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Russian Federation

Russia also known officially as the Russian Federation is a country in northern Eurasia. The country has an abundance of natural resources, particularly fossil fuels. This also accounts for primary source of Russias economic growth. Since the collapse of Soviet nion, Russia has gone through significant changes, moving from centrally planned economy to market based economy. !n late "##$ and early "##%, Russia e&perienced the first recession after '# years of e&periencing a rising economy. (ut the economy again started gaining stable growth in late "##% and "#'#.!t became a member of )T* on "" nd +ug "#'". !t also has a high ,-! .#./$$0. The country has gone through transitions dissolution in '%%' and devaluation in '%%$. These two transitions played a ma1or role in e&plaining the changes which occurred in the country. Russia after being separated from SSR in '%%' started to follow the integrated economy regime, as a result of which its 2-3 started increasing moving towards a more competitive economy where e&ports and imports of goods and services as 4 of 2-3 started increasing. !t can also be seen here that the inflow of F-! also increased after liberali5ation and shot up after the recession to overcome it. Then again the economy took a peak around '%%$ where the devaluation of the rubble increased the value of e&ports, where the main components being oil and natural gas. Since then the country has e&perienced positive growth in 2-3. Then again in late "##$ countrys 2-3 saw a nose dive due to recession affecting the whole world, but soon after the recession country recovered from it because of short term macroeconomic policies. 2-3 3er 6apita .current S 70

E&ports 8 !mports of goods and services .42-30

Agriculture, industry and services contribution in Russian economy: From being an agrarian economy Russias growth is now supported by its industrial 8 services sector, ma1or e&port items in agriculture being wheat, barley, corn, fishes, and oilseeds. The share of agriculture has been constantly declining at a slow pace after '%%', as the e&pected trend in developing countries. Soon after the opening of the economy, agriculture share declined drastically from '94 to /4. Russia basically has a very strong industrial sector mainly inherited from being a state economy earlier. The mining and e&tractive industries share a ma1or role in industrial sector growth including aircrafts and defence items. The industrial sector has not shown any drastic decline or growth during the period after liberalisation. This is because the country has a strong capital base which has been supporting in the growth of the economy. Services sector took off in the period around '%%:. The share of services sector also has followed a positive trend, contributing almost :#4 in "#'', the highest contributor in 2-3.

Value Added by Agriculture, Industry & services sector (%GDP)

The movement of labour has been from industry to services, because of slow ad1ustment in agriculture labour. The Total Factor 3roductivity is higher for industry than for any other sector despite the fact that other sectors were contributing more to the 2-3. Even when the labour started moving to other sectors the factor productivity of industrial sector did not decline. From '%%#; '%%% labour productivity decreased in every sector but in industry it still continued to increase. !n fact pre transition this sector grew two times faster than other sectors. (y "##9 again the labour productivity increased and services sector growth also increased. -uring this period the transition effect also became positive with growth. ,igh growth in other sectors overcompensated for the declining growth in industrial sector. The strong presence of industrial sector can also be attributed to the <uality factor associated with Russian industrial goods. The movement of labour has been ma1orly to the services sector.

Sources: http=>>www.worldbank.org http=>>www.econ.yale.edu>growth?pdf>cdp$%:.pdf http=>>eaces.liuc.it>'$"9"%/%"##$#">'$"9"%/%"##$#@#"#9.pdf

