world 's 10 worst economiesss

8/8/2019 World 's 10 Worst Economiesss

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WORLD S 10 WORST

ECONOMIES

Submitted By:

Meenu Goswami M090700042Iesha Sharma M090700033

Tarandeep Kaur M090700084

Priyanka Garg M090700057


2/18

Table of Content

Sr.no Title

1. Executive Summary

2. List of worlds 10 worst Economies

3. Problems of Zimbabwe

4. Problems of Dem. Republic of Congo

5. Problems of Guinea

6. Problems of Sierra Leone

7. Problems of Nicaragua

8. Problems of Burundi

9. Problems of Eritrea

10. Problems of Liberia

11. Problems of Ghana

12. Problems of Madagascar

13. Bibliography


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Ex ecutive Summary

The Project Title Worlds 10 worst Economies refers to understand the problems of all 10

economies.

In this Project we describe 10 worst economies listed in Forbes Magazine 2010.

Forbes screened IMF data for countries that have low and declining per-capita GDP, high

trade deficits and high inflation, all indicators of bad economic management regardless of the

country's inherent wealth.

All have at least one trait in common: Their governments discourage private investment--andeconomic growth--through policies of crony capitalism, expropriation or arbitrary

enforcement of the laws. That makes it hard to generate hard currency to pay off governmentdebt and discourages citizens from investing in education to improve their own economic lot.


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W ords 10 W orst E conomies

These countries aren't unlucky - they're poor by design.

Forbes screened IMF data for countries that have low and declining per-capita GDP, high

trade deficits and high inflation, all indicators of bad economic management regardless of the

country's inherent wealth.

All have at least one trait in common: Their governments discourage private investment and

economic growth through policies of crony capitalism, expropriation or arbitrary enforcement

of the laws. That makes it hard to generate hard currency to pay off government debt and

discourages citizens from investing in education to improve their own economic lot.

Worst Economies Are:

1. Zimbabwe

2. Dem. Republic of Congo

3. Guinea

4. Sierra Leone

5. Nicaragua

6. Burundi

7. Eritrea

8. Liberia

9. Ghana

10. Madagascar

Source: www.forbes.com


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Z imbabwe

Zimbabwe Ranked no.1 worst Economy in the World.

Problems:

y Zimbabwe has the highest unemployment rate in the world. For the year 2019, 90%

of Zimbabwes population is unemployed.

y This country has the lowest GDP Gross Domestic Products (PPP) per capita in the

world, 200 Int. $.

y Zimbabwe has had the Worst GDP decline in the world, -14.10% according to CIA

World Factbook in 2008.

y It has the lowest environmental happiness in the world, according to Happy Planet

Index. It had a score of 16.6 in 2009.y Zimbabwe had the worlds highest annual inflation rate, 11,200,000.00% in 2008.y This African nation had the highest central bank interest rate in the world,

975.00% in 2007.

y Zimbabwe had the highest commercial bank prime lending rate in the world,

578.96% in 2007.

y This African country is the worlds highest public debt as percentage of GDP,

241.20% in 2008.

y Zimbabwe has the worst industrial production decline in the world, -14.70% in

2008 according to CIA World Factbook.

y This country, which is obviously not a good country to live in or to visit, has the

lowest level of innovation in the world according to Global Innovation Index, it has

garnered a score of -1.63 in 2009


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D emocratic Republic of the Congo ( D RC)

DRC Ranked no.2 worst Economy in the world.

Problems:

y The Democratic Republic of the Congo (DRC) has suffered from problems of

governance and economic decline for three decades.

y In parts of the country where fighting continues, roughly 10% of the population is

dying each year (compared to a typical death rate of 2% for developing countries).

Even in peaceful areas, child malnutrition rates are alarming. Infectious diseases,

acute malnutrition, diarrheal diseases, low routine immunization coverage, and

limited access to potable water.

y The maternal mortality rate, estimated to be 1,837 deaths per 100,000, could be one of the highest in the world. HIV/AIDS prevalence rates continue to climb, with an

infection rate of 5.1%. The DRC government allocated approximately 25% of its

national budget to education during the 1970s but less than 7% now. Non-

governmental organizations (NGOs), including faith-based organizations, provide the

vast majority of social services throughout the country. Congolese and international

NGOs regularly compensate for weak governmental structures.

y After three decades of decline and recent conflicts, per capita GDP has fallen from

$250 in 1990 to less than $78 today.

y The under five mortality rate is 207 deaths per 1,000. A recent study indicates that

even in peaceful regions untouched by the present conflict nearly half of the children

are malnourished

y The accumulated debt and severe economic decline are due to both recent wars and

decades of corruption and economic mismanagement. Agricultural production has

also suffered, and crop diseases, such as cassava mosaic virus, have exacerbated

poverty and hunger.

y The ongoing war also threatens DRC's vast equatorial forest and other vital natural

resources of global importance. The DRC has five natural World Heritage Sites, more

than any other country in sub-Saharan Africa. All five, with irreplaceable resources

and species such as gorilla and the indigenous chimpanzee, the bonobo, are

endangered.


