prices over their 1988 lows. The agricultural and industrial sectors are relatively underdeveloped, accounting for only 8% and 10%, respectively, of GDP in 1986.

The Gambia has no important mineral or other natural resources and has a limited agricultural base. It is one of the world's poorest countries with a per capita income of about $250. About 75% of the population is engaged in crop production and livestock raising, which contributes about 30% to GDP. Small-scale manufacturing activity--processing peanuts, fish, and hides--accounts for less than 10% of GDP. Tourism is a growing industry. The Gambia imports about 33% of its food, all fuel, and most manufactured goods. Exports are concentrated on peanut products (over 75% of total value).

Supported by substantial international assistance, Ghana has been implementing a steady economic rebuilding program since 1983. Good harvests in 1988 featured the 6% growth in GNP. Moves toward privatization and relaxation of government controls continued in 1988-89, although at a slower-than-expected pace. In 1988 service on the $2.8 billion debt was equivalent to 75% of export earnings. As Ghana obtains concessional loans and pays off high-interest debt, however, debt service is expected to fall below 30% of export earnings in the early 1990s.

The economic rebuilding program has both helped and harmed the manufacturing sector, for example, by improving the supply of raw materials and by increasing competition from imports. The long-term outlook is favorable provided that the political structure can endure the slow pace at which living standards are improving and can manage the problems stemming from excessive population growth.

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Although possessing many natural resources and considerable potential for agricultural development, Guinea is one of the poorest countries in the world. The agricultural sector contributes about 40% to GDP and employs more than 80% of the work force, while industry accounts for about 25% of GDP. Guinea possesses over 25% of the world's bauxite reserves; exports of bauxite and alumina accounted for more than 80% of total exports in 1986.

Guinea-Bissau ranks among the poorest countries in the world, with a per capita GDP below $200. Agriculture and fishing are the main economic activities, with cashew nuts, peanuts, and palm kernels the primary exports. Exploitation of known mineral deposits is unlikely at present because of a weak infrastructure and the high cost of development. The government's four-year plan (1988-91) has targeted agricultural development as the top priority.

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A serious underlying economic problem is Kenya's 3.8% annual population growth rate--one of the highest in the world. In the meantime, GDP growth in the near term has kept slightly ahead of population--annually averaging 5.2% in the 1986-88 period. Undependable weather conditions and a shortage of arable land hamper long-term growth in agriculture, the leading economic sector.

Small, landlocked, and mountainous, Lesotho has no important natural resources other than water. Its economy is based on agriculture, light manufacturing, and remittances from laborers employed in South Africa. Subsistence farming is the principal occupation for about 86% of the domestic labor force and accounts for about 20% of GDP. Manufacturing depends largely on farm products to support the milling, canning, leather, and jute industries; other industries include textile, clothing, and light engineering.

Industry's share of total GDP rose from 6% in 1982 to 10.5% in 1987. During the period 1985-87 real GDP growth averaged 2.9% per year, only slightly above the population growth rate. In FY89 per capita GDP was only $245 and nearly 25% of the labor force was unemployed.

In 1988 and 1989 the Liberian economy posted its best two years in a decade, thanks to a resurgence of the rubber industry and rapid growth in exports of forest products. Richly endowed with water, mineral resources, forests, and a climate favorable to agriculture, Liberia is a producer and exporter of basic products. Local manufacturing, mainly foreign owned, is small in scope. Liberia imports primarily machinery and parts, transportation equipment, petroleum products, and foodstuffs. Persistent budget deficits, the flight of capital, and deterioration of transport and other infrastructure continue to hold back economic progress.

The socialist-oriented economy depends primarily upon revenues from the oil sector, which contributes virtually all export earnings and over 50% to GNP. Since 1980, however, the sharp drop in oil prices and resulting decline in export revenues has adversely affected economic development. In 1986 per capita GNP was the highest in Africa at $5,410, but it had been $2,000 higher in 1982. Severe cutbacks in imports over the past five years have led to shortages of basic goods and foodstuffs, although the reopening of the Libyan-Tunisian border in April 1988 and the Libyan-Egyptian border in December 1989 have somewhat eased shortages.

Austerity budgets and a lack of trained technicians have undermined the government's ability to implement a number of planned infrastructure development projects. The nonoil industrial and construction sectors, which account for about 15% of GNP, have expanded from processing mostly agricultural products to include petrochemicals, iron, steel, and aluminum. Although agriculture accounts for less than 5% of GNP, it employs 20% of the labor force. Climatic conditions and poor soils severely limit farm output, requiring Libya to import about 75% of its food requirements.

Madagascar is one of the poorest countries in the world. During the period 1980-85 it had a population growth of 3% a year and a - 0.4% GDP growth rate. Agriculture, including fishing and forestry, is the mainstay of the economy, accounting for over 40% of GDP, employing about 85% of the labor force, and contributing more than 70% to export earnings. Industry is confined to the processing of agricultural products and textile manufacturing; in 1988 it contributed only 16% to GDP and employed 3% of the labor force.

Industrial development has been hampered by government policies that have restricted imports of equipment and spare parts and put strict controls on foreign-owned enterprises. In 1986 the government introduced a five-year development plan that stresses self-sufficiency in food (mainly rice) by 1990, increased production for exports, and reduced energy imports.

A landlocked country, Malawi ranks among the world's least developed with a per capita GDP of $180. The economy is predominately agricultural and operates under a relatively free enterprise environment, with about 90% of the population living in rural areas. Agriculture accounts for 40% of GDP and 90% of export revenues. After two years of weak performance, economic growth improved significantly in 1988 as a result of good weather and a broadly based economic adjustment effort by the government. The closure of traditional trade routes through Mozambique continues to be a constraint on the economy.

Mali is among the poorest countries in the world, with about 80% of its land area desert or semidesert. Economic activity is largely confined to the riverine area irrigated by the Niger. About 10% of the population lives as nomads and some 80% of the labor force is engaged in agriculture and fishing. Industrial activity is concentrated on processing farm commodities.

A majority of the population still depends on agriculture and livestock for a livelihood, even though most of the nomads and many subsistence farmers were forced into the cities by recurrent drought in 1983. Mauritania has extensive deposits of iron ore that account for almost 50% of total exports. The decline in world demand for this ore, however, has led to cutbacks in production in recent years. 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.

The economy is based on sugar, manufacturing (mainly textiles), and tourism. Despite significant expansion in other sectors over the past decade, sugarcane remains dominant and is grown on about 90% of the cultivated land area, accounting for 40% of export earnings. The government's development strategy is centered on industrialization (with a view to exports), agricultural diversification, and tourism. Economic performance in 1988 was impressive, with 6.3% real growth rate and low unemployment.

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 is heavily dependent on French financial assistance.

After registering a robust 10% growth in 1988, the economy slowed in 1989 because of higher prices for food and oil imports, lower worker remittances, and a trade dispute with India over phosphoric acid prices that cost Rabat $500 million. To meet the foreign payments shortfall, Rabat has been drawing down foreign exchange reserves. Servicing the $22 billion foreign debt, high unemployment, and Morocco's vulnerability to external forces remain severe problems for the 1990s.

One of Africa's poorest countries, with a per capita GDP of little more than $100, Mozambique has failed to exploit the economic potential of its sizable agricultural, hydropower, and transportation resources. Indeed, national output, consumption, and investment declined throughout the first half of the 1980s because of internal disorders, lack of government administrative control, and a growing foreign debt. A sharp increase in foreign aid, attracted by an economic reform policy, has resulted in successive years of economic growth since 1985.

Agricultural output, nevertheless, is only at about 75% of its 1981 level, and grain has to be imported. Industry operates at only 20-40% of capacity. The economy depends heavily on foreign assistance to keep afloat.

The economy is heavily dependent on the mining industry to extract and process minerals for export. Mining accounts for almost 35% of GDP, agriculture and fisheries 10-15%, and manufacturing about 5%. Namibia is the fourth-largest exporter of nonfuel minerals in Africa and the world's fifth-largest producer of uranium. Alluvial diamond deposits are among the richest in the world, making Namibia a primary source for gem-quality diamonds. Namibia also produces large quantities of lead, zinc, tin, silver, and tungsten, and it has substantial resources of coal.

About 90% of the population is engaged in farming and stock rearing, activities which generate almost half of the national income. The economy also depends heavily on exploitation of large uranium deposits. Uranium production grew rapidly in the mid-1970s, but tapered off in the early 1980s, when world prices declined. France is a major customer, while FRG, Japan, and Spain also make regular purchases. The depressed demand for uranium has contributed to an overall sluggishness in the economy, a severe trade imbalance, and a mounting external debt.

In 1989, despite rising oil prices, the economic performance failed to meet government expectations because of higher inflationary pressures fueled by a relatively poor agricultural performance. Agricultural production was up only 4% following a 10% decline in 1988, and manufacturing remained below the 1985 level with only a 6% increase. The government is continuing an economic adjustment program to reduce Nigeria's dependence on oil and to help create a basis for sustainable noninflationary growth.

The economy has traditionally been based on agriculture. Sugarcane has been the primary crop for more than a century, and in some years it accounts for 85% of exports. The government is pushing the development of a tourist industry to relieve a high unemployment rate that was over 30% in 1986. The economic well-being of Reunion depends heavily on continued financial assistance from France.

About 40% of GDP comes from the agricultural sector; coffee and tea make up 80-90% of total exports. The amount of fertile land is limited, however, and deforestation and soil erosion have created problems. The industrial sector in Rwanda is small, contributing less than 20% to GDP. Manufacturing focuses mainly on the processing of agricultural products. The Rwandan economy remains dependent on coffee exports and foreign aid, with no relief in sight. Weak international prices since 1986 have caused the economy to contract and per capita GDP to decline.