Singapore
Ranked as the Amost openB in the world, least corrupt,most pro;business,with low ta& rates .'9."4 of 2-30,Singapore has one of the highest per;capita gross domestic products in the world. !t owes its success to a highly developed trade; oriented market .!t is a ma1or F-! outflow financier and has benefited immensely from the inflow of F-! as a result of the attractive investment climate it provides. +fter its separation from Calaysia in '%:@, Singapore was left with a dearth of natural resources, a small domestic market, and high levels of unemployment and poverty. nemployment averaged '9 percent, 2-3 per capita was less than 7",/##, and half of the population was illiterate.To remedy this,the Singapore 2overnment adopted a pro;worker, pro;business, pro;foreign investment, e&port; oriented economic policy. !nitially the government re1ected free market orthodo&y, however after discovering that the former led to greater growth they decided to adopt their current capitalist model. ,owever unlike the economic policies of 2reece and the rest of Europe, Singapore followed a policy of individuali5ing the social safety net. This led to higher than average savings rate and a very sustainable economy in the long run.Thus Singapore has managed to combine the benefits of a welfare econmy along with the efficiency associated with a capitalist economy.

!t is clearly evident from the graph, that the 2-3 of Singapore has been rising consistently e&cept for a few years in '%%% and "##D. SingaporeEs economic strategy produced real growth averaging $.#4 from '%:# to '%%%. The economy picked up in '%%% after the regional financial crisis, with a growth rate of @.94, followed by %.%4 for "###. ,owever, the economic slowdown in the nited States, Fapan and the European nion, as well as the worldwide electronics slump, had reduced the estimated economic growth in "##' to a negative ".#4. The economy e&panded by "."4 the following year, and by '.'4 in "##D when Singapore was affected by the S+RS outbreak. Subse<uently, a ma1or turnaround occurred in "##9 allowed it to make a significant recovery of $.D4 growth in Singapore, presently it records a growth rate of '.$ percent on a <uarter by <uarter basis.

E&ports, particularly in electronics .such as Fle&tronics0 ,chemicals and services are the main source of revenue for the economy, which allows it to purchase natural resources and raw goods which it does not have. Singapore thus relies on intermediary trade , by purchasing raw goods and refining them for re;e&port, such as in the wafer fabrication industry and oil refining. !t has a strategic port which gives it a competitive edge over its neighbours in carrying out such activities. Singapore has the highest trade to 2-3 ratio in the world, averaging around 9##4 during "##$;''. Canufacturing and financial business services accounted for ":4 and ""4, respectively, of SingaporeEs gross domestic product in "###. The electronics industry leads SingaporeEs manufacturing sector, accounting for 9$4 of total industrial output.Coreover the government also is prioritising development of the chemicals and biotechnology industries.To maintain its competitive position despite rising wages, the government seeks to promote higher value;added activities in the manufacturing and services sectors. !t is also in the process of opening up the financial services, telecommunications, and power generation and retailing sectors up to foreign service providers. The government has also attempted some measures including wage restraint measures and release of unused buildings in an effort to control rising commercial rents with the view to lowering the cost of doing business in Singapore. Singapore also has a highly skilled workforce due to the successful implementation of the countryEs education policy .The government promotes high levels of savings and investment through policies such as the 6entral 3rovident Fund, which is used to fund its citi5enEs healthcare and retirement needs. SingaporeEs savings rates have continued to remain among the highest in the world since the '%/#s.

The graph above supports the view that e&port of goods and services have become increasingly important in the economic growth of Singapore.

(oth the above graphs are indicative of the structural transformation of Singapore. Structural transformation refers to the reallocation of economic activity across the broad sectors agriculture, manufacturing and services.+s an economy grows,the focus shift from agriculture to the manufacturing,services and in certain cases the e&ternal sector.+griculture is generally perceived as one of the less productive sectors and thus structural transformation usually entails the movement of labour away from the less productive sector i.e. agriculture to the more productive sectors,which couls be manufacturing,services or the e&ternal sector.This can be clearly understood from te above graphs.

