Caribbean
The U.S.-Caribbean Trade Partnership Act that was designed to boost American economic ties with Caribbean nations by promoting clothing exports to the United States has done little to achieve its goal, according to business groups and government statistics. This failure has been obviously accounted to the similar measure aimed at Africa and passed at the same time which was of a rousing success (Dougherty 2001).
Caribbean countries have made some progress in diversifying their economies, but production and exports are still relatively concentrated in a few activities. Agriculture and mining remain important in many countries, but the structure of production has begun to shift more heavily toward services.
Countries in the region are highly open. The principal destinations for the region’s exports include the United States, Europe, and other CARICOM countries. Exports are concentrated in a few products, namely raw materials—particularly minerals—and agricultural crops. Imports consist mainly of manufactures, especially consumer goods.
Central America
In 2003-04, Central America emerged from a period of sluggish growth to face a more favorable short-term outlook. Driven initially by a pick-up in exports due to firming external demand conditions and commodity prices, the recovery in 2004 spilled over to domestic demand – despite the dampening effect of the oil price shock. Real Gross Domestic Product (GDP) increased from 2 ¼ percent in 2002 to 3 ½ percent in 2004. The near-term outlook is also favorable, with regional growth in 2005 projected at 3 ¼ percent, although longer-term growth faces several challenges, including increased in textiles, and rising world interest rates. After a decline in inflation through 2003, recent increases in oil prices and stringer demand conditions caused in inflation to rise throughout the region in 2004 to an average of 8 ½ percent.
External positions have continued to improve. Export growth in 2004 averaged over 14 percent in 2004, driven by strong U.S. demand and a recovery in commodity prices, especially that of coffee. While current account deficits remained largely unchanged, in part reflecting the higher oil import bull, strong capital inflows have boosted international reserves.
Progress was made in reducing fiscal deficits. While most countries in Central America saw debt-to-GDP ratios rise over the past decade, the current cyclical upturn has allowed countries to strengthen policies and improve fiscal accounts: fiscal deficits declined from an average of near 6 percent of GDO in 2002 to 3 percent in 2004, helped by buoyant revenue collections that reflected both a growth dividend and ongoing reforms of tax policy and administration. Nevertheless, in several countries (Costa Rica, El Salvador, and Nicaragua), public debt remains high or has been on an upward trend. In Guatemala, while public debt and fiscal deficits remained well contained, government efforts to strengthen the tax effort – and thus achieve the Peace Accord target of a tax-to-GDO ratio of 12 percent – were stalled by court decisions and opposition in congress. The 12 percent target was included as a key element in the 1996 Peace Accords to provide more resources for social programs and spending (Rodlauer & Schip 2005).
South America
With the exception of Brazil and Ecuador, the national capitals have the largest populations and are the economic, cultural, and political centers of the countries. Since World War II, the urban population has rapidly expanded. São Paulo, Brazil, whose population is nearly 10,000,000, is the largest city of South America and one of the fastest growing cities of its size in the world. Squatter settlements have multiplied around urban areas as the poor and unskilled flock to the cities; widespread unemployment is common. Outside the cities the population density of the continent is very low, with vast portions of the interior virtually uninhabited; most of the people live within 200 mi (320 km) of the coast.
Since World War II, the nations of South America have sought greater economic independence. An increasing number of South American industrial centers have developed heavy industries to supplement the light industries on which they had previously concentrated. An early obstacle to industrial growth in South America was the scarcity of coal. The continent has therefore relied on its petroleum reserves, most notably in Venezuela and also in Argentina, Colombia, Chile, Peru, and Ecuador, as a source of fuel. South Americans also have gradually developed their natural-gas reserves; hydroelectric plants produce most of the continent’s electricity. Iron-ore deposits are plentiful in the Guiana and Brazilian highlands, and copper is abundant in the central Andes mountain region of Chile and Peru. Other important mineral resources include tin in Bolivia, manganese and gold in Brazil, and bauxite in Guyana and Suriname.
As of 2002, South America’s unemployment rate was 10.8 %. Due to histories of high inflation in nearly all South American countries, interest rates and thus investment remain high and low, respectively. Interest rates are usually double that of the United States. For example, interest rates are about 22 % in Venezuela and 23 % in Suriname. The exception is Chile, which had a head start from 1973 under Augusto Pinochet. The South American Community of Nations is a planned continent-wide free trade zone to unite two existing free-trade organizations—Mercosur and the Andean Community.
In South America, the gap between the rich and the poor is tremendous. In Venezuela, Paraguay, Brazil, and many other South American countries, the richest 20 % may own over 60 % of the nation’s wealth, while the poorest 20 % may own less than 5 %. This wide gap can be seen in many large South American cities where makeshift shacks and slums lie next to skyscrapers and upper-class luxury apartments.