The economy depends primarily on financial assistance from the UK. The local population earns some income from fishing, the rearing of livestock, and sales of handicrafts. Because there are few jobs, a large proportion of the work force have left to seek employment overseas.

The economy has remained dependent on cocoa since the gained independence nearly 15 years ago. Since then, however, cocoa production has gradually deteriorated because of drought and mismanagement, so that by 1987 output had fallen to less than 50% of its former levels. As a result, a shortage of cocoa for export has created a serious balance-of-payments problem. Production of less important crops, such as coffee, copra, and palm kernels, has also declined.

The value of imports generally exceeds that of exports by a ratio of 4 to 1. The emphasis on cocoa production at the expense of other food crops has meant that Sao Tome has to import 90% of food needs. It also has to import all fuels and most manufactured goods. Over the years, Sao Tome has been unable to service its external debt, which amounts to roughly 80% of export earnings. Considerable potential exists for development of a tourist industry, and the government has taken steps to expand facilities in recent years.

The government also implemented a Five-Year Plan covering 1986-90 to restructure the economy and reschedule external debt service payments in cooperation with the International Development Association and Western lenders.

The agricultural sector accounts for about 20% of GDP and provides employment for about 75% of the labor force. About 40% of the total cultivated land is used to grow peanuts, an important export crop. The principal economic resource is fishing, which brought in about $200 million or about 25% of total foreign exchange earnings in 1987. Mining is dominated by the extraction of phosphate, but production has faltered because of reduced worldwide demand for fertilizers in recent years. Over the past 10 years tourism has become increasingly more important to the economy.

In this small, open tropical island economy, the tourist industry employs about 30% of the labor force and provides the main source of hard currency earnings. In recent years the government has encouraged foreign investment in order to upgrade hotels and other services. At the same time, the government has moved to reduce the high dependence on tourism by promoting the development of farming, fishing, and small-scale manufacturing.

The economic and social infrastructure is not well developed. Subsistence agriculture dominates the economy, generating about one-third of GDP and employing about two-thirds of the working population. Manufacturing accounts for less than 10% of GDP, consisting mainly of the processing of raw materials and of light manufacturing for the domestic market. Diamond mining provides an important source of hard currency. The economy suffers from high unemployment, rising inflation, large trade deficits, and a growing dependency on foreign assistance.

One of the world's least developed countries, Somalia has few resources. In 1988 per capita GDP was $210. Agriculture is the most important sector of the economy, with the livestock sector accounting for about 40% of GDP and about 65% of export earnings. Nomads and seminomads who are dependent upon livestock for their livelihoods make up about 50% of the population. Crop production generates only 10% of GDP and employs about 20% of the work force.

The main export crop is bananas; sugar, sorghum, and corn are grown for the domestic market. The small industrial sector is based on the processing of agricultural products and accounts for less than 10% of GDP. At the end of 1988 serious economic problems facing the nation were the external debt of $2.8 billion and double-digit inflation.

Many of the white one-seventh of the South African population enjoy incomes, material comforts, and health and educational standards equal to those of Western Europe. In contrast, most of the remaining population suffers from the poverty patterns of the Third World, including unemployment, lack of job skills, and barriers to movement into higher-paying fields. Inputs and outputs thus do not move smoothly into the most productive employments, and the effectiveness of the market is further lowered by international constraints on dealings with South Africa.

The main strength of the economy lies in its rich mineral resources, which provide two-thirds of exports. Average growth of 2% in output in recent years falls far short of the level needed to cut into the high unemployment level.

Sudan, one of the world's poorest countries, is buffeted by civil war, chronic political instability, adverse weather, and counterproductive economic policies. The economy is dominated by governmental entities that account for more than 70% of new investment. The private sector's main areas of activity are agriculture and trading, with most private industrial investment predating 1980. The economy's base is agriculture, which employs 80% of the work force.

Industry mainly processes agricultural items. A high foreign debt and arrearages of about $13 billion continue to cause difficulties. Since 1979 the International Monetary Fund has provided assistance and has forced Sudan to make economic reforms aimed at improving the performance of the economy.

Tanzania is one of the poorest countries in the world. The economy is heavily dependent on agriculture, which accounts for about 40% of GDP, provides 85% of exports, and employs 90% of the work force. Industry accounts for about 10% of GDP and is mainly limited to processing agricultural products and light consumer goods. The economic recovery program announced in mid-1986 has generated notable increases in agricultural production and financial support for the program by bilateral donors. The World Bank and the International Monetary Fund have increased the availability of imports and provided funds to rehabilitate Tanzania's deteriorated economic infrastructure.

Togo is one of the least developed countries in the world with a per capita GDP of about $400. The economy is heavily dependent on subsistence agriculture, which accounts for about 35% of GDP and provides employment for 80% of the labor force. Primary agricultural exports are cocoa, coffee, and cotton, which together account for about 30% of total export earnings. Togo is self-sufficient in basic foodstuffs when harvests are normal. In the industrial sector phosphate mining is by far the most important activity, with phosphate exports accounting for about 40% of total foreign exchange earnings.

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The economy depends primarily on petroleum, phosphates, and tourism for continued growth. Two successive drought-induced crop failures have strained the government's budget and increased unemployment. The current account fell from a $23 million surplus in 1988 to a $390 million deficit in 1989. Despite its foreign payments problems, Tunis appears committed to its IMF-supported structural adjustment program. Nonetheless, the government may have to slow its implementation to head off labor unrest. The increasing foreign debt--$7.6 billion at yearend 1989--is also a key problem. Tunis probably will seek debt relief in 1990.

Uganda has substantial natural resources, including fertile soils, regular rainfall, and sizable mineral deposits of copper and cobalt. For most of the past 15 years the economy has been devastated by political instability, mismanagement, and civil war, keeping Uganda poor with a per capita income of about $300. (GDP remains below the levels of the early 1970s, as does industrial production.) Agriculture is the most important sector of the economy, employing over 80% of the work force.

Coffee is the major export crop and accounted for 97% of export revenues in 1988. Since 1986 the government has acted to rehabilitate and stabilize the economy by undertaking currency reform, raising producer prices on export crops, increasing petroleum prices, and improving civil service wages. The policy changes are especially aimed at dampening inflation, which was running at over 300% in 1987, and boosting production and export earnings.

Western Sahara, a territory poor in natural resources and having little rainfall, has a per capita GDP of just a few hundred dollars. Fishing and phosphate mining are the principal industries and sources of income. Most of the food for the urban population must be imported. All trade and other economic activities are controlled by the Moroccan Government.

Despite temporary growth in 1988, the economy has been in decline for more than a decade with falling imports and growing foreign debt. Economic difficulties stem from a sustained drop in copper production and ineffective economic policies. In 1988 real GDP stood only slightly higher than that of 10 years before, while an annual population growth of more than 3% has brought a decline in per capita GDP of 25% during the same period. A high inflation rate has also added to Zambia's economic woes in recent years.

Agriculture employs a majority of the labor force and supplies almost 40% of exports. The agro-based manufacturing sector produces a variety of goods and contributes about 25% to GDP. Mining accounts for only 5% of both GDP and employment, but supplies of minerals and metals account for about 40% of exports. Wide year-to-year fluctuations in agricultural production over the past six years resulted in not only an uneven growth rate, but one that did not equal the 3% annual increase in population.

No economic activity at present except for fishing off the coast and small-scale tourism, both based abroad. Exploitation of mineral resources will be held back by technical difficulties, high costs, and objections by environmentalists.

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Economic activity is limited to servicing meteorological and geophysical research stations and French and other fishing fleets. The fishing catches landed on Iles Kerguelen by foreign ships are exported to France and Reunion.

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Some fishing takes place in adjacent waters. There is a potential source of income from harvesting fin fish and krill. The islands receive income from postage stamps produced in the UK.

Over the past 25 years, the economy has changed from one based on subsistence whaling, hunting, and fishing to one dependent on foreign trade. Fishing is still the most important industry, accounting for over two-thirds of exports and about 25% of the population's income. Exploitation of mineral resources is limited to lead and zinc. Maintenance of a social welfare system similar to Denmark's has given the public sector a dominant role in the economy. Greenland is heavily dependent on an annual subsidy of about $400 million from the Danish Government.

Iceland's prosperous Scandinavian-type economy is basically capitalistic, but with extensive welfare measures, low unemployment, and comparatively even distribution of income. The economy is heavily dependent on the fishing industry, which provides nearly 75% of export earnings. In the absence of other natural resources, Iceland's economy is vulnerable to changing world fish prices. National output declined for the second consecutive year in 1989, and two of the largest fish farms filed for bankruptcy. Other economic activities include livestock raising and aluminum smelting. A fall in the fish catch is expected for 1990, resulting in a continuation of the recession.

Jan Mayen is a volcanic island with no exploitable natural resources. Economic activity is limited to providing services for employees of Norway's radio and meteorological stations located on the island.

Coal mining is the major economic activity on Svalbard. By treaty (9 February 1920), the nationals of the treaty powers have equal rights to exploit mineral deposits, subject to Norwegian regulation. Although US, UK, Dutch, and Swedish coal companies have mined in the past, the only companies still mining are Norwegian and Soviet. Each company mines about half a million tons of coal annually. The settlements on Svalbard are essentially company towns.

The Norwegian state-owned coal company employs nearly 60% of the Norwegian population on the island, runs many of the local services, and provides most of the local infrastructure. There is also some trapping of seal, polar bear, fox, and walrus.

Fundamentally, Afghanistan is an extremely poor, landlocked country, highly dependent on farming (wheat especially) and livestock raising (sheep and goats). Economic considerations, however, have played second fiddle to political and military upheavals, including the nine-year Soviet military occupation (ended 15 February 1989) and the continuing bloody civil war. Over the past decade, one-third of the population has fled the country, with Pakistan sheltering some 3 million refugees and Iran perhaps 2 million.