Sources; http=>>www.tradingeconomics.com>singapore>gdp http=>>databank.worldbank.org>data>views>reports.asp& http=>>www.mongabay.com>reference>country?studies>singapore>E6*G*CH.html

http=>>en.wikipedia.org>wiki>Economy?of?Singapore http=>>www.nber.org>papers>w'$%%:.pdf

Puerto Rico Economic Structure


+ S 6ommonwealth nation, 3uerto Rico controls only its internal affairs while the S federal government controls all interstate and international trade relations. The country has en1oyed fiscal autonomy under Section %D: of the S !nternal Revenue 6ode, in force from '%/: to "##:, which e&empted companies from paying .S. corporate ta&es on profits earned from sales of items produced in 3uerto Rico. The residents of 3uerto Rico do not pay federal income ta&es, and the local authorities have discretion to design ta& incentives to attract foreign direct investment. This ma1or tool has allowed 3uerto Rico to develop the manufacturing and services sectors of the economy in a fairly short amount of time. From an agrarian economy, based primarily on sugar, tobacco, and coffee products, 3uerto Rico is now a thriving modern industrial and services oriented economy. !n '%9#, agriculture represented DD./ percent of total net income, while manufacturing had '".$ percent of the total. !n "#'' value added by agriculture was #.:$ percent of 2-3, while manufacturing added 9$.: percent and services added 9%.D percent of 2-3.

Canufacturing sector has gradually changed from being labour;intensive to being a capital;intensive sector. !n '%$# the !ndustry sector provided ":."4 of the total employment, whereas in "#'' it employed only 'D.@4 of the total employed population. +t the same time value added by !ndustry as a percentage of 2-3 has grown steadily over the years from DD.$@4 in '%:: to almost @#4 in "#''. Top industries in terms of value added are sophisticated and capital intensive industries such aschemical manufactures, computer and electronic product manufacturing, beverage and tobacco products manufacture, processed foods .food manufacturing0. .US Census Bureau Island Areas Data0

Share of employment in the service sector has increased over the years however value added by services as a percentage of 2-3 has shown a downward trend in the recent years. Tourism has traditionally been an important source of income for the island. !n "#'' it contributed S- @.%'$ billion to the countrys 2-3 .almost :4 of the 2-30. Gearly D million tourists arrived in "#'' and the tourism industry employed over @@,### people in "#''. Statistics show that the 2-3 is growing much more rapidly than the population, and 3uerto Ricos 2-3 per capita is one of the highest 6aribbean !sland nations. 3uerto Rico has also emerged as a net e&porter of goods and services. Share of E&ports .of goods and services0 as a percentage 2-3 has increased from @".D percent in '%:# to /% percent in "#''.

Sources I Fason (ram, Francisco E. CartJne5 and 6harles Steindel, KTrends and -evelopments in the Economy of 3uerto Rico Lolume '9, Gumber ", Federal Reserve (ank of Gew Hork, Carch "##$ )orld Travel and Tourism 6ouncil, KTravel and Tourism Economic !mpact ;"#'" 3uerto Rico, "#'" )orld (ank, )-! database, http=>>databank.worldbank.org>data>home.asp& http=>>www.economywatch.com>world?economy>puerto;rico>structure;of; economy.html http=>>www.topuertorico.org>economy.shtml http=>>www.newyorkfed.org>research>current?issues>ci'9;">ci'9;".html http=>>www.wttc.org>research>economic;impact;research>country;reports> http=>>www.gdb;pur.com>economy>fact;sheet.html http=>>factfinder".census.gov>faces>tableservices>1sf>pages>productview.&htmlM srcNbkmk

