Economic overview In 36 editions of 36.

In 1990 the world economy grew at an estimated 1.0%, considerably lower than the estimated 3.0% for 1989 and the 3.4% for 1988. The technologically advanced areas--North America, Japan, and Western Europe--together account for 67% of the gross world product (GWP) of $20.9 trillion; these developed areas grew in the aggregate at 2.3% in 1990. In contrast, output in the USSR and Eastern Europe fell an average of 5.2%; these countries account for 15% of GWP. Experience in the developing countries continued mixed, with the newly industrializing economies generally maintaining their rapid growth, and many others struggling with debt, rampant inflation, and inadequate investment.

This third group contributed 18% of GWP and grew on average 2.3% in 1990; output in this group is probably understated because of lack of data and the method of calculation used. The year 1990 witnessed continued political and economic upheavals in the USSR and Eastern Europe, which are in between systems, lacking both the rough discipline of the command economy and the institutions of the market economy. As for prospects in the 1990s, the addition of nearly 100 million people a year to an already overcrowded globe will exacerbate the problems of pollution, desertification, underemployment, epidemics, and famine.

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 and 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 proposing a major overhaul of the banking and financial systems, but to date has made little progress.

Subsistence agriculture provides the main livelihood for 80 to 90% of the population, but accounts for less than 15% 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 nonoil economy, and food has to be imported. For the long run, Angola has the advantage of rich natural resources, notably gold, diamonds, and arable land. To realize its economic potential Angola not only must secure domestic peace but also must reform government policies that have led to distortions and imbalances throughout the economy.

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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 40% 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 3% 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 1989. No other sector has experienced such growth, especially not agriculture, which is plagued by erratic rainfall and poor soils. The unemployment rate remains a problem at 25%.

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, accounts for about 15% of GDP.

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 depends 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 birthrate. The economy is service oriented, with commerce, transport, and public services accounting for 65% of GDP during the period 1985-88. Although nearly 70% of the population lives in rural areas, agriculture's share of GDP is only 16%; the fishing sector accounts for 4%. About 90% of food must be imported. The fishing potential, mostly lobster and tuna, is not fully exploited. In 1988 fishing represented only 3.5% of GDP. Cape Verde annually runs a high trade deficit, financed by remittances from emigrants and foreign aid.

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 experienced serious budgetary difficulties and balance-of-payments disequilibrium.

Despite the recent upsurge in oil prices, Cameroon's economic outlook is troubled. 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) had a per capita income of roughly $440 in 1990. 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. 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 burdened by the ravages of 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 48% 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 highly dependent on foreign aid, with its economy in trouble and many regions suffering from shortages. Oil companies are exploring areas north of Lake Chad and in the Doba basin in the south.

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 grants and 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 only 5% in 1988. Despite major investment in the tourist industry, which accounts for about 25% of GDP, growth has stagnated since 1983. A sluggish growth rate of 1.5% during 1985-90 has led to large budget deficits, declining incomes, and balance-of-payments difficulties.

In 1990, 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 only about $200, one of the lowest on the continent. The country's chronic economic problems worsened in 1990, with copper production down 20% to a 20-year low, inflation near 250% compared with 100% in 1987-89, and IMF and most World Bank support suspended until the institution of agreed-on changes.

Agriculture, a key sector of the economy, employs 75% of the population but generates under 25% of GDP. The main potential 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. 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.

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 1990.

The economy is based on service activities connected with the country's strategic location and status as a free trade zone in northeast Africa. 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 40% continues to be a major problem. Per capita consumption dropped an estimated 35% over the last five years with a population growth rate of 6% (including immigrants and refugees) and a recession.

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. The addition of 1 million people every seven months to Egypt's population 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, taking place under concessions offered to US, French, and Spanish firms, has been moderately successful, and some revenues from oil exports will begin rolling in by mid-1991.

The economy is based on subsistence agriculture, which occupies much of the labor force and contributes about 23% to GDP. Manufacturing, which includes a number of agroprocessing factories, accounts for another 26% 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 92% of its imports and to which it sends about 40% 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 60% of export earnings. The manufacturing sector is heavily dependent on inputs from the agricultural sector. Over 90% of large-scale industry, but less then 10% of agriculture, 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, was reversed in 1989 because of a near doubling of oil prices over their 1988 lows. In 1990 the economy continued to grow, but debt servicing problems are hindering economic advancement. The agricultural and industrial sectors are relatively underdeveloped, except for oil.

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 $230. About 75% of the population is engaged in crop production and livestock raising, which contributes 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 one-third of its food, all fuel, and most manufactured goods. Exports are concentrated on peanut products (about 75% of total value).

Supported by substantial international assistance, Ghana has been implementing a steady economic rebuilding program since 1983, including moves toward privatization and relaxation of government controls. Heavily dependent on cocoa, gold, and timber exports, economic growth is threatened by a poor cocoa harvest and higher oil prices in 1991. Rising inflation--unofficially estimated at 50%--could undermine Ghana's relationships with multilateral lenders.

Civil service wage increases and the cost of peacekeeping forces sent to Liberia are boosting government expenditures and undercutting structural adjustment reforms. Ghana opened a stock exchange in 1990.

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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 27% of GDP. Guinea possesses over 25% of theworld's bauxite reserves; exports of bauxite and alumina accounted for about 70% of total exports in 1989.

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 3.6% 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 4.9% in the 1986-90 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 ($153 million in 1989). The great majority of households gain their livelihoods from subsistence farming and migrant labor. 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 GDP rose from 6% in 1982 to 15% in 1989. Political and economic instability in South Africa raise uncertainties for Lesotho's economy, especially with respect to migrant worker remittances--over one-third of GDP.