Another 1 million have probably moved into and around urban areas within Afghanistan. Large numbers of bridges, buildings, and factories have been destroyed or damaged by military action or sabotage. Government claims to the contrary, gross domestic product almost certainly is lower than 10 years ago because of the loss of labor and capital and the disruption of trade and transport. Official claims indicate that agriculture grew by 0.7% and industry by 3.5% in 1988.

The economy is based on the output of a narrow range of agricultural products, such as jute, which is the main cash crop and major source of export earnings. Bangladesh is hampered by a relative lack of natural resources, a rapid population growth of 2.8% a year and a limited infrastructure, and it is highly vulnerable to natural disasters. Despite these constraints, real GDP averaged about 3.8% annually during 1985-88.

One of the poorest nations in the world, alleviation of poverty remains the cornerstone of the government's development strategy. The agricultural sector contributes over 50% to GDP and 75% to exports, and employs over 74% of the labor force. Industry accounts for about 10% of GDP.

The economy is based on agriculture and forestry, which provide the main livelihood for 90% of the population and account for about 50% of GDP. One of the world's least developed countries, rugged mountains dominate and make the building of roads and other infrastructure difficult and expensive. Bhutan's hydropower potential and its attraction for tourists are its most important natural resources.

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 and US. There are no industrial or agricultural activities on the islands.

Beginning in late 1978 the Chinese leadership has been trying to move the economy from the sluggish Soviet-style centrally planned economy to a more productive and flexible economy with market elements--but still within the framework of monolithic Communist control. To this end the authorities have switched to a system of household responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprise in services and light manufacturing, and opened the foreign economic sector to increased trade and joint ventures.

The most gratifying result has been a strong spurt in production, particularly in agriculture in the early 1980s. Otherwise, the leadership has often experienced in its hybrid system the worst results of socialism (bureaucracy, lassitude, corruption) and of capitalism (windfall gains and stepped-up inflation). Beijing thus has periodically backtracked, retightening central controls at intervals and thereby undermining the credibility of the reform process.

Open inflation and excess demand continue to plague the economy, and political repression, following the crackdown at Tiananmen in mid-1989, has curtailed tourism, foreign aid, and new investment by foreign firms. Popular resistance and changes in central policy have weakened China's population control program, which is essential to the nation's long-term economic viability.

India's Malthusian economy is a mixture of traditional village farming and handicrafts, modern agriculture, old and new branches of industry, and a multitude of support services. It presents both the entrepreneurial skills and drives of the capitalist system and widespread government intervention of the socialist mold. Growth of 4% to 5% annually in the 1980s has softened the impact of population growth on unemployment, social tranquility, and the environment.

Agricultural output has continued to expand, reflecting the greater use of modern farming techniques and improved seed that have helped to make India self-sufficient in food grains and a net agricultural exporter. However, tens of millions of villagers, particularly in the south, have not benefited from the green revolution and live in abject poverty. Industry has benefited from a liberalization of controls. The growth rate of the service sector has also been strong.

Although Japan has few natural resources, since 1971 it has become the world's third-largest industrial economy, ranking behind only the US and the USSR. Government-industry cooperation, a strong work ethic, and a comparatively small defense allocation have helped Japan advance rapidly, notably in high-technology fields. Industry, the most important sector of the economy, is heavily dependent on imported raw materials and fuels.

Self-sufficent in rice, Japan must import 50% of its requirements for other grain and fodder crops. Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the total global catch. Overall economic growth has been spectacular: a 10% average in the 1960s, a 5% average in the 1970s and 1980s. In 1989 strong investment and consumption spending helped maintain growth at nearly 5%. Inflation remains low at 2.1% despite high oil prices and a somewhat weaker yen. Japan continues to run a huge trade surplus, $60 billion in 1989, which supports extensive investment in foreign properties.

More than 90% of this command economy is socialized; agricultural land is collectivized; and state-owned industry produces 95% of manufactured goods. State control of economic affairs is unusually tight even for a Communist country because of the small size and homogeneity of the society and the strict one-man rule of Kim. Economic growth during the period 1984-89 has averaged approximately 3%. Abundant natural resources and hydropower form the basis of industrial development.

Output of the extractive industries includes coal, iron ore, magnesite, graphite, copper, zinc, lead, and precious metals. Manufacturing emphasis is centered on heavy industry, with light industry lagging far behind. The use of high-yielding seed varieties, expansion of irrigation, and the heavy use of fertilizers have enabled North Korea to become largely self-sufficient in food production. North Korea, however, is far behind South Korea in economic development and living standards.

The driving force behind the economy's dynamic growth has been the planned development of an export-oriented economy in a vigorously entrepreneurial society. GNP increased almost 13% in both 1986 and 1987 and 12% in 1988 before slowing to 6.5% in 1989. Such a rapid rate of growth was achieved with an inflation rate of only 3% in the period 1986-87, rising to 7% in 1988 and 5% in 1989. Unemployment is also low, and some labor bottlenecks have appeared in several processing industries.

While the South Korean economy is expected to grow at more than 5% annually during the 1990s, labor unrest--which led to substantial wage hikes in 1987-89--threatens to undermine noninflationary growth.

The economy is based on fishing, tourism, and shipping. Agriculture is limited to the production of a few subsistence crops that provide only 10% of food requirements. Fishing is the largest industry, employing 80% of the work force and accounting for over 60% of exports; it is also an important source of government revenue. During the 1980s tourism has become one of the most important and highest growth sectors of the economy.

In 1988 industry accounted for about 14% of GDP. Real GDP is officially estimated to have increased by about 10% annually during the period 1974-86, and GDP estimates for 1988 show a further growth of 9% on the strength of a record fish catch and an improved tourist season.

Economic activity traditionally has been based on agriculture and the breeding of livestock--Mongolia has the highest number of livestock per person in the world. In recent years extensive mineral resources have been developed with Soviet support. The mining and processing of coal, copper, molybdenum, tin, tungsten, and gold account for a large part of industrial production.

Nepal is among the poorest and least developed countries in the world with a per capita income of only $158. Real growth averaged 4% in the 1980s until FY89, when it plunged to 1.5% because of the ongoing trade/transit dispute with India. Agriculture is the mainstay of the economy, providing a livelihood for over 90% of the population and accounting for 60% of GDP and about 75% of exports. Industrial activity is limited, and what there is involves the processing of agricultural produce (jute, sugarcane, tobacco, and grain). Apart from agricultural land and forests, the only other exploitable natural resources are mica, hydropower, and tourism.

Despite considerable investment in the agricultural sector, production in the 1980s has not kept pace with the population growth of 2.7%, which has led to a reduction in exportable surpluses and balance-of-payments difficulties. Economic prospects for the 1990s remain grim.

Pakistan is a poor Third World country faced with the usual problems of rapidly increasing population, sizable government deficits, and heavy dependence on foreign aid. In addition, the economy must support a large military establishment and provide for the needs of 4 million Afghan refugees. A real economic growth rate averaging 5-6% in recent years has enabled the country to cope with these problems. Almost all agriculture and small-scale industry is in private hands, and the government seeks to privatize a portion of the large-scale industrial enterprises now publicly owned.

In December 1988, Pakistan signed a three-year economic reform agreement with the IMF, which provides for a reduction in the government deficit and a liberalization of trade in return for further IMF financial support. The so-called Islamization of the economy has affected mainly the financial sector; for example, a prohibition on certain types of interest payments. Pakistan almost certainly will make little headway against its population problem; at the current rate of growth, population would double in 32 years.

Agriculture, forestry, and fishing dominate the economy, employing about half of the labor force and accounting for about 25% of GDP. The plantation crops of tea, rubber, and coconuts provide about 50% of export earnings and almost 20% of budgetary revenues. The economy has been plagued by high rates of unemployment since the late 1970s.

Anguilla has few natural resources, and the economy depends heavily on lobster fishing, offshore banking, tourism, and remittances from emigrants. In recent years the economy has benefited from a boom in tourism. Development is planned to improve the infrastructure, particularly transport and tourist facilities, and also light industry. Improvement in the economy has reduced unemployment from 40% in 1984 to about 5% in 1988.

The economy is primarily service oriented, with tourism the most important determinant of economic performance. During the period 1983-87, real GDP expanded at an annual average rate of 8%. Tourism's contribution to GDP, as measured by value added in hotels and restaurants, rose from about 14% in 1983 to 17% in 1987, and stimulated growth in other sectors--particularly in construction, communications, and public utilities.

During the same period the combined share of agriculture and manufacturing declined from 12% to less than 10%. Antigua and Barbuda is one of the few areas in the Caribbean experiencing a labor shortage in some sectors of the economy.

Tourism is the mainstay of the economy. In 1985 the economy suffered a severe blow when Exxon closed its refinery, a major source of employment and foreign exchange earnings. Economic collapse was prevented by soft loans from the Dutch Government and by a booming tourist industry. Hotel capacity expanded by 20% between 1985 and 1987 and is projected to more than double by 1990. Unemployment has steadily declined from about 20% in 1986 to about 3% in 1988.

The Bahamas is a stable, middle-income developing nation whose economy is based primarily on tourism and offshore banking. Tourism alone provides about 50% of GDP and directly or indirectly employs about 50,000 people or 40% of the local work force. The economy has boomed in recent years, aided by a steady annual increase in the number of tourists. The per capita GDP of over $9,800 is one of the highest in the region.

A per capita income of $5,250 gives Barbados the highest standard of living of all the small island states of the eastern Caribbean. Historically, the economy was based on the cultivation of sugarcane and related activities. In recent years, however, the economy has diversified into manufacturing and tourism. The tourist industry is now a major employer of the labor force and a primary source of foreign exchange. A high unemployment rate of about 19% in 1988 remains one of the most serious economic problems facing the country.