Croatia
The Republic of 6roatia is a unitary democratic parliamentary republic situated in Europe .!t is an open economy which is largely connected to other foreign markets. !ts 2-3 per capita .current S70 is 'D,"%#, making it a high income country, according to )orld (ank classification. For the 6roatian Economy, until )orld )ar ', the crafts;manufacturing stage, until '$/# and the railroad stage, from appro&imately '$/# to '%'$ signify the initial incorporation of the industrial revolution in the alteration of the traditional agrarian economy. -uring the '$/#s only '",### people were engaged in large; scale manufacturing. +ccording to '%'# census, there were only 9',### industrial workers. First industrial plants were based only on the e&ploitation of natural wealth .lumber and food processing industries0 and use of cheap labour force which e&panded during the process of de;agrarianisation .labour;intensive industries= te&tiles, footwear, and partially metal production0. Slowly the process of industriali5ation began to e&pand from the larger cities to the countryside. Even then prior to )orld )ar !!, peasants comprised more than half of 6roatiaEs population and the countryEs economy was based largely on agriculture and livestock. !ndustriali5ation became dominant after )orld )ar !! when 6roatia became a part of the Socialist Federal Republic of Hugoslavia. -uring this time, the economy diversified, industry and trade grew rapidly, and tourism developed swiftly. + planned socialist system .'%9@;'%%#0 brought in a very intensive process of change in the basic professional structure .industriali5ation and de; agrariani5ation0, as well as the spatial arrangement of settlement .de;ruralisation and urbani5ation0 .(iland5ic '%/$0. 6roatia bid for independence in '%%#. !t was met with military force by the Hugoslavian government, unleashing a war that lasted from '%%' to '%%@. (ut the war hap a serious impact on the 2-3 of the country which fell from 7"9/$"':D'/9.99:' in '%%# to 7'9@/$D$:%:".D"#$ in '%%9. The economy started recovering after war.

!t again fell in the '%%% crisis and the "##$ crisis. The first private accumulations of capital developed most <uickly in fields of trade, tourism and catering, finance, consulting services and similar areas, and much slower in the restructuring of production.industry0, after its !ndependence. The share of agriculture in 2-3 had already declined from 9D./4 in '%:' to %.:4 in '%%'. !t stood at @.'$94 in "#'". !ndustry, which was the main focus in the socialist regime, also lost its sheen to services. !n '%$$ it created @'.D4 of 2G3 which fell to 9#4 in '%%9.The 4 value added in 2-3 stood at ":.@"'4 in "#'". The shares of agriculture and industry in the 2-3 composition have declined over the years and the services sector is the dominant sector now accounting for :$."%@4 of the 2-3 ."#'"0, as is evident from the graph. So the 6roatian Economy is primarily a Sevices;based economy with tourism as the main component of service e&port. The tertiary sector absorbs the largest amount of manpower, followed by secondary sector, followed by primary sector.

!t can be concluded that 6roatia underwent through a shift from an agrarian to services oriented economy, with a base moderate industrial base. The shift from agriculture to services has been in terms of both value added and population. (ibliography= AThe development and structure of the 6roatian economyB by -ragutin Feletar 3h.-., Ooran Stiperski 3h.-. http=>>data.worldbank.org> http=>>www.nationsencyclopedia.com>economies>Europe>6roatia;*LERL!E);*F; E6*G*CH.html

Uruguay
ruguay officially the *riental Republic of ruguay and sometimes called the Eastern Republic of ruguay is a country in the southeastern part of South +merica. R 2 +H !S + )E+PT,H 6* GTRH by Patin +merican standards, although its economic development has been sluggish since the '%@#s. !n '%%# the country had a gross domestic product .2-30 of appro&imately S7%." billion, or S7",%/# per capita, placing it among the highest;income countries in Patin +merica. ruguayEs small population .1ust over D million0 and low population growth .#./ percent per year0 enabled its people to maintain a reasonable standard of living during the '%$#s, despite the nationEs unsteady economic performance. Pike many other countries in the region, ruguay faced a large e&ternal debt and an appreciable public;sector deficit, both of which impeded the growth of the economy. *ther ma1or limitations on growth were the continued dependence on a few agricultural products and one of South +mericaEs lowest levels of foreign and domestic investment.