Civil war during 1990 destroyed much of Liberia's economy, especially the infrastructure in and around Monrovia. Expatriate businessmen fled the country, taking capital and expertise with them. Many will not return. Richly endowed with water, mineral resources, forests, and a climate favorable to agriculture, Liberia had been a producer and exporter of basic products, while local manufacturing, mainly foreign owned, had been small in scope. Political instability threatens prospects for economic reconstruction and repatriation of some 750,000 Liberian refugees who fled to neighboring countries.

The socialist-oriented economy depends primarily upon revenues from the oil sector, which contributes practically all export earnings and about one-third of GNP. Since 1980, however, the sharp drop in oil prices and the resulting decline in export revenues have adversely affected economic development. In 1988 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. Windfall profits from the hike in world oil prices in late 1990 improved the foreign payments position and may permit Tripoli to ease austerity measures. The nonoil industrial and construction sectors, which account for about 22% of GDP, 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 18% 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 80% of the labor force, and contributing to more than 70% of total export earnings. Industry is largely confined to the processing of agricultural products and textile manufacturing; in 1990 it accounted for only 16% of GDP and employed 3% of the labor force. 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 $175. 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 1988-90 as a result of good weather and a broadly based economic adjustment effort by the government.

The economy depends on substantial inflows of economic assistance from the IMF, the World Bank, and individual donor nations. 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 70% 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 live 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 droughts in the 1970s and 1980s. 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. The nation's coastal waters are among the richest fishing areas in the world, but overexploitation by foreigners threatens this key source of revenue.

The country's first deepwater port opened near Nouakchott in 1986. In recent years, the droughts, the conflict with Senegal, rising energy costs, and economic mismanagement have resulted in a substantial buildup of foreign debt. The government now has begun the second stage of an economic reform program in consultation with the World Bank, the IMF, and major donor countries.

The economy is based on sugar, manufacturing (mainly textiles), and tourism. Sugarcane is grown on about 90% of the cultivated land area and accounts for 32% of export earnings. The government's development strategy is centered on industrialization (with a view to exports), agricultural diversification, and tourism. Economic performance in 1989 was impressive, with 5.0% real growth 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.

The economy recovered moderately in 1990 because of the resolution of a trade dispute with India over phosphoric acid sales, a rebound in textile sales to the EC, and lower prices for food imports. In addition, a dramatic increase in worker remittances, increased Arab donor aid, and generous debt rescheduling agreements helped ease foreign payments pressures. On the down side, higher oil import costs fueled inflation. Servicing the $21 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 at about only 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 30% of GDP. 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. More than half the population depends on agriculture (largely subsistence agriculture) for its livelihood.

About 90% of the population is engaged in farming and stock rearing, activities which generate almost half 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 Germany, 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.

Although Nigeria is Africa's leading oil-producing country, it remains poor with a $280 per capita GDP. In 1990, despite rising oil prices and a sharp drop in inflation, performance remained slack with continuing underutilization of industrial capacity and a second year of relatively weak agricultural performance. Agricultural production was up only 4.2% in 1990, still below the 1987 level. Industrial output showed a 7.2% increase, but remained below the 1985 level.

Government efforts to reduce Nigeria's dependence on oil exports and to sustain noninflationary growth have fallen short due to inadequate new investment funds. Living standards continue to deteriorate from the higher level of the early 1980s oil boom.

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 has been pushing the development of a tourist industry to relieve high unemployment, which recently amounted to one-third of the labor force. The white and Indian communities are substantially better off than other segments of the population, adding to the social tensions generated by poverty and unemployment. The economic well-being of Reunion depends heavily on continued financial assistance from France.

Almost 50% 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 only 16% 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. A structural adjustment program with the World Bank began in October 1990. An outbreak of insurgency, also in October, has dampened any prospects for economic improvement.

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 has left to seek employment overseas.

The economy has remained dependent on cocoa since the country 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 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. The government in 1990 was attempting to get the budget deficit under control and, in general, to bring economic policy in line with the recommendations of the IMF and the World Bank.

One of the world's poorest and least developed countries, Somalia has few resources. 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 more than half 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. Serious economic problems facing the nation are the external debt of $1.9 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 less than 2% in output in recent years falls far short of the 5-6% level needed to cut into the high unemployment rate.

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. Sluggish economic performance over the past decade, attributable largely to declining annual rainfall, has reduced levels of per capita income and consumption. A high foreign debt and huge arrearages continue to cause difficulties. In 1990 the International Monetary Fund took the unusual step of declaring Sudan noncooperative on account of its nonpayment of arrearages to the Fund.

Tanzania is one of the poorest countries in the world. The economy is heavily dependent on agriculture, which accounts for about 47% of GDP, provides 85% of exports, and employs 90% of the work force. Industry accounts for 8% 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.

The economy is heavily dependent on subsistence agriculture, which accounts for about 35% of GDP and provides employment for 78% 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. Togo serves as a regional commercial and trade center. The government actively encourages foreign investment.

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The economy depends primarily on petroleum, phosphates, tourism, and exports of light manufactures for continued growth. Following two years of drought-induced economic decline, the economy made a strong recovery in 1990 as a result of a bountiful harvest, continued export growth, and higher domestic investment. Continued high inflation and unemployment have eroded popular support for the government, however, and forced Tunis to slow the pace of economic reform. Nonetheless, the government appears committed to implementing its IMF-supported structural adjustment program and to servicing its foreign debt.

Uganda has substantial natural resources, including fertile soils, regular rainfall, and sizable mineral deposits of copper and cobalt. The economy has been devastated by much political instability, mismanagement, and civil war since independence in 1962, 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 accounts for the bulk of export revenues. 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.