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G uinea

Guinea ranked no.3 worst Economy in the world.

Problems:y Guinea is a small economy in terms of the total value of its output. The population is

small, at around 7.6 million, and not very productive.

y The amount of output produced per person is very low at US$540 a year (by way of

comparison the U.S. figure is US$29,340 per person, per year). This low output level,

combined with poor educational prospects and inadequate access to health care and

other human services, has earned Guinea a place near the bottom of the United

Nations Human Development Index, with a ranking of 162 out of 174 countries.

y The population is growing fairly rapidly, at 1.96 percent a year, with the average

woman giving birth to 5.5 children during her lifetime, and this rate adds to the

problems of generating higher incomes.

y Mostly 80 percent people depend on agriculture for their livelihoods, mainly on small

family farms.

y Following independence from France in 1958 all opposition was ruthlessly crushed,

and Guinea pursued a M ar x ist development strategy, which continued until 1984.

y Inefficient public companies controlled all economic activity, discouraging all private

enterprise, and the economy was centrally planned. Vestiges of the old system remain,

despite 15 years of support from the International Monetary Fund (IMF) for economic

reforms. Only the mining sector remained productive over this entire period, as it

operated mainly in enclaves isolated from the rest of the economy.


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Sierra Leone

Sierra Leone ranked no.4 worst Economy in the World

Problems:

The economy of Sierra Leone is getting worse with the national currency losing it

value.

y GDP (official exchange rate, 2009 est.): $2.064 billion. GDP growth rate (2009

est.): 2%. Avg. annual inflation rate (2009 est., IMF): 9%.

y The economic growth rate slowed because of a decline in the mining sector and

increasing corruption among government officials.

y The economy of Sierra Leone is that of a least developed country

with a GDP of approximately 1.9 billion USD in 2009.Since the end of the civil war in 2002 the

economy is gradually recovering with a GDP growth rate between 4 and 7%.

y In 2008 it's GDP in PPP ranked between 147th (World Bank) and 153th (CIA)

largest in the world.

y Sierra Leone's economic development has always been hampered by an

overdependence on mineral exploitation. Successive governments and the

population as a whole have always believed that "diamonds and gold" are

sufficient generators of foreign currency earnings and lure for investment. Aresult large scale agriculture of commodity products, industrial development and

sustainable investments have been neglected by governments. The economy

could thus be described as one which is "exploitative" and based on the

extraction of unsustainable resources or non-reusable assets. Sierra Leone is a

member of the WTO.

y By the 1990s economic activity was declining and economic infrastructure had

become seriously degraded. Chronic electricity shortages have hampered Sierra

Leones development and recovery from the countrys civil war. The coming on

line of the Bumbuna Dam hydroelectric project in 2009 is alleviating the power

shortage.

y Much of Sierra Leones formal economy was destroyed in the civil war.y Much of Sierra Leones recovery will depend on the success of the Government


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of Sierra Leones efforts to limit official corruption, which many feel was th

chief culprit for the countrys descent into civil war. A key indicator of success

will be the effectiveness of government management of its natural resources.

Besides mineral deposits, Sierra Leone has sizeable marine and timber resources.

Both sectors are threatened by limited management and overexploitation.y Mineral exports remain Sierra Leone's principal foreign exchange earner. Sierra

Leone is a major producer of gem-quality diamonds. Though rich in this

resource, the country has historically struggled to manage its exploitation an

export. Annual production estimates range between $250-$300 million

NicaraguaProblems:

y Ranking fifth on the list is Nicaragua, the only Latin American country to show

such a poisonous combination of poverty and stagnant growth. Nicaragua's

inflation adjusted GDP fell 1.5% in 2009

y Most Nicaraguans are devious, dishonest, lazy and skilled in only one thing:

Taking advantage of others.