Latin America & Caribbean VS East Asia
Nearly 36 percent of the population in Latin America and the Caribbean lives below the poverty line—the same proportion as a decade ago. Although incomes have gone up a little since the 1980s, the fact that one out of three inhabitants’ lives in poverty is not good news. Furthermore, the portion of the population living in extreme poverty climbed to 16 percent in 1997 from 13 percent in 1987. Why the region’s performance is so dismal compared with that of East Asia? For quick comparison, between 1986 and 1995, Malaysia cut its poverty rate by two-thirds while Thailand’s dropped by half, from 26 percent to 13 percent. The simple answer is slow growth—Latin American and Caribbean economies grew a paltry 1.3 percent a year in real per capita terms over the last decade. And this is despite the region’s proximity to the rapidly growing U.S. economy of the 1990s.
East Asia
Everyone agrees that the economies of East Asia, and particularly the “Four Tigers” (Hong Kong, Korea, Singapore, and Taiwan Province of China), have grown spectacularly over the past generation, but nobody seems to agree on why. They are named as such because of their powerful and intimidating economic performance. The debate over why they have grown so well in the past raises difficult questions about regional growth in the future and about the aspiration of countries elsewhere to replicate the East Asian success.
For nearly a quarter century since the early 1970s, the countries in East Asia grew at phenomenal rates, leading observers to dub the period as the “Asian Miracle”. According to Paul Krugman (1994), the rapid growth of the East Asian economies over the past three decades had come primarily from capital accumulation, increasing labor force participation, and improving labor quality, rather than from improvements in productivity. However, the rapid growth came to an end when the financial crisis hit in 1997, with many of high-performing countries in the region falling into painful recessions and facing the distinct possibility that the miracle, if indeed there had been one, was over.
South Asia (Indian Sub-continent)
The Deputy Managing Director of IMF (International Monetary Fund) Shigemitsu Sugisaki speaks about the economic issue covering South Asia. Despite a succession of shocks resulting from the bursting of the equity price bubble, the corporate scandals, and a number of adverse geopolitical developments, South Asia has still shown its remarkable resilience in financial markets. Sugasaki added that the signs of improved global financial stability are a source of encouragement and to strength going forward. An aspiring speech of Sugasaki projected that the global growth of South Asia will rise from 3 ¼ percent in 2003 to 4 percent next year. Notwithstanding the effects of the disastrous act of nature, Asia remains a bright spot in the global economic picture and the Asia-Pacific region is again set to be the world’s fastest growing region. Growth in South Asia region is expected to be about 5 ½ percent this year, and increase to nearly 6 percent next year. The key to this is bounded to the role of the IMF in supporting economic reforms in countries of the region. The main operational vehicle for providing such support is the Poverty Reduction and Growth Facility, or PRGF.
Central Asia
At the beginning of the 1990s, following a long period of isolation, the Central Asian states of the former Soviet Union—Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—faced the tough challenge of achieving a market framework, integrating their economies with the rest of the world, and improving living standards. Since then, all five countries have made progress toward decentralizing their economies, expanding international links, and diversifying and increasing production and trade. Comparisons with other transforming economies, however, indicate that much more remains to be done. In most of these countries, the private sector’s share still constitutes less than one-half of economic activity; banking systems continue to be heavily state controlled; and per capita foreign direct investment remains relatively low. A set of indicators developed by the European Bank for Reconstruction and Development (EBRD) to measure progress in privatization, enterprise restructuring, and price, trade, and financial sector reforms indicate that this group of transition countries lags behind most of the others.
The financial crisis in Russia in August 1998 considerably altered the external economic environment for the Central Asian transition countries. Russian demand for their exports dropped sharply. Capital flows were also affected, as foreign investors reassessed the risks in the region, and exchange rates came under pressure. The five countries were faced with resisting a reversal in exchange and trade liberalization. Turkmenistan and Uzbekistan initially intensified exchange controls, while the other three countries combined financial restraint with exchange market intervention to ward off the pressures on their economies. Nevertheless, the currencies of Kazakhstan, the Kyrgyz Republic, and Tajikistan depreciated sharply, in nominal terms, by the end of 1998 and into 1999. Inflation flared up again. These events underscored the need to strengthen external debt management, following years of heavy borrowing, to compensate for low domestic saving rates and sustain investment. The countries should continue to take a cautious approach to external borrowing—even Kazakhstan, which has gained the favor of international markets (particularly since oil was discovered there) and recently repaid its IMF loan, well ahead of schedule.