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 1990 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 three-fourths of the labor force and supplies almost 40% of exports. The manufacturing sector, based on agriculture and mining, produces a variety of goods and contributes 35% 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 have resulted in an uneven growth rate, one that on average matched 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 is unlikely because of 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 75% of exports and about 25% of the population's income. Maintenance of a social welfare system similar to Denmark's has given the public sector a dominant role in the economy. In 1990, the economy became critically dependent on shrimp exports and an annual subsidy (now about $355 million) from the Danish Government because cod exports had fallen, the zinc and lead mine closed, and a large promising platinum and gold mine was not yet operational.

Greenland has signed a contract for its largest construction project, a power plant to supply the capital. To avoid a decline in the economy, Denmark has agreed to pay 75% of the costs of running Sondrestrom Airbase and Kulusuk Airfield as civilian bases after the US withdraws in 1992.

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. As a result of climbing fish prices in 1990 and a noninflationary labor agreement, Iceland is pulling out of a recession, which began in mid-1988 with a sharp decline in fish prices and an imposition of quotas on fish catches to conserve stocks. Inflation was down sharply from 20% in 1989 to 8% in 1990.

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 about 3.3 million refugees and Iran about 1.3 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.

Bangladesh is one of the poorest nations in the world. 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, population growth of more than 2% a year, large-scale unemployment, and a limited infrastructure; furthermore, it is highly vulnerable to natural disasters.

Despite these constraints, real GDP growth averaged about 3.5% annually during 1985-89. A strong agricultural performance in FY90 pushed the growth rate up to 5.5%. Alleviation of poverty remains the cornerstone of the government's development strategy.

The economy, one of the world's least developed, is based on agriculture and forestry, which provide the main livelihood for 90% of the population and account for about 50% of GDP. Rugged mountains dominate the terrain and make the building of roads and other infrastructure difficult and expensive. The economy is closely aligned with that of India through strong trade and monetary links. Low wages in industry lead most Bhutanese to stay in agriculture. Most development projects, such as road construction, rely on Indian migrant labor. 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 the 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. 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 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 partial liberalization of controls. The growth rate of the service sector has also been strong. India, however, has been challenged more recently by much lower foreign exchange reserves, higher inflation, and a large debt service burden.

Although Japan has few natural resources, since 1971 it has become the world's third-largest 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 global catch. Overall economic growth has been spectacular: a 10% average in the 1960s, a 5% average in the 1970s and 1980s. In 1990 strong investment and consumption spending helped maintain growth at 5.6%. Inflation remains low at 3.1% despite higher oil prices and rising wages because of a tight labor market. Japan continues to run a huge trade surplus, $52 billion in 1990, 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 1984-90 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. Despite the use of high-yielding seed varieties, expansion of irrigation, and the heavy use of fertilizers, North Korea has not yet become self-sufficient in food production. Four consecutive years of poor harvests, coupled with distribution problems, have led to chronic food shortages. North Korea remains 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. Real GNP--which grew by 6.7% in 1989 after an average annual growth of over 12% between 1986-88--grew about 9% in 1990. Labor unrest--which led to substantial wage hikes in 1987-88--was noticeably calmer in 1990, unemployment averaged a low 2.5%, and investment was strong.

Inflation rates, however, are beginning to challenge South Korea's strong economic performance. Consumer prices rose 8.6%, the highest rate in nine years. Policymakers are concerned higher prices could lead to a resurgence of labor unrest.

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 25% 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 5% of GDP. Real GDP is officially estimated to have increased by about 10% annually during the period 1974-87, 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. In early 1991 the Mongolian leadership was struggling with severe economic dislocations, mainly attributable to chaotic economic conditions in the USSR, by far Mongolia's leading trade and development partner. For example, the government doubled most prices in January 1991, and industrial production dropped 10% in the first quarter of 1991. Moscow almost certainly will be cutting aid in 1991.

Nepal is among the poorest and least developed countries in the world with a per capita income of less than $200. Real growth averaged 4% in the 1980s until FY89, when it plunged to 1.5% because of a trade/transit dispute with India. Though the impasse is over, political turmoil and inflated energy costs will probably constrain growth to under 4%. Agriculture is the mainstay of the economy, providing a livelihood for over 90% of the population and accounting for 60% of GDP. Industrial activity is limited, mainly involving the processing of agricultural produce (jute, sugarcane, tobacco, and grain). Production of textiles and carpets has expanded recently and accounted for 87% of foreign exchange earnings in FY89.

Apart from agricultural land and forests, the only other exploitable natural resources are mica, hydropower, and tourism. Agricultural production in the late 1980s grew by about 5%, compared with a population growth of 2.6%. Forty percent or more of the population is undernourished partly because of poor distribution. Economic prospects for the 1990s are poor, with economic growth probably outpacing population growth only slightly.

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. Late in 1990, the IMF suspended assistance to Pakistan because the government failed to follow through on deficit reforms. Pakistan almost certainly will make little headway on raising living standards for its rapidly expanding population; at the current rate of growth, population would double in 29 years.

Agriculture, forestry, and fishing dominate the economy, employing about 45% of the labor force and accounting for 26% of GDP. The plantation crops of tea, rubber, and coconuts provide about 35% of export earnings. The economy has been plagued by high rates of unemployment since the late 1970s. Economic growth, which has been depressed by ethnic unrest, accelerated in 1990 as domestic conditions began to improve.

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 1983-89, real GDP expanded at an annual average rate of about 7%. Tourism's contribution to GDP, as measured by value added tax in hotels and restaurants, rose from about 14% in 1983 to 16% in 1989, and stimulated growth in other sectors--particularly in construction, communications, and public utilities. 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, although offshore banking and oil refining and storage are also important. Hotel capacity expanded rapidly between 1985 and 1989 and nearly doubled in 1990 alone. Unemployment has steadily declined from about 20% in 1986 to about 2% in 1990. The reopening of the local oil refinery, once a major source of employment and foreign exchange earnings, promises to give the economy an additional boost.