+griculture played a central role in ruguayEs economy. !n '%$$ agricultural activity .including fishing0 directly generated 'D percent of 2-3 and provided over half the value of e&ports. !ndirectly, agriculture was responsible for a much higher proportion of both 2-3 and e&ports. Cany of ruguayEs most dynamic manufacturing enterprises;;such as its tanneries and te&tile mills;;depended on agricultural inputs. The close relationship between agriculture and manufacturing had a significant impact on ruguayEs economic development. !n "#'#, ruguayEs e&port;oriented agricultural sector contributed to %.D4 of the 2-3 and employed 'D4 of the workforce. +griculture produces /#4 of ruguayan e&ports. (eef, soybeans, cellulose, rice, wheat, wood, dairy products and wool are the ma1or e&port products of ruguay. ruguayEs industries, including construction, mining, and energy, generated DD percent of 2-3 in '%$$. These industries underwent most of their development behind high tariff barriers in

the '%@#s. +s a conse<uence, the industrial sector was geared mostly to the domestic market. The small si5e of the internal market limited the growth of manufacturing and prevented many industries from achieving economies of scale. !n addition, the substantial level of protection meant that ruguayan consumers paid high prices for domestically produced goods, which faced no international competition. -uring the '%/#s and '%$#s, ruguayEs protectionist apparatus was partially dismantled, and industry began ad1usting to the world market. !ndustry sector alone contributed about '94 of 2-3 in "#'#. (anking has traditionally been one of the strongest service e&port sectors in the country. within the service sector, a large commercial bank and several insurance companies. !n '%$$ the entire service sector, including activities such as private banking, transportation, and tourism, accounted for 9" percent of 2-3. The e&ternal sector, i.e., activities involving foreign trade, generated the remaining '" percent of 2-3. +nd if we look at the current statistic then we find that the service sector contributes about :%.D4 ."#'" est.0 of the 2-3. So from these data it is clear that the service sector is playing a vital role in the development of the country and the this sector is growing at an increasing rate of 2-3.

The labour force in ruguay was small .'.9 million in '%%#0, about $# percent urban, and educated at least to a high school level. 6urrently unemployment being at the :.' 4 and contribution of the labour force being agriculture: 13%;
industry: 14%; services: 73% (2010 est.). and if the total em loyment is concerned than each sector contri!utes agriculture: 12%; industry: 20%; services: "#% (2010 est.)

The ma1or e&port being Soya beans .'#40, (ovine meat .fro5en0 .'#40, 6hemical wood pulp, soda or sulfate, not dissolving grade .$40, Rice .940, )heat and meslin .940 etc. so if we look at the data about the e&port of goods and services the current data shows that the e&port is about "D4 of 2-3 in "#'" and it peaked in "##D as about DD4 of 2-3.

Sources=
1. http://$%tended &ational 'ousehold (urvey) 200": *ncestry+ 2 http=>>www.heritage.org>inde&>country>uruguay 3.

http=>>internationalliving.com>countries>uruguay>the;economy;in;uruguay>

9. http=>>www.mongabay.com>reference>country?studies>uruguay>E6*G*CH.html @. http=>>databank.worldbank.org>data>home.asp&

Lithuania
ocation: Eastern Europe, bordering the (altic Sea, between Patvia and Russia Geogra!"ic #oordinates: @: ## G, "9 ## E Area: :@,D## s< km.land= :",:$# s< kmQ water= ",:"# s< km0 and $oundaries: ',@/9 km .(elarus :$# km, Patvia @/: km, 3oland %' km, Russia .Raliningrad0 ""/ km0 Pithuania is a member of the European nion and the biggest economy among three (altic states Pithuania was the first occupied Soviet republic to break free from the Soviet nion and restore its sovereignty via the declaration of independence on '' Carch '%%#. 2-3 per capita in Pithuania is /#4 above the worldEs average of S7'#,@##. Pithuania has a favourable legislative basis for business as the country is ranked the Drd in the region of Eastern Europe and 6entral +sia and the ":th in the world by the Ease of -oing (usiness !nde& prepared by the )orld (ank 2roup. Pithuania is ranked the D#th out of '/% countries in the !nde& of Economic Freedom, measured by The ,eritage Foundation. +ccording to the ,uman -evelopment Report "#'', Pithuania belongs to the group of very high human development countries.