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E ritrea

Ex ports [152 nd of 189]

Ex ports to US [199 th of 224]

GD P [145 th of 203]

GD P (purchasing power parity) [159 th of 187]

Inflation rate (consumer prices) 17% [7 th of 192]

Problems

y Since independence from Ethiopia in 1993, Eritrea has faced the economic problems

of a small, desperately poor country, accentuated by the recent implementation o

restrictive economic policies.

y Like the economies of many African nations, the economy is largely based on

subsistence agriculture, with 80% of the population involved in farming and herding.

The Ethiopian-Eritrea war in 1998-2000 severely hurt Eritrea's economy. GDP

growth fell to zero in 1999 and to 12.1% in 2000.

y The May 2000 Ethiopian offensive into northern Eritrea caused some $600 million

in property damage and loss, including losses of $225 million in livestock and

55,000 homes. The attack prevented planting of crops in Eritrea's most productive

region, causing food production to drop by 62%. Even during the war, Eritrea

developed its transportation infrastructure, asphalting new roads, improving its ports,

and repairing war-damaged roads and bridges. Since the war ended, the government

has maintained a firm grip on the economy, expanding the use of the military and

party-owned businesses to complete Eritrea's development agenda.

y Erratic rainfall and the delayed demobilization of agriculturalists from the military

continue to interfere with agricultural production, and Eritrea's recent harvests have

not been able to meet the food needs of the country.


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y The government continues to place its hope for additional revenue on the

development of several international mining projects.

y Eritrea's economic future depends upon its ability to master social problems such as

illiteracy, unemployment, and low skills, and more importantly, on the government's

willingness to support a true market economy.

Liberia

Liberia is a rather strange place. It should not be a poor country, but it certainly is. For a few

years in the 1970s, Liberia's per capita income was equivalent to that of Japan. Liberia is now

ranked by the World Bank as among the very poorest countries in the entire world.

Problems:

y In eighth place is Liberia, another resource-rich nation that has mismanaged its way to

poverty through decades of corruption and civil war. The country has been relatively

stable since 2005 and may achieve 6% GDP growth this year. But that's a GDP of less

than $900 million, with rubber exports the single largest source of foreign currency at

$170 million.

y Registrations of foreign ships brings in another $18 million, hardly enough to make a

dent in the country's $3.4 billion debt. Last year commercial creditors agreed to call it

even at 3 cents on the dollar, possibly allowing Liberia to begin the cycle of

borrowing and defaulting anew. Some economic growth is expected after A rcelor

M ittal ( MT - news - people ) begins shipping iron ore from the Yekapi complex in

2011.

y Liberia is a very poor country with a market-based economy that is only beginning to

recover from the ravages of civil war. According to the Liberian government, the

unemployment rate is 70 percent (although in a largely subsistence economy, this

figure may be more a reflection of urban unemployment). In addition, the absence of

infrastructure throughout the country continues to depress productive capacity, despite

Liberia's rich natural resources and potential self-sufficiency in food. The country's

literacy rate is an estimated 25 percent.


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y Liberia's need to rebuild following a seven-year conflict combined with its abundant

natural resources make it a country with great potential for investment.

y As governmental corruption that reaches to the highest level of government, it is

unlikely that significant numbers of serious investors will be induced to come here.

y The seacoast of Liberia has many beautiful tropical beaches, a favorable climate in thedry season (September-May), and sport fishing. However, growth in this sector is a

long-term prospect because of the lack of adequate infrastructure, and current

problems with regional and internal stability. Manufacturing accounted for just under

5 percent of GDP, but the availability of agricultural crops, mineral resources, and

low cost labor presents opportunities for growth in this sector.

y The IMF has identified problems with continued lax expenditure controls and extra

budgetary expenditures. Large resource allocations to military expenditures and

foreign travel as opposed to much needed social services remain a problem.

y The willingness of the IFIs ( international financial institutions) and donors to

construct a program to bring Liberia to the point where it would be eligible for

assistance under World Bank rules depends largely on evidence that the government

of Liberia is committed to sound economic policies.

y Due to the high price of newspapers, the high rate of illiteracy (estimated at 75

percent), high transportation costs, and the poor state of roads elsewhere in the

country, newspaper distribution generally is limited to the Monrovia area. As a result,

radio was the primary means of mass communication.

y Liberia's infrastructure was totally devastated during the civil war years from 1989-

96. Currently, public utilities, such as electrical power, sewers and running water are

provided to only a small portion of the public in Monrovia. Roads in and around

Monrovia get minimal maintenance, but roads to the hinterlands are frequently

impassable in the rainy season. The telephone system frequently breaks down and

there is only minimal domestic or international postal service.