The economy is based primarily on agriculture and merchandising. Agriculture accounts for more than 30% of GDP and provides 75% of export earnings, while sugar, the chief crop, accounts for almost 40% of hard currency earnings. The US, Belize's main trading partner, is assisting in efforts to reduce dependency on sugar with an agricultural diversification program. In 1987 the drop in income from sugar sales to the US because of quota reductions was almost totally offset by higher world prices for sugar.

The economy is highly dependent on the tourist industry, which generates about 21% of the national income. In 1985 the government offered offshore registration to companies wishing to incorporate in the islands, and, in consequence, incorporation fees generated about $2 million in 1987. Livestock raising is the most significant agricultural activity. The islands' crops, limited by poor soils, are unable to meet food requirements.

The economy depends heavily on tourism (70% of GDP and 75% of export earnings) and offshore financial services, with the tourist industry aimed at the luxury market and catering mainly to visitors from North America. About 90% of the islands' food and consumer goods needs must be imported. The Caymanians enjoy one of the highest standards of living in the region.

In 1988 the economy grew at a 3.8% rate, a drop from the 5.1% of the previous year. Gains in agricultural production (on the strength of good coffee and banana crops) and in construction, were partially offset by declines in the rates of growth for the industry and commerce sectors. In 1988 consumer prices rose by nearly 21% followed by a 10% rise in 1989. Unemployment is officially reported at about 6%, but much underemployment remains. External debt, on a per capita basis, is among the world's highest.

The Soviet-style economy, centrally planned and largely state owned, is highly dependent on the agricultural sector and foreign trade. Sugar provides about 75% of export revenues and is mostly exported to the USSR and other CEMA countries. The economy has stagnated since 1985 under a program that has deemphasized material incentives in the workplace, abolished farmers' informal produce markets, and raised prices of government-supplied goods and services.

Castro has complained that the ongoing CEMA reform process has interfered with the regular flow of goods to Cuba. Recently the government has been trying to increase trade with Latin America and China. Cuba has had difficulty servicing its foreign debt since 1982. The government currently is encouraging foreign investment in tourist facilities. Other investment priorities include sugar, basic foods, and nickel. The annual $4 billion Soviet subsidy, a main prop to Cuba's threadbare economy, may be cut in view of the USSR's mounting economic problems.

The economy is dependent on agriculture and thus is highly vulnerable to climatic conditions. Agriculture accounts for about 30% of GDP and employs 40% of the labor force. Principal products include bananas, coconuts, citrus, and root crops. In 1988 the economy achieved a 5.6% growth in real GDP on the strength of a boost in construction, higher agricultural production, and growth of the small manufacturing sector based on soap and garment industries. The tourist industry remains undeveloped because of a rugged coastline and the lack of an international-class airport.

The economy is largely dependent on the agricultural sector, which employs 50% of the labor force and provides about half of export revenues. The principal commercial crop is sugarcane, followed by coffee, cocoa, and tobacco. Industry is based on the processing of agricultural products, durable consumer goods, minerals, and chemicals. Rapid growth of free trade zones has established a significant expansion of manufacturing for export, especially wearing apparel.

Over the past decade tourism has also increased in importance and is a significant earner of foreign exchange and a source of new jobs. Unemployment is officially reported at about 25%, but underemployment may be much higher.

The economy experienced a modest recovery during the period 1983-86, after a sharp decline in the early 1980s. Real GDP grew by 1.5% a year on the strength of value added by the manufacturing and service sectors. In 1987 the economy expanded by 2.5% as agricultural output recovered from the 1986 drought. The agricultural sector accounts for 25% of GDP, employs about 40% of the labor force, and contributes about 66% to total exports.

Coffee is the major commercial crop, contributing 60% to export earnings. The manufacturing sector, based largely on food and beverage processing, accounts for 17% of GDP and 16% of employment. Economic losses due to guerrilla sabotage total more than $2.0 billion since 1979. The costs of maintaining a large military seriously constrain the government's ability to provide essential social services.

The economy is essentially agricultural and centers on the traditional production of spices and tropical plants. Agriculture accounts for about 20% of GDP and 90% of exports and employs 24% of the labor force. Tourism is the leading foreign exchange earner, followed by agricultural exports. Manufacturing remains relatively undeveloped, but with a more favorable private investment climate since 1983, it is expected to grow. Despite an impressive average annual growth rate for the economy of 5.5% during the period 1984-88, unemployment remains high at about 26%.

The economy depends on agriculture, tourism, light industry, and services. It is also dependent upon France for large subsidies and income and social transfers. Tourism is a key industry, with most tourists from the US. In addition, an increasingly large number of cruise ships visit the islands. The traditionally important sugarcane crop is slowly being replaced by other crops, such as bananas (which now supply about 50% of export earnings), eggplant, and flowers.

Other vegetables and root crops are cultivated for local consumption, although Guadeloupe is still dependent on imported food, which comes mainly from France. Light industry consists mostly of sugar and rum production. Most manufactured goods and fuel are imported. Unemployment is especially high among the young.

The economy is based on agriculture, which accounts for 25% of GDP, employs about 60% of the labor force, and supplies two-thirds of exports. Industry accounts for about 20% of GDP and 15% of the labor force. The economy has reentered a slow-growth phase, but is hampered by political uncertainty. In 1988 the economy grew by 3.7%, the third consecutive year of mild growth. Government economic reforms introduced since 1986 have stabilized exchange rates and have helped to stem inflationary pressures. The inflation rate has dropped from 36.9% in 1986 to 15% in 1989.

About 85% of the population live in absolute poverty. Agriculture is mainly small-scale subsistence farming and employs 65% of the work force. The majority of the population does not have ready access to safe drinking water, adequate medical care, or sufficient food. Few social assistance programs exist, and the lack of employment opportunities remains the most critical problem facing the economy.

Honduras is one of the poorest countries in the Western Hemisphere. Agriculture is the most important sector of the economy, accounting for nearly 30% of GDP, employing 62% of the labor force, and producing two-thirds of exports. Productivity remains low, however, leaving considerable room for improvement. Although industry is still in its early stages, it employs nearly 15% of the labor force, accounts for 23% of GDP, and generates 20% of exports.

The service sectors, including public administration, account for 48% of GDP and employ nearly 20% of the labor force. Basic problems facing the economy include a high population growth rate, a high unemployment rate, a lack of basic services, a large and inefficient public sector, and an export sector dependent mostly on coffee and bananas, which are subject to sharp price fluctuations.

The economy is based on sugar, bauxite, and tourism. In 1985 it suffered a setback with the closure of some facilities in the bauxite and alumina industry, a major source of hard currency earnings. Since 1986 an economic recovery has been under way. In 1987 conditions began to improve for the bauxite and alumina industry because of increases in world metal prices. The recovery has also been supported by growth in the manufacturing and tourism sectors.

In September 1988, Hurricane Gilbert inflicted severe damage on crops and the electric power system, a sharp but temporary setback to the economy. By October 1989 the economic recovery from the hurricane was largely complete and real growth was up about 3% for 1989.

The economy is based on sugarcane, bananas, tourism, and light industry. Agriculture accounts for about 7% of GDP and the small industrial sector for 10%. Sugar production has declined, with most of the sugarcane now used for the production of rum. Banana exports are increasing, however, going mostly to France. The bulk of meat, vegetable, and grain requirements must be imported, contributing to a chronic trade deficit that requires large annual transfers of aid from France.

Tourism has become more important than agricultural exports as a source of foreign exchange. The majority of the work force is employed in the service sector and in administration. In 1984 the annual per capita income was relatively high at $3,650. During 1985 the unemployment rate was between 25% and 30% and was particularly severe among younger workers.

The economy is small and open with economic activity centered on tourism and construction. Tourism is the most important sector and accounted for 20% of GDP in 1986. Agriculture accounted for about 4% of GDP and industry 9%. The economy is heavily dependent on imports, making it vulnerable to fluctuations in world prices. Exports consist mainly of electronic parts sold to the US.

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Tourism, petroleum refining, and offshore finance are the mainstays of the economy. The islands enjoy a comparatively high per capita income and a well-developed infrastructure compared with other countries in the region. Unlike many Latin American countries, the Netherlands Antilles has avoided large international debt. Almost all consumer and capital goods are imported, with the US being the major supplier. The economy has suffered somewhat in recent years because of the depressed state of the world oil market and declining tax revenues.

In 1983 the drop in oil prices led to the devaluation of the Venezuelan bolivar, which ended a substantial flow of Venezuelan tourists to the islands. As a result of a decline in tax revenues, the government has been seeking financial support from the Netherlands.

Government control of the economy historically has been extensive, although the new government has pledged to reduce it. The financial system is directly controlled by the state, which also regulates wholesale purchasing, production, sales, foreign trade, and distribution of most goods. Over 50% of the agricultural and industrial firms are state owned. Sandinista economic policies and the war have produced a severe economic crisis.

The foundation of the economy continues to be the export of agricultural commodities, largely coffee and cotton. Farm production fell by roughly 7% in 1989, the fifth successive year of decline. The agricultural sector employs 44% of the work force and accounts for 23% of GDP and 86% of export earnings. Industry, which employs 13% of the work force and contributes 26% to GDP, showed a sharp drop of - 23% in 1988 and remains below pre-1979 levels.

External debt is one of the highest in the world on a per capita basis. In 1989 the annual inflation rate was 1,700%, down from a record 16,000% in 1988. Shortages of basic consumer goods are widespread.

The GDP contracted an estimated 7.5% in 1989, following a drop of 20% in 1988. Political instability, lack of credit, and the erosion of business confidence prompted declines of 20-70% in the financial, agricultural, commercial, manufacturing, and construction sectors between 1987 and 1989. Transits through the Panama Canal were off slightly, as were toll revenues. Unemployment remained about 23% during 1989. Imports of foodstuffs and crude oil increased during 1989, but capital goods imports continued their slide. Exports were widely promoted by Noriega trade delegations, but sales abroad remained stagnant.