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 slackened in recent years, as the annual increase in the number of tourists slowed. Nonetheless, the per capita GDP of $9,800 is one of the highest in the region.

A per capita income of $6,500 gives Barbados one of the highest standards 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. An unemployment rate of 18% 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.

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 1990 the economy grew at an estimated 3.5% rate, a decrease from the strong 5.0% gain of the previous year. Gains in agricultural production (on the strength of good coffee and banana crops) and in construction, were partially offset by lower rates of growth for industry. In 1990 consumer prices rose by about 25% and the trade deficit widened. Unemployment is officially reported at 6%, but much underemployment remains. External debt, on a per capita basis, is among the world's highest.

The 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 over half is exported to the USSR. The economy has stagnated since 1985 under policies that have deemphasized material incentives in the workplace, abolished farmers' informal produce markets, and raised prices of government-supplied goods and services.

In 1990 the economy probably fell 3%, largely as a result of declining trade with the Soviet Union and Eastern Europe. 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, is likely to show a substantial decline over the next few years in view of the USSR's mounting economic problems.

Instead of highly subsidized trade, Cuba will be shifting to trade at market prices in convertible currencies. In early 1991, the shortages of fuels, spare parts, and industrial products in general had become so severe as to amount to a deindustrialization process in the eyes of some observers.

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, citrus, mangoes, root crops, and coconuts. 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 the soap and garment industries.

In 1989, however, Hurricane Hugo wiped out 70% of the banana crop and affected other economic activity. The tourist industry remains undeveloped because of a rugged coastline and the lack of an international-class airport.

The economy is largely dependent on trade; imported components average 60% of the value of goods consumed in the domestic market. 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 major earner of foreign exchange and a source of new jobs. Agriculture remains a key sector of the economy.

The principal commercial crop is sugarcane, followed by coffee, cotton, cocoa, and tobacco. Domestic industry is based on the processing of agricultural products, durable consumer goods, minerals, and chemicals. Unemployment is officially reported at about 30%, but there is considerable underemployment. An increasing foreign debt burden and galloping inflation are the economy's greatest weaknesses.

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, accounting for 45% of export earnings. The manufacturing sector, based largely on food and beverage processing, accounts for 18% of GDP and 15% of employment. Economic losses because of guerrilla sabotage total more than $2.0 billion since 1979. The costs of maintaining a large military seriously constrain the government's efforts to provide essential social services. Nevertheless, growth in national output last year exceeded growth in population for the first time since 1987.

The economy is essentially agricultural and centers on the traditional production of spices and tropical plants. Agriculture accounts for about 16% of GDP and 80% 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 is expected to grow, given a more favorable private investment climate since 1983. Despite an impressive average annual growth rate for the economy of 5.6% during the period 1986-90, unemployment remains high at about 25%.

The economy depends on agriculture, tourism, light industry, and services. It is also dependent upon France for large subsidies and imports. 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 26% of GDP, employs about 60% of the labor force, and supplies two-thirds of exports. Manufacturing accounts for about 15% of GDP and 12% of the labor force. In 1990 the economy grew by 3.5%, the fourth consecutive year of mild growth. Government economic policies, however, were erratic in 1990--an election year--and inflation shot up to 60%, the highest level in modern times.

About 85% of the population live in abject poverty. Agriculture is mainly small-scale subsistence farming and employs two-thirds 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 one of the most critical problems facing the economy, along with soil erosion and political instability.

Honduras is one of the poorest countries in the Western Hemisphere. Agriculture, the most important sector of the economy, accounts for nearly 30% of GDP, employs 62% of the labor force, and produces two-thirds of exports. Productivity remains low. Industry, still in its early stages, employs nearly 9% of the labor force, accounts for 15% of GDP, and generates 20% of exports. The service sectors, including public administration, account for 50% of GDP and employ nearly 20% of the labor force.

Basic problems facing the economy include rapid population growth, high unemployment, sharply increased inflation, a lack of basic services, a large and inefficient public sector, and the dependence of the export sector mostly on coffee and bananas, which are subject to sharp price fluctuations. Despite government efforts at reform and large-scale foreign assistance, the economy still is unable to take advantage of its sizable natural resources.

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. In 1990, 3.5% economic growth was led by mining and tourism.

The economy is based on sugarcane, bananas, tourism, and light industry. Agriculture accounts for about 12% 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, 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 1986 per capita GDP was relatively high at $6,000. During 1986 the unemployment rate was 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 10%. 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 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.

Government control of the economy historically has been extensive, although the Chamorro 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 about 25% to GDP, showed a drop of 7% in 1989 and remains below pre-1979 levels. External debt is one of the highest in the world on a per capita basis. In 1990 the annual inflation rate was 11,800%, sharply up from 1,800% in 1989.

GDP expanded by an estimated 5% in 1990, after contracting 1% in 1988 and 14% in 1989. Political stability prompted greater business confidence and consumer demand, leading to increased production by the agricultural, commercial, manufacturing, construction, and utilities sectors. The transportation sector and government services declined slightly due to slack early-1990 transits through the Panama Canal, lower oil pipeline flowthrough, and Panama City's budget cuts. Imports and exports posted gains during the year, and government revenues were up sharply over 1989's levels.

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 1950s. 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 is slowly recovering from the disruptions caused by Hurricane Hugo in September 1989. The tourism infrastructure was especially hard hit.

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 sectors. Saint Lucia also possesses 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. Saint 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. The services sector, based mostly on a growing tourist industry, is also important. 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 began to emerge from a lengthy depression in 1990. The economy fell sharply through most of the 1980s, largely because of the decline in oil prices. This sector accounts for 80% of export earnings and more than 25% of GDP. The government, in response to the oil revenue loss, pursued a series of austerity measures that pushed the unemployment rate as high as 22% in 1988. The economy showed signs of recovery in 1990, however, helped along by rising oil prices.