The economy of Pithuania was one of the %astest gro&ing in t"e &orld last decade .'%%$I"##$0 as 2-3 growth rate was positive % years in a row. The accession to the )T* in "##' and the E in "##9, which enabled free movement of the labour force, capital and trade between the Cember State resulted in substantial economic e&pansion, , leading to the notion of a (altic Tiger. 6urrent e&cellent telecommunication infrastructure and well;educated, multilingual workforce give the possibility to provide high <uality business services and produce manufacturing products worldwide.

The global credit crunch which started in "##$ affected the real estate and retail sectors. The construction sector shrank by 9:.$4 during the first D <uarters of "##% and the slump in retail trade was almost D#4. 2-3 plunged by '@./4 in the first nine months of "##%. Pithuania was the last among the (altic states to be hit by the economic crisis because its 2-3 growth rate in "##$ was still positive. !n the third <uarter of "##%, compared to the previous <uarter, 2-3 again grew by :.'4 after five;<uarters with negative numbers. . The governments efforts to attract foreign investment, to develop e&port markets, and to pursue broad economic reforms has been key to Pithuanias <uick recovery from a deep recession, making Pithuania one of the fastest growing economies in the E . Sectors related to domestic consumption and real estate are still suffering from the economic crisis. ,owever, e&porters have started making profits even with lower levels of revenue. The catalysts of growing profit margins are lower raw material prices and staff e&pense.

. Services, which due to historic reasons were underdeveloped, e&panded rapidly after independence. The service sector accounts for the largest share of 2-3 .:$.94 in "#'"0. *ne of the most important sub;sectors is information and communication technologies. D/ thousand employees work for more than "### !6T companies. !6T received %.@4 of total F-!. '' out of "# biggest !T companies from (altic countries are based in Pithuania. Pithuania e&ported D'4 of its !T services in the first <uarter of "##%. (y "#'@, the share of e&ports of services is e&pected to be appro&imately '>" of Pithuanias total e&ports. -evelopment of shared services and outsourcing of business processes .(3*0 is one of the most promising fields in Pithuania. !nternational companies successfully outsourcing business operations in Pithuania are (arclays (ank 3P6, 6!T6* 2roup, C!RR*R, 3ricewaterhouse6oopers, +nthill, Ernst 8 Houng and etc. +ccording to the +.T. Rearney 2lobal Services Pocation !nde& "#'', Pithuania went up by / places to rank '9th globally, leaving behind the R .':0 or the S .'$0 as well as the neighbouring 3oland ."90 or ,ungary .D'0 and the 65ech Republic .D@0.

+griculture in Pithuania formed the basis of the PithuaniaEs economy in '%9#. Core than half of the labor force of Pithuania was engaged in agricultural work. Fifty years later, agriculture of Pithuania still continued to play a crucial role in the economy of the country. +lthough in the transitional period its share in 2-3 has fallen from "/4 in '%%# to D.D4 in "#'". + rapid privatisation coupled with the restitution of property rights on land has led to a strongly disaggregated ownership structure, resulting in low productivity. -espite a decreased share in 2-3, the agricultural sector is still important for Pithuania as it employs almost $4 of the work force and supplies materials for the food processing sector. 99.$4 of the land is arable. Total crop area was '.$ million hectares in "##$. 6ereals, wheat and triticale are the most popular production of farms. -uring the period of Soviet control of Pithuania, the government tried to change the economy from one based on agriculture to one based on industry. ,owever, in the post;Soviet era, industry has declined significantly in relation to the other segments of the economy. PithuaniaEs industrial sector produced almost @' percent of 2-3 in '%%', but industrial production has subse<uently e&perienced declines;;by a reported 9@ percent in "#'', for e&ample. The sector employed D$ percent of the labor force in '%%".!n '%%% alone, industrial production declined by '9 percent. There have also been deep cuts in employment in industry. For instance, in '%%# there were "@,### workers in the electronics industry, but by '%%/, that number had declined to '#,###. Pithuanian industry suffers from outdated e<uipment and a reliance on unstable markets in the nations of the former Soviet nion. The chemical industry remains one of PithuaniaEs most profitable sectors. !n '%%/ it accounted for almost '# percent of all Pithuanian e&ports. Pithuania also has a significant wood and paper processing industry.. !ts products account for about @.9 percent of e&ports. The rest of the industry produces diverse goods including consumer durables, e.g. refrigerators, consumer electronics, etc. There are small but growing and technologically advanced biotechnology, computer and !nternet industries. Cost of the industrial production is e&ported to the European countries.