Puerto Rico has one of the most dynamic economies in the Caribbean region. Industry has surpassed agriculture as the primary sector of economic activity and income. Encouraged by duty-free access to the US and by tax incentives, US firms have invested heavily in Puerto Rico since the 1970s. Important new industries include pharmaceuticals, electronics, textiles, petrochemicals, and processed foods. Sugar production has lost out to dairy production and other livestock products as the main source of income in the agricultural sector. Tourism has traditionally been an important source of income for the island.

The economy has historically depended on the growing and processing of sugarcane and on remittances from overseas workers. In recent years, tourism and export-oriented manufacturing have assumed larger roles.

Since 1983 the economy has shown an impressive average annual growth rate of almost 5% because of strong agricultural and tourist industry sectors. There is also an expanding industrial base supported by foreign investment in manufacturing and other activities, such as in data processing. The economy, however, remains vulnerable because the important agricultural sector is dominated by banana production. St. Lucia is subject to periodic droughts and/or tropical storms, and its protected market agreement with the UK for bananas may end in 1992.

Agriculture, dominated by banana production, is the most important sector of the economy, providing employment for over 60% of the labor force and contributing about 20% to GDP. The services sector is next in importance, based mostly on a growing tourist industry. The economy continues to have a high unemployment rate of 30% because of an overdependence on the weather-plagued banana crop as a major export earner. Government progress toward diversifying into new industries has been relatively unsuccessful.

Trinidad and Tobago's petroleum-based economy has been in decline since 1982. During the first half of the 1980s, the petroleum sector accounted for nearly 80% of export earnings, 40% of government revenues, and almost 25% of GDP. In recent years, however, the economy has suffered because of the sharp fall in the price of oil. The government, in response to the revenue loss, pursued a series of austerity measures that pushed the unemployment rate to 22% in 1988.

Agriculture employs only about 11% of the labor force and produces less than 3% of GDP. Since this sector is small, it has been unable to absorb the large numbers of the unemployed. The government currently seeks to diversify its export base.

The economy is based on fishing, tourism, and offshore banking. Subsistence farming--corn and beans--exists only on the Caicos Islands, so that most foods, as well as nonfood products, must be imported.

Tourism is the primary economic activity, accounting for more than 70% of GDP and 70% of employment. The manufacturing sector consists of textile, electronics, pharmaceutical, and watch assembly plants. The agricultural sector is small with most food imported. International business and financial services are a small but growing component of the economy. The world's largest petroleum refinery is at St. Croix.

As the poorest country in Europe, Albania's development lags behind even the least favored areas of the Yugoslav economy. The Stalinist-type economy operates on the principles of central planning and state ownership of the means of production. In recent years Albania has implemented limited economic reforms to stimulate its lagging economy, although they do not go nearly so far as current reforms in the USSR and Eastern Europe.

Attempts at self-reliance and a policy of not borrowing from international lenders--sometimes overlooked in recent years--have greatly hindered the development of a broad economic infrastructure. Albania, however, possesses considerable mineral resources and is largely self-sufficient in food. Numerical estimates of Albanian economic activity are subject to an especially wide margin of error because the government is isolated and closemouthed.

The mainstay of Andorra's economy is tourism. An estimated 12 million tourists visit annually, attracted by Andorra's duty-free status and by its summer and winter resorts. Agricultural production is limited by a scarcity of arable land, and most food has to be imported. The principal livestock activity is sheep raising. Manufacturing consists mainly of cigarettes, cigars, and furniture. The rapid pace of European economic integration is a potential threat to Andorra's advantages from its duty-free status.

Austria boasts a prosperous and stable capitalist economy with a sizable proportion of nationalized industry and extensive welfare benefits. Thanks to an excellent raw material endowment, a technically skilled labor force, and strong links with West German industrial firms, Austria has successfully occupied specialized niches in European industry and services (tourism, banking) and produces almost enough food to feed itself with only 8% of the labor force in agriculture.

Living standards are roughly comparable with the large industrial countries of Western Europe. Problems for the l990s include an aging population and the struggle to keep welfare benefits within budget capabilities.

This small private-enterprise economy has capitalized on its central geographic location, highly developed transport network, and diversified industrial and commercial base. Industry is concentrated mainly in the populous Flemish area in the north, although the government is encouraging reinvestment in the southern region of Walloon. With few natural resources Belgium must import essential raw materials, making its economy closely dependent on the state of world markets.

In 1988 over 70% of trade was with other EC countries. During the period 1986-88 the economy profited from falling oil prices and a lower dollar, which helped to improve the terms of trade. Real GDP grew by an average of 3.5% in 1986-89, up from 1.5% in 1985. However, a large budget deficit and 10% unemployment cast a shadow on the economy.

Growth in the sluggish Bulgarian economy fell to the 2% annual level in the 1980s, and by 1989 Sofia's foreign debt had skyrocketed to $10 billion--giving a debt service ratio of more than 40% of hard currency earnings. The post-Zhivkov regime faces major problems of renovating an aging industrial plant, keeping abreast of rapidly unfolding technological developments, investing in additional energy capacity (the portion of electric power from nuclear energy reached 37% in 1988), and motivating workers, in part by giving them a share in the earnings of their enterprises.

A major decree of January 1989 summarized and extended the government's economic restructuring efforts, which include a partial decentralization of controls over production decisions and foreign trade. The new regime promises more extensive reforms and eventually a market economy. But the ruling group cannot (so far) bring itself to give up ultimate control over economic affairs exercised through the vertical Party/ministerial command structure.

Reforms have not led to improved economic performance, in particular the provision of more and better consumer goods. A further blow to the economy was the exodus of 310,000 ethnic Turks in mid-1989, which caused temporary shortages of skilled labor in glassware, aluminum, and other industrial plants and in tobacco fields.

Czechoslovakia is highly industrialized and has a well-educated and skilled labor force. Its industry, transport, energy sources, banking, and most other means of production are state owned. The country is deficient, however, in energy and many raw materials. Moreover, its aging capital plant lags well behind West European standards. Industry contributes over 50% to GNP and construction 10%. About 95% of agricultural land is in collectives or state farms.

The centrally planned economy has been tightly linked in trade (80%) to the USSR and Eastern Europe. Growth has been sluggish, averaging less than 2% in the period 1982-89. GNP per capita ranks next to the GDR as the highest in the Communist countries. As in the rest of Eastern Europe, the sweeping political changes of 1989 have been disrupting normal channels of supply and compounding the government's economic problems. Czechoslovakia is beginning the difficult transition from a command to a market economy.

This modern economy features high-tech agriculture, up-to-date small-scale and corporate industry, extensive government welfare measures, comfortable living standards, and high dependence on foreign trade. Growth in output, however, has been sluggish in 1987-89, and unemployment in early 1989 stood at 9.6% of the labor force. The government is trying to revitalize growth in preparation for the economic integration of Europe in 1992.

The Faroese enjoy the high standard of living characteristic of the Danish and other Scandinavian economies. Fishing is the dominant economic activity. It employs over 25% of the labor force, accounts for about 25% of GDP, and contributes over 80% to export revenues. A handicraft industry employs about 20% of the labor force. Because of cool summers agricultural activities are limited to raising sheep and to potato and vegetable cultivation. There is a labor shortage, and immigrant workers accounted for 5% of the work force in 1989. Denmark annually subsidizes the economy, perhaps on the order of 15% of GDP.

Finland has a highly industrialized, largely free market economy, with per capita output nearly three-fourths the US figure. Its main economic force is the manufacturing sector--principally the wood, metals, and engineering industries. Trade is important, with the export of goods representing about 25% of GNP. Except for timber and several minerals, Finland depends on imported raw materials, energy, and some components of manufactured goods.

Because of the climate, agricultural development is limited to maintaining self-sufficiency in basic commodities. Economic prospects are generally bright, the main shadow being the increasing pressures on wages and prices.

One of the world's most developed economies, France has substantial agricultural resources and a highly diversified modern industrial sector. Large tracts of fertile land, the application of modern technology, and subsidies have combined to make it the leading agricultural producer in Western Europe. France is largely self-sufficient in agricultural products and is a major exporter of wheat and dairy products. The industrial sector generates about one-third of GDP and employs about one-third of the work force.

During the period 1982-86 economic growth was sluggish, averaging only 1.4% annually. This trend was reversed by late 1987, however, with a strong expansion of consumer demand, followed by a surge in investment. The economy has had difficulty generating enough jobs for new entrants into the labor force, resulting in a high unemployment rate, but the upward trend in growth recently pushed the jobless rate below 10%. The steadily advancing economic integration within the European Community is a major force affecting the fortunes of the various economic sectors.

The GDR is moving rapidly away from its centrally planned economy. As the 1990s begin, economic integration with West Germany appears inevitable, beginning with the establishment of a common currency. The opening of the border with the FRG in late 1989 and the continuing emigration of hundreds of thousands of skilled workers had brought growth to a standstill by yearend 1989. Features of the old economic regime that will quickly change: (a) the collectivization of 95% of East German farms; (b) state ownership of nearly all transportation facilities, industrial plants, foreign trade organizations, and financial institutions; (c) the 65% share in trade of the USSR and other CEMA countries; and (d) the detailed control over economic details exercised by Party and state.

Once integrated into the thriving West German economy, the area will have to stem the outflow of workers and renovate the obsolescent industrial base. After an initial readjustment period, living standards and quality of output will steadily rise toward West German levels.

West Germany, a major economic power and a leading exporter, has a highly urbanized and skilled population that enjoys excellent living standards and comprehensive social welfare benefits. The FRG is poor in natural resources, coal being the most important mineral. The FRG's comparative advantage lies in the technologically advanced production stages. Thus manufacturing and services dominate economic activity, and raw materials and semimanufactures constitute a large proportion of imports.