Agriculture employs only about 11% of the labor force and produces about 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, most food being imported. International business and financial services are a small but growing component of the economy. The world's largest petroleum refinery is at Saint Croix.

As the poorest country in Europe, Albania's development lags behind even the least favored areas of the Yugoslav economy. For over 40 years, the Stalinist-type economy has operated 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, provide incentives, and decentralize decisionmaking. In an effort to expand international ties, Tirane has reestablished diplomatic relations with the Soviet Union and the US. The Albanians have also passed legislation allowing foreign investment.

Albania possesses considerable mineral resources and, until 1990, was largely self-sufficient in food; several years of drought have hindered agricultural development. Numerical estimates of Albanian economic activity are subject to an especially wide margin of error because the government until recently did not release economic information.

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 to 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.

Improved export prospects from German unification and the opening of Eastern Europe will also boost the economy during the next few years. Living standards are roughly comparable with the large industrial countries of Western Europe. Problems for the l990s include an aging population, the high level of subsidies, and the struggle to keep welfare benefits within budget capabilities. Austria, which has applied for EC membership, is currently involved in EC and European Free Trade Association negotiations for a European Economic Area and will have to adapt its economy to achieve freer movement of goods, services, capital, and labor with the EC.

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.

Over 70% of trade is with other EC countries. During the period 1988-90 Belgium's economic performance was marked by buoyant output growth, moderate inflation, and a substantial external surplus. Real GDP grew by an average of 3.9% in 1988-90. However, the economy is likely to slow in 1991-92 to below 3% GDP growth.

Growth in the lackluster Bulgarian economy fell to the 2% annual level in the 1980s. By 1990 Sofia's foreign debt had skyrocketed to over $10 billion--giving a debt service ratio of more than 40% of hard currency earnings and leading the regime to declare a moratorium on its hard currency payments. The post-Zhivkov regime faces major problems of renovating an aging industrial plant; coping with worsening energy, food, and consumer goods shortages; keeping abreast of rapidly unfolding technological developments; investing in additional energy capacity (the portion of electric power from nuclear energy reached over one-third in 1990); 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. In October 1990 the Lukanov government proposed an economic reform program based on a US Chamber of Commerce study. It was never instituted because of a political stalemate between the BSP and the UDF. The new Popov government launched a similar reform program in January 1991, but full implementation has been slowed by continuing political disputes.

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 in many raw materials. Moreover, its aging capital plant lags well behind West European standards. Industry contributes almost 50% to GNP and construction contributes 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 is the highest in Eastern Europe. As in the rest of Eastern Europe, the sweeping political changes of 1989-90 have been disrupting normal channels of supply and compounding the government's economic problems. Having eased restrictions on private enterprise in 1990 and having adjusted some key prices, Czechoslovakia is now implementing a broad two-year program to make the difficult transition from a command to a market economy. Inflation and unemployment are beginning to rise, albeit from comparatively low levels.

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. The Danish economy is likely to maintain its slow but steady improvement in 1991. GDP grew by 1.3% in 1990 and probably will grow by about 1.25% in 1991; unemployment is running close to 10%. In 1990 Denmark had the lowest inflation rate in the EC, a record trade surplus, and the first balance-of-payments surplus in 26 years. As the government prepares for the economic integration of Europe during 1992, growth, investment, and competitiveness are expected to improve, reducing unemployment, inflation, and debt.

The Faroese, who have long been enjoying the affluent living standards of the Danes and other Scandinavians, now must cope with the decline of the all-important fishing industry and with an external debt twice the size of annual income. When the nations of the world extended their fishing zones to 200 nautical miles in the early 1970s, the Faroese no longer could continue their traditional long-distance fishing and subsequently depleted their own nearby fishing areas; one estimate foresaw a 25% drop in fish catch in 1990 alone.

Half the fishing fleet is for sale, and the 22 fish-processing plants work at only half capacity. The government no longer can maintain its high level of spending on roads and tunnels, hospitals, sports facilities, and other social welfare programs.

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 30% of GDP. 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. The economy, which experienced an average of 4.9% annual growth between 1987 and 1989, leveled off in 1990 and is now in a recession facing negative growth in 1991. The clearing account system between Finland and the Soviet Union in the postwar period--mainly Soviet oil and gas for Finnish manufactured goods--had kept Finland isolated from world recessions; the system, however, was dismantled on 1 January 1991 in favor of hard currency trade.

As a result, Finland must increase its competitiveness in certain sectors, for example, textiles, foodstuffs, paper, and metals, and has already begun to shift trade westward. Finland, as a member of EFTA, is negotiating a European Economic Area arrangement with the EC which would allow for free movement of capital, goods, services, and labor within the organization.

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-quarter of GDP, and the growing services sector has become crucial to the economy.

After sluggish growth during the period 1982-87, the economy expanded at a rapid 3.8% pace in 1988-89. The economy slowed down in 1990, with growth of 2.0% expected in 1991. The economy has had difficulty generating enough jobs for new entrants into the labor force, resulting in a high unemployment rate, which probably will rise to around 10% during the slowdown. The steadily advancing economic integration within the European Community is a major force affecting the fortunes of the various economic sectors.

The newly unified German economy presents a starkly contrasting picture. Western Germany has an advanced market economy and is a leading exporter. It experienced faster-than-projected real growth largely because of demand in eastern Germany for western German goods. Western Germany has a highly urbanized and skilled population which enjoys excellent living standards, abundant leisure time, and comprehensive social welfare benefits.

Western Germany is relatively poor in natural resources, coal being the most important mineral. Western Germany's world-class companies manufacture technologically advanced goods. The region's economy is mature: manufacturing and service industries account for the dominant share of economic activity, and raw materials and semimanufactured products constitute a large proportion of imports. In 1989 manufacturing accounted for 31% of GDP, with other sectors contributing lesser amounts.