!nternational trade for such a small country as Pithuania is crucial. The ratio of foreign trade to 2-3 has always been at least '##4, and for the last several years e&ceeded it. The E is the biggest trade partner of Pithuania with a @$4 of total imports and :94 of total e&ports during the first ten months of the year "##%. The 6ommonwealth of !ndependent States is the second economic union that Pithuania trades the most with, with a share of imports of D94 and a share of e&ports of "D4 during the same period Some sectors are directed mainly at e&port markets. Transport and logistics e&port ">D of their products and>or servicesQ the biotechnology industry e&ports $#4Q plastics e&port @"4Q laser technologies e&port $:4Q metal processing, machinery and electric e<uipment e&port :94Q furniture and wood processing e&port @@4Q te&tile and clothing e&port /:4Q and the food industry e&ports D:4. PithuaniaEs 2-3 growth is mostly driven by its e&ports.

Sources; )orld (ank, )-! database, http=>>databank.worldbank.org>data>home.asp& http=>>www.mongabay.com>reference>country?studies>lithuania>E6*G*CH.html http=>>www.mapsofworld.com>lithuania>economy;and;business> http=>>ec.europa.eu>economy?finance>een>##">article?9#/D?en.htm http=>>globaledge.msu.edu>countries>lithuania>economy http=>>www.nationsencyclopedia.com>economies>Europe>Pithuania;E6*G*C!6; SE6T*RS.html 2*LERGCEGT *F T,E RE3 (P!6 *F P!T, +G!+,E R*3E+G 6*CC!SS!*G, -!RE6T*R+TE 2EGER+P F*R E6*G*C!6 +G- F!G+G6!+P +FF+!RS= Foint +ssessment of PithuaniaEs Economic 3olicy 3riorities

Latvia
The Patvian economy which is an open economy in Gorthern Europe is part of the European nionEs .E 0 single market. Patvia is a member of the )orld Trade *rgani5ation .)T*0 since '%%%, and a member of the European nion since "##9. +ccording to the ,uman -evelopment Report "#'', Patvia belongs to the group of very high human development countries. -ue to its geographical location, transit services are highly;developed, along with timber and wood; processing, agriculture and food products, and manufacturing of machinery and electronic devices. The Republic of Patvia was founded on Govember '$, '%'$, however, its independent status was interrupted at the outset of )orld )ar !! when in '%9#, the country was forcibly incorporated into the Soviet nion, invaded and occupied by Ga5i 2ermany in '%9', then re;occupied by the Soviets in '%99 to form the Patvian SSR for the ne&t fifty years. The peaceful Singing Revolution starting in '%$/ called for (altic emancipation of Soviet rule, it ended with the dissolution of the Soviet nion in '%%' and Patvia declared the restoration of its de facto independence on +ugust "', '%%'.