Southeast Asia
The Southeast Asian islands are a major source of world petroleum supplies; the region is also a center for logging. Southeast Asia has experienced great economic growth since the 1980s; Singapore was one of the four original “East Asian Tigers” and in recent years Indonesia, Malaysia, the Philippines and Thailand have often been considered a new brood of “tigers.” Tiger refers to the rapid growth of these economies. Much of this growth has been driven by foreign direct investment in local industries; the money came from the U.S. and Japanese TNCs; later from international investment portfolios. Because of this international investment, Southeast Asia was often considered an example of globalized capitalism by international economic experts. On a local level however, the growth was interpreted somewhat differently: “Asian values“, a model of authoritarian governments firmly guiding economies toward rapid development, have been promoted by some regional leaders; confidence in this model was shaken by the Asian financial crisis of 1997, which occasioned a period of more cautious, slower growth. All of the southeast-asian states except East Timor are members of ASEAN. The ASEAN Free Trade Area has reduced tariff barriers between regional economies; the signatories have agreed to extend a free trade agreement with the People’s Republic of China and Japan in coming years. While Singapore is the 2nd busiest Port in the world and a major Financial and Banking hub, Malaysia is the world largest exporter of Oil Palm. In sharp contrast to the hub of economic development in Singapore, there is persistent poverty in Vietnam, Laos, and Cambodia. Two Southeast Asian countries, Laos and Vietnam, are ruled by Communist parties; these have since 1986 both been gradually transitioning from planned to market economies. The poverty is a consequence of the war this region was embroiled in from 1941 to 1975, in Cambodia fighting continued until the late 1990s. Vietnam combines free market capitalism and communism, attracting multinationals, and encouraging small entrepreneurs. It has developed into the most prosperous of the three countries, even though it ranks among the world’s poorest countries. Laos and Cambodia experience difficulties because of their rough or isolated terrain and their lacking infrastructure.
Oceania
Australia
Australia has a prosperous, Western-style mixed economy, with a per capita GDP slightly higher than those of the UK, Germany and France. The country was ranked third in the United Nations‘ 2005 Human Development Index and sixth in The Economist worldwide quality-of-life index 2005. In recent years, the Australian economy has been resilient in the face of global economic downturn. Rising output in the domestic economy has been offsetting the global slump, and business and consumer confidence remains robust.
Economy of Polynesia
With the exceptions of New Zealand, Hawaii, and foreign controlled territories, the majority of Polynesian islands derive their incomes from foreign aid and remittances from those who live in other countries. Many Polynesian locations such as Easter Island supplement this with tourism money. Some have more unusual sources of income, such as Tuvalu which marketed its ‘.tv’ internet top level domain name. Others still live as they did before Western Civilization encountered them.
North America
The economy of North America comprises more than 440 million people in 23 states. It is marked by a sharp division between the northern English-speaking countries of Canada (although has a large francophone minority) and the United States, which are some of the wealthiest and most developed nations in the world, and the countries of Central America and the Caribbean that are less well off. Mexico lies between these two extremes. While a part of NAFTA and a member of the OECD it remains poorer than he United States but almost on-par with Canada’s economy, both of these which are its northern neighbours.
Europe
The economy of Europe is comprised of more than 665 million people in 48 different states. Like other continents, the wealth of Europe‘s states varies, although the poorest are well above the poorest states of other continents in terms of GDP and living standards. The difference in wealth across Europe can be seen in a rough East-West divide. Whilst Western European states all have high GDPs and living standards, many of Eastern Europe‘s economies are emerging from the collapse of the USSR and the former Yugoslavia. As a continent, Europe has the largest economy. Europe’s largest national economy is that of Germany, which ranks third globally in nominal GDP, and fourth in purchasing power parity (PPP) GDP. The European Union is the world’s largest economy, if counted as a single unit.
In early 2004, 10 mostly former communist states joined the EU in its biggest ever expansion, enlarging the union to 25 members, with another eight making associated trade agreements. Most European economies are in very good shape, and the continental economy reflects this. Conflict and unrest in some of the former Yugoslavia states and in the Caucasus states are hampering economic growth in those states, however.
Africa
The economy of Africa comprises approximately 887 million people as of July 2005 living in 54 different states. Africa is by far the world’s poorest inhabited continent, and it is, on average, poorer than it was 25 years ago.
The United Nations‘ Human Development Report 2003 (of 175 countries) found that positions 151 (Gambia) to 175 (Sierra Leone) were taken up entirely by African nations.
It has had (and in some ways is still having) a shaky and uncertain transition from colonialism, with the ensuing Cold War and increases in corruption and despotism being major contributing factors to its poor economic situation. While rapid growth in China and now India, and moderate growth in South America, has lifted millions beyond subsistence living, Africa has stagnated, even going backwards in terms of foreign trade, investment, and per capita income. This poverty has widespread effects, including low life expectancy, violence, and instability – factors intertwined with the continent’s poverty. Over the decades a number of solutions have been proposed and many attempted, but no improvement scheme has shown much success.
Credit:ivythesis.typepad.com
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