In recent years, gross fixed investment has accounted for about 21% of GDP. In 1990 GDP in the western region was an estimated $16,300 per capita. In contrast, eastern Germany's obsolete command economy, once dominated by smokestack heavy industries, has been undergoing a wrenching change to a market economy. Industrial production in early 1991 is down 50% from the same period last year, due largely to the slump in domestic demand for eastern German-made goods and the ongoing economic restructuring.

The FRG's legal, social welfare, and economic systems have been extended to the east, but economic restructuring--privatizing industry, establishing clear property rights, clarifying responsibility for environmental clean-up, and removing Communist-era holdovers from management--is proceeding slowly so far, deterring outside investors. The region is one of the world's largest producers of low-grade lignite coal, but has few other resources.

The quality of statistics from eastern Germany remains poor; Bonn is still trying to bring statistics for the region in line with West German practices. The most challenging economic problem of a united Germany is the reconstruction of eastern Germany's economy--specifically, finding the right mix of fiscal, regulatory, monetary, and tax policies that will spur investment in the east without derailing western Germany's healthy economy or damaging relations with Western partners.

The biggest danger is that soaring unemployment in eastern Germany, which could climb to the 30 to 40% range, could touch off labor disputes or renewed mass relocation to western Germany and erode investor confidence in eastern Germany. Overall economic activity grew an estimated 4.6% in western Germany in 1990, while dropping roughly 15% in eastern Germany. Per capita GDP in the eastern region was approximately $8,700 in 1990.

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 government that enlarged the public sector from 55% of GDP in 1981 to about 70% when Prime Minister Mitsotakis took office. Mitsotakis inherited several severe economic problems from the preceding socialist and caretaker governments, which neglected the runaway budget deficit, a ballooning current account deficit, and accelerating inflation.

With only a two-seat majority in the Chamber of Deputies, Mitsotakis has concentrated on cutting the public-sector payroll, cautiously expanding the tax base, and adopting guidelines for privatizing Greece's loss-ridden state-owned enterprises. 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 trade and investment 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.

This unique, noncommercial 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. The incomes and living standards of lay workers are comparable to, or somewhat better than, those of counterparts who work in the city of Rome.

Agriculture is an important sector, providing sizable export earnings and meeting domestic food needs. Industry accounts for about 40% of GNP and 30% of employment. About 40% of Hungary's foreign trade is with the USSR and Eastern Europe and a third is with the EC. Low rates of growth reflect the inability of the Soviet-style economy to modernize capital plant and motivate workers. GNP declined by 1% in 1989 and by an estimated 6% in 1990.

Since 1985 external debt has more than doubled, to over $20 billion. In recent years Hungary has experimented widely with decentralized and market-oriented enterprises. The newly democratic government has renounced the Soviet economic growth model and plans to open the economy to wider market forces and to much closer economic relations with Western Europe. Prime Minister Antall has declared his intention to move foward on privatization of state enterprises, provision for bankruptcy, land reform, and marketization of international trade, but concerns over acceptable levels of unemployment and inflation may slow the reform process.

The economy is small, open, and trade dependent. Agriculture, once the most important sector, is now dwarfed by industry, which accounts for 37% of GDP and about 80% of exports and employs 26% of the labor force. The government has successfully reduced the rate of inflation from double-digit figures in the late 1970s to 3.3% in 1990. In 1987, after years of deficits, the balance of payments was brought into the black. Unemployment, however, is a serious problem. A 1990 unemployment rate of 16.6% 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 small private companies, and an undeveloped agricultural south, dominated by large public enterprises. Services account for 48% of GDP, industry 34%, agriculture 4%, and public administration 13%. 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 1990, 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 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 tourism. 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. 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 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 to 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 27% of GDP, with the electronics and textile industries major contributors. In 1989 inflation was held to a low 0.9%. Per capita GDP at $5,500 places Malta in the middle-income range of the world's nations.

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 provides about 25% of GDP and is led by the food-processing, oil-refining, and metalworking industries.

The highly mechanized agricultural sector employs only 5% of the labor force, but provides large surpluses for export and the domestic food-processing industry. An unemployment rate of 6.8% 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 maintain high growth; for the past five years growth has averaged 4.1%, the fourth-highest among OECD countries. Growth slackened in 1987-88 partially because of the sharp drop in world oil prices, but picked up again in 1989. The Brundtland government plans to push hard on environmental issues, as well as cutting unemployment, improving child care, upgrading major industries, and negotiating an EC - European Free Trade Association (EFTA) agreement on an Economic European Area.

The economy, except for the agricultural sector, had followed the Soviet model of state ownership and control of 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 dropped by 2.0% in 1989 and by a further 8.9% in 1990.

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 and dropped back to 250% in 1990. Shortages of consumer goods and some food items worsened in 1988-89. Agricultural products and coal are among the biggest hard currency earners, but manufactures are increasing in importance. Poland, with its hard currency debt of $48.5 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, free prices, make the zloty convertible, and, in general, halt the hyperinflation. These financial measures were accompanied by plans to privatize the economy in stages.

While inflation fell to an annual rate of 77.5% by November of 1990, the rise in unemployment and the drop in living standards have led to growing popular discontent and to a change of government in January 1991. The new government is continuing the previous government's economic program, while trying to speed privatization and to better cushion the populace from the dislocations associated with reform. 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 14% during the 1987-89 period, 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. The year 1990 witnessed about a 20% drop in industrial production because of energy and input shortages and labor unrest. In recent years the agricultural sector has had to contend with drought, mismanagement, and shortages of inputs. A drought in 1990 contributed to a lackluster harvest, a problem compounded by corruption and a poor distribution system.

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-half 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, largely in services, handicrafts, and small-scale industry. New laws providing for the privatization of large state firms have been passed.