In 1988 manufacturing accounted for 35% of GDP, with other sectors contributing lesser amounts. The major economic problem in 1989 is persistent unemployment of over 8%. The FRG is well poised to take advantage of the increasing economic integration of the European Community. The dramatic opening of the boundary with East Germany in late 1989 poses new economic challenges that could tax even this powerful economy.

The economy depends heavily on British defense expenditures, revenue from tourists, fees for services to shipping, and revenues from banking and finance activities. Because more than 70% of the economy is in the public sector, changes in government spending have a major impact on the level of employment. Construction workers are particularly affected when government expenditures are cut.

Greece has a mixed capitalistic economy with the basic entrepreneurial system overlaid in 1981-89 by a socialist-left-government that enlarged the public sector and became the nation's largest employer. Like many other Western economies, Greece suffered severely from the global oil price hikes of the 1970s, annual GDP growth plunging from 8% to 2% in the 1980s, and inflation, unemployment, and budget deficits rising sharply.

The fall of the socialist government in 1989 and the inability of the conservative opposition to muster a clear majority have led to business uncertainty and the continued prospects for lackluster economic performance. Once the political situation is sorted out, Greece will have to face the challenges posed by the steadily increasing integration of the European Community, including the progressive lowering of tariff barriers. Tourism continues as a major industry, providing a vital offset to the sizable commodity trade deficit.

Tourism is a major source of revenue. Other economic activity includes financial services, breeding the world-famous Guernsey cattle, and growing tomatoes and flowers for export.

The economy is supported financially by contributions (known as Peter's pence) from Roman Catholics throughout the world, the sale of postage stamps, tourist mementos, fees for admission to museums, and the sale of publications.

Hungary's postwar Communist government spurred the movement from a predominantly agricultural to an industrialized economy. The share of the labor force in agriculture dropped from over 50% in 1950 to under 20% in 1989. Agriculture nevertheless remains an important sector, providing sizable export earnings and meeting domestic food needs. Industry accounts for about 40% of GNP and 30% of employment. Nearly three-fourths of foreign trade is with the USSR and Eastern Europe.

Low rates of growth reflect the inability of the Soviet-style economy to modernize capital plant and motivate workers. GNP grew about 1% in 1988 and declined by 1% in 1989. Since 1985 external debt has more than doubled, to nearly $20 billion. In recent years Hungary has moved further than any other East European country in experimenting with decentralized and market-oriented enterprises. These experiments have failed to jump-start the economy because of: limitations on funds for privatization; continued subsidization of insolvent state enterprises; and the leadership's reluctance to implement sweeping market reforms that would cause additional social dislocations in the short term.

The economy is small, open, and trade dependent. Agriculture, once the most important sector, is now dwarfed by industry, which accounts for 35% of GNP and about 80% of exports and employs 20% of the labor force. The government has successfully reduced the rate of inflation from double-digit figures in the late 1970s to about 4% in 1989. In 1987, after years of deficits, the balance of payments was brought into the black. Unemployment, however, is a serious problem. A 1989 unemployment rate of 17.7% placed Ireland along with Spain as the countries with the worst jobless records in Western Europe.

Offshore banking, manufacturing, and tourism are key sectors of the economy. The government's policy of offering incentives to high-technology companies and financial institutions to locate on the island has paid off in expanding employment opportunities in high-income industries. As a result, agriculture and fishing, once the mainstays of the economy, have declined in their shares of GNP. Banking now contributes over 20% to GNP and manufacturing about 15%. Trade is mostly with the UK.

Since World War II the economy has changed from one based on agriculture into a ranking industrial economy, with approximately the same total and per capita output as France and the UK. The country is still divided into a developed industrial north, dominated by large private companies and state enterprises and an undeveloped agricultural south. Services account for 58% of GDP, industry 37%, and agriculture 5%. Most raw materials needed by industry and over 75% of energy requirements must be imported.

The economic recovery that began in mid-1983 has continued through 1989, with the economy growing at an annual average rate of 3%. For the 1990s, Italy faces the problems of refurbishing a tottering communications system, curbing the increasing pollution in major industrial centers, and adjusting to the new competitive forces accompanying the ongoing economic integration of the European Community.

The economy is based largely on financial services, agriculture, and tourism. Potatoes, cauliflower, tomatoes, and especially flowers are important export crops, shipped mostly to the UK. The Jersey breed of dairy cattle is known worldwide and represents an important export earner. Milk products go to the UK and other EC countries. In 1986 the finance sector overtook tourism as the main contributor to GDP, accounting for 40% of the island's output.

In recent years the government has encouraged light industry to locate in Jersey, with the result that an electronics industry has developed alongside the traditional manufacturing of knitwear. All raw material and energy requirements are imported, as well as a large share of Jersey's food needs.

The prosperous economy is based primarily on small-scale light industry and some farming. Industry accounts for 54% of total employment, the service sector 42% (mostly based on tourism), and agriculture and forestry 4%. The sale of postage stamps to collectors is estimated at $10 million annually and accounts for 10% of revenues. Low business taxes (the maximum tax rate is 20%) and easy incorporation rules have induced about 25,000 holding or so-called letter box companies to establish nominal offices in Liechtenstein.

Such companies, incorporated solely for tax purposes, provide an additional 30% of state revenues. The economy is tied closely to that of Switzerland in a customs union, and incomes and living standards parallel those of the more prosperous Swiss groups.

The stable economy features moderate growth, low inflation, and negligible unemployment. Agriculture is based on small but highly productive family-owned farms. The industrial sector, until recently dominated by steel, has become increasingly more diversified, particularly toward high-technology firms. During the past decade growth in the financial sector has more than compensated for the decline in steel. Services, especially banking, account for a growing proportion of the economy. Luxembourg participates in an economic union with Belgium on trade and most financial matters and is also closely connected economically with the Netherlands.

Significant resources are limestone, a favorable geographic location, and a productive labor force. Malta produces only about 20% of its food needs, has limited freshwater supplies, and has no domestic energy sources. Consequently, the economy is highly dependent on foreign trade and services. Manufacturing and tourism are the largest contributors to the economy. Manufacturing accounts for about 30% of GDP, with the textile and clothing industry a major contributor. In 1988 inflation was held to a low 0.9%. Per capita GDP at $5,100 places Malta in the middle-income range of the world's nations.

No data are published on the economy. Monaco, situated on the French Mediterranean coast, is a popular resort, attracting tourists to its casino and pleasant climate. The Principality has successfully sought to diversify into services and small, high-value-added, non-polluting 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.

About 50% of Monaco's annual revenue comes from value-added taxes on hotels, banks, and the industrial sector; about 25% of revenue comes from tourism. Living standards are high, that is, roughly comparable to those in prosperous French metropolitan suburbs.

This highly developed and affluent economy is based on private enterprise. The government makes its presence felt, however, through many regulations, permit requirements, and welfare programs affecting most aspects of economic activity. The trade and financial services sector contributes over 50% of GDP. Industrial activity, including construction, provides about 25% of GDP, and is led by the food-processing, oil-refining, and metal-working industries.

The highly mechanized agricultural sector employs only 6% of the labor force, but provides large surpluses for export and the domestic food-processing industry. An unemployment rate of over 8.6% and a sizable budget deficit are currently the most serious economic problems.

Norway is a prosperous capitalist nation with the resources to finance extensive welfare measures. Since 1975 exploitation of large crude oil and natural gas reserves has helped achieve an average annual growth of roughly 4%, the third-highest among OECD countries. Growth slackened in 1987-88 because of the sharp drop in world oil prices and a slowdown in consumer spending, but picked up again in 1989. Future economic issues involve the aging of the population, the increased economic integration of Europe, and the balance between private and public influence in economic decisions.

The economy, except for the agricultural sector, had followed the Soviet model of state ownership and control of the country's productive assets. About 75% of agricultural production had come from the private sector and the rest from state farms. The economy has presented a picture of moderate but slowing growth against a background of underlying weaknesses in technology and worker motivation. GNP increased between 3% and 6% annually during the period 1983-1986, but grew only 2.5% and 2.1% in 1987 and 1988, respectively.

Output dropped by 1.5% in 1989. The inflation rate, after falling sharply from the 1982 peak of 100% to 22% in 1986, rose to a galloping rate of 640% in 1989. Shortages of consumer goods and some food items worsened in 1988-89. Agricultural products and coal have remained the biggest hard currency earners, but manufactures are increasing in importance. Poland, with its hard currency debt of approximately $40 billion, is severely limited in its ability to import much-needed hard currency goods.

The sweeping political changes of 1989 disrupted normal economic channels and exacerbated shortages. In January 1990, the new Solidarity-led government adopted a cold turkey program for transforming Poland to a market economy. The government moved to eliminate subsidies, end artificially low prices, make the zloty convertible, and, in general, halt the hyperinflation. These financial measures are accompanied by plans to privatize the economy in stages. Substantial outside aid will be needed if Poland is to make a successful transition in the 1990s.

During the past four years, the economy has made a sustained recovery from the severe recession of 1983-85. The economy grew by 4.7% in 1987, 4.1% in 1988, and 3.5% in 1989, largely because of strong domestic consumption and investment spending. Unemployment has declined for the third consecutive year, but inflation continues to be about three times the European Community average. The government is pushing economic restructuring and privatization measures in anticipation of the 1992 European Community timetable to form a single large market in Europe.

Industry, which accounts for one-third of the labor force and generates over half the GNP, suffers from an aging capital plant and persistent shortages of energy. In recent years the agricultural sector has had to contend with drought, mismanagement, and shortages of inputs. Favorable weather in 1989 helped produce a good harvest, although far below government claims. The new government is slowly loosening the tight central controls of Ceausescu's command economy.

It has instituted moderate land reforms, with close to one-third of cropland now in private hands, and it has allowed changes in prices for private agricultural output. Also, the new regime is permitting the establishment of private enterprises of 20 or fewer employees in services, handicrafts, and small-scale industry. Furthermore, the government has halted the old policy of diverting food from domestic consumption to hard currency export markets. So far, the government does not seem willing to adopt a thorough-going market system.