The Patvian economy began to falter in '%%' and took a nosedive in '%%". !ndustrial production declined and especially hard hit was the engineering industry, which was not able to sell most of its production. !nternational trade also plummeted as most of the trade with the former Soviet republics was conducted using world prices. *ne of the key areas of change is in the price of energy, which increased seventy;five times between '%%# and '%%". The average prices of imports in these two years increased forty;five times, whereas prices of e&ports increased only about thirty;three times. )ith such price hikes and the general economic chaos prevailing in the whole post;Soviet region, e&ports in the '%%#;%" period decreased by 99 percent, imports by @% percent, and energy imports by @" percent. ,owever after the introduction of the free traded currency lat ,there was moderate improvement in '%%D and the economy steadied in late '%%9, led by recovery in light industry and a boom in commerce and finance. This recovery was interrupted twice, first by a banking crisis and the

bankruptcy of Banka Baltija, PatviaEs largest bank, in '%%@ and second by a severe crisis in the financial system of neighbouring Russia in '%%$. +fter "###, Patvian 2-3 grew and till the middle of "##$, Patvia was the fastest developing economy in Europe. The Financial 6risis of "##$ severely disrupted the Patvian economy, primarily as a result of the easy credit bubble that began building up during "##9. The bubble burst lead to a rapidly weakening economy, resulting in a budget, wage and unemployment crisis. S'9T Patvia had the worst economic performance in "##%, with annual growth rate averaging U'$4. ,owever, by "#'# with PatviaEs policy of internal devaluation, the economic situation improved and by "#'" Patvia was definitely out of the crisis, showing strong growth forecasts. The Patvian economy grew by @.@4 in "#'' and by @.:4 in "#'" reaching the highest rate of growth in Europe.

+griculture, Services and !ndustry contributions to the Patvian economy The years following )orld )ar !! saw a shift in PatviaEs ma1or economic activity from agriculture and toward Soviet;style heavy industry. !n '%%#, agriculture accounted for "" percent of the 2-3 while industry comprised almost 9: percent and servicesVincluding transportation, communication, and constructionVwere around D" percent. +fter independence, the shift from the socialist system and restructuring period in the early '%%#s yielded a remarkable change from an industry;based economy to a services;based economy. (y '%%$ agriculture contributed only 9 percent of the 2-3, while industry contributed "$ percent and services contributed :$ percent.

Canufacturing sector is slowly changing from being labour;intensive to being a capital;intensive sector. !n '%%: the !ndustry sector provided "/."4 of the total employment, whereas in "#'" it employed "D."4 of the total employed population. Top industries in terms of value added are capital intensive industries such as pharmaceutical industries, timber and wood processing, processed foods .food manufacturing0.The timber industry is the nations main e&porter of merchandise. )hile its share has fallen compared to levels '# years ago, the timber industry still accounts for around '@4 of total e&ports of goods and services

Share of employment in the service sector has increased over the years as value added by services as a percentage of 2-3 has shown a upward trend from the early '%%#s. !n '%%:,the services industry provided @@.94of the total employment which has grown to ::.:%4 in "#'".+ncillary services for transport and logistics is an increasing important employment source for Patvia as the value added by transport sector makes up around '9 4 of the 2-3. The "##$ crisis has structurally changed the Patvian economy, putting it more in balance and shifting from domestic consumption to e&ports. +fter a sharp fall,

Patvia has now returned to the path of growth for some time. The e&port of goods and services which was the main driver in early '%%#s retained its roll in "#'' as well after Patvia came out of recession.

Patvias economic development in the future will be closely linked to e&port opportunitiesQ therefore the greatest risk to Patvias growth is linked to development in the global economy. +s growth rates slow for its main trading partners, the growth of Patvias e&ports may moderate and affect Patvias economic development. Sources= )orld (ank, )-! database, http=>>databank.worldbank.org>data>home.asp& http=>>www.nationsencyclopedia.com>economies>Europe>Patvia http=>>www.mongabay.com>reference>country?studies>latvia>E6*G*CH.html http=>>en.wikipedia.org>wiki>Economy?of?Patvia http=>>baltice&port.com>MarticleNlatvi1as;ekonomika