However, most of the early privatization will involve converting state firms into joint-stock companies. The selling of shares to the public has not yet been worked out. 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 thoroughgoing market system, that is, there is great caution in decontrolling prices because of public opposition. The government has sharply raised price ceilings instead of lifting them entirely.

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 six years of perestroyka (economic and political restructuring) have undermined the institutions and processes of the Soviet command economy without replacing them with efficiently functioning markets. The initial reforms have 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 has been 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 six years: the unpopular and short-lived antialcohol campaign; the initial cutback in imports of consumer goods; the failure to act decisively at the beginning for the privatization of agriculture; and the buildup of a massive overhang of unspent rubles in the hands of households and enterprises. The regime has vacillated among a series of ambitious economic policy prescriptions put forth by leading economists and political leaders.

The plans vary from proposals for (a) quick marketization of the economy; (b) gradual marketization; (c) a period of retrenchment to ensure a stable base for future marketization; and (d) a return to disciplined central planning and allocation. The economy, caught between two systems, is suffering from even greater mismatches between what is being 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. Official Soviet statistics report GNP fell by 2% in 1990, but the actual decline was substantially greater. Whatever the numerical decline, it does not capture the increasing disjointures in the economy evidenced by emptier shelves, longer lines, increased barter, and widespread strikes.

This Western capitalistic economy has done well since Spain joined the EC in 1986. With annual increases in real GNP averaging about 5% in the 1987-90 period, 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 almost 7% in 1989-90. Another economic problem facing Spain is an unemployment rate of 16.3%, 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 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. For some observers, the Swedish model has succeeded in making economic efficiency and social egalitarianism complementary, rather than competitive, goals. Others argue that the Swedish model is on the verge of collapsing by pointing to the serious economic problems Sweden faces in 1991: high inflation and absenteeism, growing unemployment and deficits, and declining international competitiveness.

In 1990, to improve the economy, the government approved a mandate for Sweden to seek EC membership and an austerity and privatization package and implemented a major tax reform. These reforms may succeed in turning the economy around in 1992.

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 halted the expansion of welfare measures and 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 27% 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. In mid-1990 the economy fell into recession after eight years of strong economic expansion, which had raised national output by one quarter.

Britain's inflation rate, which has been consistently well above those of her major trading partners, is expected to decline in 1991. Between 1986 and 1990 unemployment fell from 11% to about 6%, but it is now rising rapidly because of the economic slowdown. 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.

For 20 years Communist Yugoslavia had been trying to replace the Stalinist command economy with a decentralized semimarket system that features worker self-management councils in all large plants. This hybrid system neared collapse in late 1989 when inflation soared. The government applied shock therapy in 1990 under an IMF standby program that provides tight control over monetary expansion, a freeze on wages, the pegging of the dinar to the deutsche mark, and a partial price freeze on energy, transportation, and communal services.

This program brought hyperinflation to a halt and encouraged a rise in foreign investment. Since June 1990, however, inflation has rebounded and threatens to rise further in 1991. Estimated annual inflation for 1990 is 164%. Other huge problems remain: rising unemployment, the low quality of industrial output, and striking differences in income between the poorer southern regions and the comparatively well-off northern areas. Even so, political issues far outweigh economic problems in importance.

Petroleum production and processing account for about 85% of export receipts, 60% of government revenues, and 20% of GDP. Economic conditions have fluctuated with the changing fortunes of oil since 1985, including the Gulf crisis of 1990-91. The liberation of Kuwait in early 1991 has improved short- to medium-term prospects and has raised investors' confidence. Bahrain with its highly developed communication and transport facilities is home to numerous multinational firms with business in the Gulf.

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 25% 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.

Nearly half 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 46% of GNP in 1990. 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 1988-91 (intifadah) has raised unemployment and substantially lowered the incomes of the population. Furthermore, the Persian Gulf crisis dealt a severe blow to the Gaza Strip in 1990 and on into 1991. Worker remittances from the Gulf states have plunged, unemployment has increased, and export revenues have fallen dramatically. The risk of malnutrition is a real possibility in 1991.

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. Disruptions from the bitter war with Iraq, massive corruption, mismanagement, demographic pressures, and ideological rigidities have kept economic growth at depressed levels.

Oil accounts for over 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 3.2% 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 has been dominated by the oil sector, which has provided about 95% of foreign exchange earnings. In the 1980s financial problems, caused by massive expenditures in the eight-year war with Iran and damage to oil export facilities by Iran, led the government to implement austerity measures and to borrow heavily and later reschedule foreign debt payments.

After the end of hostilities in 1988, oil exports gradually increased with the construction of new pipelines and restoration of damaged facilities. Agricultural development remained 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, also was under financial constraints. Iraq's seizure of Kuwait in August 1990, subsequent international economic embargoes, and military actions by an international coalition beginning in January 1991 drastically changed the economic picture. Oil exports were cut to near zero, and industrial and transportation facilities severely damaged.

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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 agricultural and industrial sectors on an intensive scale over the past 20 years. Industry accounts for about 23% of the labor force, agriculture for 5%, 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. About half of Israel's $18 billion external government 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. Iraq's invasion of Kuwait on 2 August dealt a blow to Israel's economy in 1990.

Higher world oil prices added an estimated $300 million to Israel's 1990 oil import bill, and helped keep the inflation rate at 18% for the year. Regional tensions and continuing acts of the Palestinian uprising (intifadah)-related violence contributed to a sharp dropoff in tourism--a key source of foreign exchange--to the lowest level since the 1973 Arab-Israeli war. In 1991, the influx of up to 400,000 Soviet immigrants will increase unemployment, intensify the country's housing crisis, and contribute to a widening budget deficit.