The economy relies heavily on the tourist industry as a source of revenue. More than 2 million tourists visit each year, contributing about 60% to GDP. The sale of postage stamps to foreign collectors is another important income producer. The manufacturing sector employs nearly 40% of the labor force and agriculture less than 4%. The per capita level of output and standard of living are comparable to northern Italy.

The first five years of perestroyka (economic restructuring) have undermined the institutions and processes of the Soviet command economy without replacing them with efficiently functioning markets. The initial reforms featured greater authority for enterprise managers over prices, wages, product mix, investment, sources of supply, and customers. But in the absence of effective market discipline, the result was the disappearance of low-price goods, excessive wage increases, an even larger volume of unfinished construction projects, and, in general, continued economic stagnation.

The Gorbachev regime has made at least four serious errors in economic policy in these five years: the unpopular and short-lived anti-alcohol campaign; the initial cutback in imports of consumer goods; the failure to act decisively for the privatization of agriculture; and the buildup of a massive overhang of unspent rubles in the hands of households and enterprises. In October 1989, a top economic adviser, Leonid Abalkin presented an ambitious but reasonable timetable for the conversion to a partially privatized market system in the 1990s.

In December 1989, however, Premier Ryzhkov's conservative approach prevailed, namely, the contention that a period of retrenchment was necessary to provide a stable financial and legislative base for launching further reforms. Accordingly, the new strategy was to put the reform process on hold in 1990-92 by recentralizing economic authority and to placate the rank-and-file through sharp increases in consumer goods output.

In still another policy twist, the leadership in early 1990 was considering a marked speedup in the marketization process. Because the economy is caught in between two systems, there was in 1989 an even greater mismatch between what was produced and what would serve the best interests of enterprises and households. Meanwhile, the seething nationality problems have been dislocating regional patterns of economic specialization and pose a further major threat to growth prospects over the next few years.

This Western capitalistic economy has done well since Spain joined the European Economic Community in 1986. With increases in real GNP of 5.5% in 1987 and about 5% in 1988 and 1989, Spain has been the fastest growing member of the EC. Increased investment--both domestic and foreign--has been the most important factor pushing the economic expansion. Inflation moderated to 4.8% in 1988, but an overheated economy caused inflation to reach an estimated 7% in 1989. Another economic problem facing Spain is an unemployment rate of 16.5%, the highest in Europe.

Aided by a long period of peace and neutrality during World War I through World War II, Sweden has achieved an enviable standard of living under a mixed system of high-tech capitalism and extensive welfare benefits. It has essentially full employment, a modern distribution system, excellent internal and external communications, and a skilled and intelligent labor force. Timber, hydropower, and iron ore constitute the resource base of an economy that is heavily oriented toward foreign trade.

Privately owned firms account for about 90% of industrial output, of which the engineering sector accounts for 50% of output and exports. As the 1990s open, however, Sweden faces serious economic problems: long waits for adequate housing, the decay of the work ethic, and a loss of competitive edge in international markets.

Switzerland's economic success is matched in few, if any, other nations. Per capita output, general living standards, education and science, health care, and diet are unsurpassed in Europe. Inflation remains low because of sound government policy and harmonious labor-management relations. Unemployment is negligible, a marked contrast to the larger economies of Western Europe. This economic stability helps promote the important banking and tourist sectors.

Since World War II, Switzerland's economy has adjusted smoothly to the great changes in output and trade patterns in Europe and presumably can adjust to the challenges of the 1990s, in particular, the further economic integration of Western Europe and the amazingly rapid changes in East European political/economic prospects.

The UK is one of the world's great trading powers and financial centers, and its economy ranks among the four largest in Europe. The economy is essentially capitalistic with a generous admixture of social welfare programs and government ownership. Over the last decade the Thatcher government has halted the expansion of welfare measures and has promoted extensive reprivatization of the government economic sector. Agriculture is intensive, highly mechanized, and efficient by European standards, producing about 60% of food needs with only 1% of the labor force.

Industry is a mixture of public and private enterprises, employing about 24% of the work force and generating 22% of GDP. The UK is an energy-rich nation with large coal, natural gas, and oil reserves; primary energy production accounts for 12% of GDP, one of the highest shares of any industrial nation. Following the recession of 1979-81, the economy has enjoyed the longest period of continuous economic growth it has had during the last 30 years.

During the period 1982-89 real GDP grew by about 25%, while the inflation rate of 14% was nearly halved. Between 1986 and 1989 unemployment fell from 11% to about 6%. As a major trading nation, the UK will continue to be greatly affected by: world boom or recession; swings in the international oil market; productivity trends in domestic industry; and the terms on which the economic integration of Europe proceeds.

Tito's reform programs 20 years ago changed the Stalinist command economy to a decentralized semimarket system but a system that the rigid, ethnically divided political structure ultimately could not accommodate. A prominent feature of the reforms was the establishment of workers' self-management councils in all large plants, which were to select managers, stimulate production, and divide the proceeds. The general result of these reforms has been rampant wage-price inflation, substantial rundown of capital plant, consumer shortages, and a still larger income gap between the poorer southern regions and the relatively affluent northern provinces of Hrvatska and Slovenija.

In 1988-89 the beleaguered central government has been reforming the reforms, trying to create an open market economy with still considerable state ownership of major industrial plants. These reforms have been moving forward with the advice and support of the International Monetary Fund through a series of tough negotiations. Self-management supposedly is to be replaced by the discipline of the market and by fiscal austerity, ultimately leading to a stable dinar.

However, strikes in major plants, hyperinflation, and interregional political jousting have held back progress. According to US economic advisers, only a highly unlikely combination of genuine privatization, massive Western economic investment and aid, and political moderation can salvage this economy.

The oil price decline in recent years has had an adverse impact on the economy. Petroleum production and processing account for about 85% of export receipts, 60% of government revenues, and 20% of GDP. In 1986 soft oil-market conditions led to a 5% drop in GDP, in sharp contrast wit the 5% average annual growth rate during the early 1980s. The slowdown in economic activity, however, has helped to check the inflation of the 1970s. The government's past economic diversification efforts have moderated the severity of the downturn but failed to offset oil and gas revenue losses.

These data are for the area controlled by the Republic of Cyprus (information on the northern Turkish-Cypriot area is sparse). The economy is small, diversified, and prosperous. Industry contributes about 28% to GDP and employs 35% of the labor force, while the service sector contributes about 55% to GDP and employs 40% of the labor force. Rapid growth in exports of agricultural and manufactured products and in tourism have played important roles in the average 6% rise in GDP in recent years. While this growth put considerable pressure on prices and the balance of payments, the inflation rate has remained low and the balance-of-payments deficit manageable.

Nearly half of the labor force of the Gaza Strip is employed across the border by Israeli industrial, construction, and agricultural enterprises, with worker transfer funds accounting for 40% of GNP in 1989. The once dominant agricultural sector now contributes only 13% to GNP, about the same as that of the construction sector, and industry accounts for 7%. Gaza depends upon Israel for 90% of its imports and as a market for 80% of its exports. Unrest in the territory in 1988-89 (intifadah) has raised unemployment and substantially lowered the incomes of the population.

Since the 1979 revolution, the banks, petroleum industry, transportation, utilities, and mining have been nationalized, but the new five-year plan--the first since the revolution--passed in January 1990, calls for the transfer of many government-controlled enterprises to the private sector. War-related disruptions, massive corruption, mismanagement, demographic pressures, and ideological rigidities have kept economic growth at depressed levels.

Oil accounts for 90% of export revenues. A combination of war damage and low oil prices brought a 2% drop in GNP in 1988. GNP probably rose slightly in 1989, considerably short of the 3.4% population growth rate in 1989. Heating oil and gasoline are rationed. Agriculture has suffered from the war, land reform, and shortages of equipment and materials. The five-year plan seeks to reinvigorate the economy by increasing the role of the private sector, boosting nonoil income, and securing foreign loans. The plan is overly ambitious but probably will generate some short-term relief.

The Bathist regime engages in extensive central planning and management of industrial production and foreign trade while leaving some small-scale industry and services and most agriculture to private enterprise. The economy is dominated by the oil sector, which provides about 95% of foreign exchange earnings. Since the early 1980s financial problems, caused by war expenditures and damage to oil export facilities by Iran, have led the government to implement austerity measures and to reschedule foreign debt payments.

Oil exports have gradually increased with the construction of new pipelines. Agricultural development remains hampered by labor shortages, salinization, and dislocations caused by previous land reform and collectivization programs. The industrial sector, although accorded high priority by the government, is under financial constraints. New investment funds are generally allocated only to projects that result in import substitution or foreign exchange earnings.

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Israel has a market economy with substantial government participation. It depends on imports for crude oil, food, grains, raw materials, and military equipment. Despite limited natural resources, Israel has developed its agriculture and industry sectors on an intensive scale over the past 20 years. Industry accounts for about 23% of the labor force, agriculture for 6%, and services for most of the balance. Diamonds, high-technology machinery, and agricultural products (fruits and vegetables) are the biggest export earners.

The balance of payments has traditionally been negative, but is offset by large transfer payments and foreign loans. Nearly two-thirds of Israel's $16 billion external debt is owed to the US, which is its major source for economic and military aid. To earn needed foreign exchange, Israel must continue to exploit high-technology niches in the international market, such as medical scanning equipment. In 1987 the economy showed a 5.2% growth in real GNP, the best gain in nearly a decade; in 1988-89 the gain was only 1% annually, largely because of the economic impact of the Palestinian uprising (intifadah). Inflation dropped from an annual rate of over 400% in 1984 to about 16% in 1987-88 without any major increase in unemployment.