Jordan was a secondary beneficiary of the oil boom of the late 1970s and early 1980s, when its annual GNP growth averaged 10-12%. Recent years, however, have witnessed a sharp reduction in grant aid from Arab oil-producing countries and a dropoff in worker remittances, with national 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 mid-1989, the Jordanian Government agreed to implement an IMF austerity program designed to tackle the country's serious economic problems. The program sought to gradually reduce the government's budget deficit over the next several years and implement badly needed structural reforms in the economy. In return for agreeing to the IMF program, Jordan was granted IMF standby loans of over $100 million. Recognizing that it would be unable to cover its debt obligations, the government also began debt rescheduling negotiations with creditors in mid-1989.

The onset of the Gulf crisis in August 1990 forced the government to shelve the IMF program and suspend most debt payments and rescheduling negotiations. Economic prospects for 1991 are especially gloomy, given the unsettled conditions in the Middle East.

Up to the invasion by Iraq in August 1990, the oil sector had dominated the economy. Kuwait has the third-largest oil reserves in the world after Saudi Arabia and Iraq. Earnings from hydrocarbons generated over 90% of both export and government revenues and contributed about 40% to GDP. Most of the nonoil sector has traditionally been dependent upon oil-derived government revenues. Iraq's destruction of Kuwait's oil industry during the Gulf war has devastated the economy.

Iraq destroyed or damaged more than 80% of Kuwait's 950 operating oil wells, as well as sabotaging key surface facilities. Western firefighters had brought about 140 of the 600 oil well fires and blowouts under control as of early June 1991. It could take two to three years to restore Kuwait's oil production to its prewar level of about 2.0 million barrels per day.

Since 1975 civil war has seriously damaged Lebanon's economic infrastructure, disrupted economic activity, and all but ended Lebanon's position as a Middle Eastern entrepot and banking hub. Following October 1990, however, a tentative peace has enabled the central government to begin restoring control in Beirut, collect taxes, and regain access to key port and government facilities. The battered economy has also been propped up by a financially sound banking system and resilient small- and medium-scale manufacturers.

Family remittances, foreign financial support to political factions, the narcotics trade, and international emergency aid are main sources of foreign exchange. Economic prospects for 1991 have brightened, particularly if the Syrian-backed government is able to maintain law and order and reestablish business confidence. Rebuilding war-ravaged Beirut is likely to provide a major stimulus to the Lebanese economy in 1991.

Economic performance is closely tied to the fortunes of the oil industry. Petroleum accounts for nearly all export earnings, about 80% of government revenues, and roughly 40% 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 more than 85% of export earnings and roughly 75% 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 $12,500, among the highest in the world outside the OECD countries.

The petroleum sector accounts for roughly 70% of budget revenues, 33% of GDP, and almost all export earnings. Saudi Arabia has the largest reserves of petroleum in the world, ranks as the largest exporter of petroleum, plays a leading role in OPEC, and invests substantial amounts abroad.

Syria's rigidly structured Bathist economy turned out slightly more goods in 1990 than 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 oil imports. 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. Output in 1990 rebounded from the very bad year of 1989, as agricultural production and oil revenues increased substantially.

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 55% of the labor force, accounting for almost 20% of GDP, and contributing about 20% 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 additional 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 highest incomes per capita outside the OECD nations. 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 but remittances from the Gulf dropped dramatically in the wake of Iraq's invasion of Kuwait in August 1990.

Israeli reprisals against Palestinian unrest in the West Bank since 1987 have pushed unemployment up and lowered living standards. The Persian Gulf crisis of 1990-91 also dealt a blow to the economy. Many Palestinians returned from the Gulf, exacerbating unemployment. Export revenues have plunged because of the loss of export markets in Jordan and the Gulf.

Whereas the northern city Sanaa is the political capital of a united Yemen, the southern city Aden, with its refinery and port facilities, is the economic and commercial capital. Future economic development depends heavily on Western-assisted development of promising oil resources. South Yemen's willingness to merge stemmed partly from the steady decline in Soviet economic support. North--The low level of domestic industry and agriculture have made northern Yemen dependent on imports for virtually all of its essential needs.

Large trade deficits have been made up for by remittances from Yemenis working abroad and foreign aid. Once self-sufficient in food production, northern Yemen has been 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.

South--This has been 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 have made economic development difficult. The economy has grown at an average annual rate of only 2-3% since the mid-1970s. The economy had been 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 real growth among the OECD nations, averaging about 3.2%. 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.

only economic activity is a tuna fishing station

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, however, appears to be recovering, rising from 1.4% in 1988 to 3.9% in 1990. 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. In 1991 the government also plans to begin negotiations with the US and Canada on a free trade agreement.

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 Saint Pierre has dropped steadily over the years. In March 1989, an agreement between France and Canada set fish quotas for Saint 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 and France.

The US has the most powerful, diverse, and technologically advanced economy in the world, with a per capita GNP of $21,800, the largest among major industrial nations. In 1989 the economy enjoyed its seventh successive year of substantial growth, the longest in peacetime history. The expansion featured moderation in wage and consumer price increases and a steady reduction in unemployment to 5.2% of the labor force. In 1990, however, growth slowed to 1% because of a combination of factors, such as the worldwide increase in interest rates, Iraq's invasion of Kuwait in August, the subsequent spurt in oil prices, and a general decline in business and consumer confidence. Ongoing problems for the 1990s include inadequate investment in education and other economic infrastructure, rapidly rising medical costs, and sizable budget and trade deficits.

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.

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.

no economic activity

Agriculture provides the economic base. The major export earners are fruit, copra, and clothing. Manufacturing activities are limited to a fruit-processing plant and several clothing factories. Economic development is hindered by the isolation of the islands from foreign markets and a lack of natural resources and good transportation links. A large trade deficit is annually made up for by remittances from emigrants and from foreign aid. Current economic development plans call for exploiting the tourism potential and expanding the fishing industry.