Jordan was a secondary beneficiary of the oil boom of the late 1970s and early 1980s, when its GNP growth averaged 10-12%. Recent years, however, have witnessed a sharp reduction in cash aid from Arab oil-producing countries and in worker remittances, with growth averaging 1-2%. Imports--mainly oil, capital goods, consumer durables, and foodstuffs--have been outstripping exports by roughly $2 billion annually, the difference being made up by aid, remittances, and borrowing.

In 1989 the government pursued policies to encourage private investment, curb imports of luxury goods, promote exports, reduce the budget deficit, and, in general, reinvigorate economic growth. Success will depend largely on exogenous forces, such as the absence of drought and a pickup in outside support. Down the road, the completion of the proposed Unity Dam on the Yarmuk is vital to meet rapidly growing requirements for water.

The oil sector dominates the economy. Of the countries in the Middle East, Kuwait has oil reserves second only to those of Saudi Arabia. Earnings from hydrocarbons generate over 90% of both export and government revenues and contribute about 40% to GDP. Most of the nonoil sector is dependent upon oil-derived government revenues to provide infrastructure development and to promote limited industrial diversification. The economy is heavily dependent upon foreign labor--Kuwaitis account for less than 20% of the labor force. The early years of the Iran-Iraq war pushed Kuwait's GDP well below its 1980 peak; however, during the period 1986-88, GDP increased each year, rising to 5% in 1988.

Severe factional infighting in 1989 has been destroying physical property, interrupting the established pattern of economic affairs, and practically ending chances of restoring Lebanon's position as a Middle Eastern entrepot and banking hub. The ordinary Lebanese citizen struggles to keep afloat in an environment of physical danger, high unemployment, and growing shortages. The central government's ability to collect taxes has suffered greatly from militia control and taxation of local areas.

As the civil strife persists, the US dollar has become more and more the medium of exchange. Transportation, communications, and other parts of the infrastructure continue to deteriorate. Family remittances, foreign political money going to the factions, international emergency aid, and a small volume of manufactured exports help prop up the battered economy. Prospects for 1990 are grim, with expected further declines in economic activity and living standards.

Economic performance is closely tied to the fortunes of the oil industry. Petroleum accounts for nearly all export earnings, about 70% of government revenues, and more than 50% of GDP. Oman has proved oil reserves of 4 billion barrels, equivalent to about 20 years' supply at the current rate of extraction. Although agriculture employs a majority of the population, urban centers depend on imported food.

Oil is the backbone of the economy and accounts for 90% of export earnings and more than 80% of government revenues. Proved oil reserves of 3.3 billion barrels should ensure continued output at current levels for about 25 years. Oil has given Qatar a per capita GDP of about $17,000, among the highest in the world.

By far the most important economic activity is the production of petroleum and petroleum products. The petroleum sector accounts for about 85% of budget revenues, 80% of GDP, and almost all export earnings. Saudi Arabia has the largest reserves of petroleum in the world, is the largest exporter of petroleum, and plays a leading role in OPEC. Oil wealth has provided a per capita GDP that is comparable to most industrialized countries. Saudi Arabia is one of the few countries where consumer prices have been dropping or showing little change in recent years.

Syria's rigidly structured Bathist economy is turning out roughly the same amount of goods in 1989 as in 1983, when the population was 20% smaller. Economic difficulties are attributable, in part, to severe drought in several recent years, costly but unsuccessful attempts to match Israel's military strength, a falloff in Arab aid, and insufficient foreign exchange earnings to buy needed inputs for industry and agriculture.

Socialist policy, embodied in a thicket of bureaucratic regulations, in many instances has driven away or pushed underground the mercantile and entrepreneurial spirit for which Syrian businessmen have long been famous. Two bright spots: a sizable number of villagers have benefited from land redistribution, electrification, and other rural development programs; and a recent find of light crude oil has enabled Syria to cut back its substantial imports of light crude. A long-term concern is the additional drain of upstream Euphrates water by Turkey when its vast dam and irrigation projects are completed toward the end of the 1990s.

The economic reforms that Turkey launched in 1980 continue to bring an impressive stream of benefits. The economy has grown steadily since the early 1980s, with real growth in per capita GDP increasing more than 6% annually. Agriculture remains the most important economic sector, employing about 60% of the labor force, accounting for almost 20% of GDP, and contributing about 25% to exports. Impressive growth in recent years has not solved all of the economic problems facing Turkey.

Inflation and interest rates remain high, and a large budget deficit will continue to provide difficulties for a country undergoing a substantial transformation from a centrally controlled to a free market economy. The government has launched a multimillion-dollar development program in the southeastern region, which includes the building of a dozen dams on the Tigris and Euphrates rivers to generate electric power and irrigate large tracts of farmland. The planned tapping of huge quantities of Euphrates water has raised serious concern in the downstream riparian nations of Syria and Iraq.

The UAE has an open economy with one of the world's higher levels of income per capita. This wealth is based on oil and gas, and the fortunes of the economy fluctuate with the prices of those commodities. Since 1973, when petroleum prices shot up, the UAE has undergone a profound transformation from an impoverished region of small desert principalities to a modern state with a high standard of living. At present levels of production, crude oil reserves should last for over 100 years.

Economic progress in the West Bank has been hampered by Israeli military occupation and the effects of the Palestinian uprising. Industries using advanced technology or requiring sizable financial resources have been discouraged by a lack of financial resources and Israeli policy. Capital investment has largely gone into residential housing, not into productive assets that could compete with Israeli industry. A major share of GNP is derived from remittances of workers employed in Israel and neighboring Gulf states. Israeli reprisals against Palestinian unrest in the West Bank since 1987 have pushed unemployment up and lowered living standards.

The low level of domestic industry and agriculture make North Yemen dependent on imports for virtually all of its essential needs. Large trade deficits are made up for by remittances from Yemenis working abroad and foreign aid. Once self-sufficient in food production, the YAR is now a major importer. Land once used for export crops--cotton, fruit, and vegetables--has been turned over to growing qat, a mildly narcotic shrub chewed by Yemenis that has no significant export market. Oil export revenues started flowing in late 1987 and boosted 1988 earnings by about $800 million.

The PDRY is one of the poorest Arab countries, with a per capita GNP of about $500. A shortage of natural resources, a widely dispersed population, and an arid climate make economic development difficult. The economy has grown at an average annual rate of only 2-3% since the mid-1970s. The economy is organized along socialist lines, dominated by the public sector. Economic growth has been constrained by a lack of incentives, partly stemming from centralized control over production decisions, investment allocation, and import choices.

Bermuda enjoys one of the highest per capita incomes in the world, having successfully exploited its location by providing luxury tourist facilities and financial services. The tourist industry attracts more than 90% of its business from North America. The industrial sector is small, and agriculture is severely limited by a lack of suitable land. About 80% of food needs are imported.

As an affluent, high-tech industrial society, Canada today closely resembles the US in per capita output, market-oriented economic system, and pattern of production. Since World War II the impressive growth of the manufacturing, mining, and service sectors has transformed the nation from a largely rural economy into one primarily industrial and urban. In the 1980s Canada registered one of the highest rates of growth among the OECD nations, averaging about 4%. With its great natural resources, skilled labor force, and modern capital plant, Canada has excellent economic prospects.

In mid-1990, however, the long-simmering problems between English- and French-speaking areas became so acute that observers spoke openly of a possible split in the confederation; foreign investors were becoming edgy.

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Mexico's economy is a mixture of state-owned industrial plants (notably oil), private manufacturing and services, and both large-scale and traditional agriculture. In the 1980s Mexico experienced severe economic difficulties: the nation accumulated large external debts as world petroleum prices fell; rapid population growth outstripped the domestic food supply; and inflation, unemployment, and pressures to emigrate became more acute.

Growth in national output dropped from 8% in 1980 to 1.1% in 1988 and 2.5% in 1989. The US is Mexico's major trading partner, accounting for two-thirds of its exports and imports. After petroleum, border assembly plants and tourism are the largest earners of foreign exchange. The government, in consultation with international economic agencies, is implementing programs to stabilize the economy and foster growth.

The inhabitants have traditionally earned their livelihood by fishing and by servicing fishing fleets operating off the coast of Newfoundland. The economy has been declining, however, because the number of ships stopping at St. Pierre has steadily dropped over the years. In March 1989, an agreement between France and Canada set fish quotas for St. Pierre's trawlers fishing in Canadian and Canadian-claimed waters for three years. The agreement settles a longstanding dispute that had virtually brought fish exports to a halt. The islands are heavily subsidized by France. Imports come primarily from Canada.

The US has the most powerful and diversified economy in the world, with a per capita GNP of over $21,000, the largest among the major industrial nations. In 1989 the economy entered its eighth successive year of growth, the longest in peacetime history. The expansion has featured continued moderation in wage and consumer price increases, an unemployment rate of 5.2%, (the lowest in 10 years), and an inflation rate of 4.8%. On the negative side, the US enters the 1990s with massive budget and trade deficits, huge and rapidly rising medical costs, and inadequate investment in industrial capacity and economic infrastructure.

Economic development is strongly linked to the US, with which American Samoa does 90% of its foreign trade. Tuna fishing and tuna processing plants are the backbone of the private sector economy, with canned tuna the primary export. The tuna canneries are the second-largest employer, exceeded only by the government. Other economic activities include meat canning, handicrafts, dairy farming, and a slowly developing tourist industry. Tropical agricultural production provides little surplus for export.

Australia has a prosperous Western-style capitalist economy, with a per capita GNP comparable to levels in industrialized West European countries. Rich in natural resources, Australia is a major exporter of agricultural products, minerals, metals, and fossil fuels. Of the top 25 exports, 21 are primary products, so that, as happened during 1983-84, a downturn in world commodity prices can have a big impact on the economy. The government is pushing for increased exports of manufactured goods but competition in international markets will be severe.