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G hana

"The economy of Ghana has a diverse and rich resource base, and as such, has one of the

highest GDP per capita in Africa".

Ghana Ranked 9th Worst Economy In The World. Ghana is a typical example of the world's

worst-managed economies. It's a country that shouldn't be poor, but it is.

Problems

y GDP per capita: $671Inflation rate: 16%

y The West African nation's gross domestic product per capita fell 9% last year to $621,ranking it 154th out of 184 countries tracked by the International Monetary Fund,

below resource-impoverished Haiti.

y With a $3 billion trade deficit last year and $4.9 billion in external debt, Ghana is

struggling to pay its bills even as it sits on some of the world's biggest reserves of

gold and bauxite, as well as considerable amounts of offshore oil, which is being

developed by A nadarko Petroleum ( APC - news - people ) and others.

y Ghana has the world's largest manmade lake and the 1-gigawatt Aksombo

Hydroelectric Plant, built to supply electricity to Africa's largest aluminum smelter.

But the smelter has "been idle since 2009, a casualty of low aluminum prices and

persistent electricity shortages that have forced the government to divert the power

elsewhere.

y The Ghanaian economy was faced with serious difficulties in 2008 as a result of huge

domestic spending and coupled with the food and fuel crises, as well as the global

financial crises, the economy, like many other economies including the most

advanced ones, encountered a number of challenges, registering high inflation as well

as high fiscal and current account deficits.

y Consequently, the Government was faced with serious economic challenges

particularly in 2009. It was against this background that the Government was

committed to pursuing measures that will ensure the attainment of macroeconomic

stability and significant progress has been made in this respect. The report fails to

acknowledge the progress made in the last fifteen months. Real GDP growth in Ghana


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for 2009 slowed down, but it was higher than what pertained in most sub-Saharan

African countries and exceeded the average growth rate for sub-Saharan Africa

y Consumer price inflation fell to 16.0 percent in December 2009 and further to 10.68

percent in May 2010, after peaking at 20.7 percent in June 2009.

y The fiscal and current account deficits were reduced from 14.5 percent and 18.7 percent to 9.5 percent and 5.1 percent, respectively.

y Gross International Reserves increased from US$2 billion in 2008 to US$3.2 billion

in 2009 and is projected to increase to US$3.7 billion in 2010

y Private Investment The Forbes report indicates that the Government is discouraging

private investment economic growth through policies of crony capitalism,

expropriation or arbitrary enforcement of the laws

W ith all these achievements in a year Ghana cannot be said to be a typical example of theW orlds worst-managed economies. W e wish to further comment on some specific issues.

G hana's problems are mostly homegrown," said Peter A llum, the I MF 's mission chief to

G hana, in F ebruary. F orbes ranks G hana ninth on our list of the world's worst

economies.

M adagascarMada is great, but it's no paradise, for both the Malagasy and the traveler.

Problems:

y Madagascar is listed by the United Nations as one of the world's 49 least developed

nations.

y According to the US Department of State, in 2003 "approximately 70 percent of

(Madagascar's) population was below the government's own poverty level of approximately 45 cents a day in income."

y The World Bank estimates that each Malagasy earns only US$290 per year. In a list

of 208 countries rated according to gross national income per capita for 2003 the bank

places Madagascar at position 187, just 21 places from the bottom.


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y Madagascar's infant mortality is almost 1 in 10. Only about five per cent of the

island's land is considered arable.

y Madagascar was ranked by Transparency International in its 2003 International

Corruption Perceptions Index as the 45th most corrupt nation in the world. The

previous year Madagascar was ranked as the 4th most corrupt nation.y These are not a great set of figures, and along with them come all the expected human

consequences - low life expectancy, rapid population growth, poor health care,

periodic famine, hand-to-mouth living, exploitation, the list goes on.

y A little bit of money can buy you a lot in Madagascar; a point not lost on

unscrupulous Malagasy and foreigners alike. Cronyism is said to be rife, and heads

can be easily turned from all sorts of unsavoury or downright illegal activities if the

price is right. Human predators are ready and willing to take advantage. Sexual

tourism is obvious and can involve children. There are also reports of human

trafficking.

y The problems have been exacerbated by decades of bad government. The little

infrastructure and few social institutions left by the French colonialists were allowed

to run down during the 40 years of socialist rule that followed independence.

Perhaps their best opportunities lie with education and environmentally sustainable

development .

W hy is M adagascar so poor?

Madagascar is among the world's poorest countries despite its biological and cultural richness

due to:

y K leptocractic rule

Under the kleoptocratic rule of French-backed dictator Didier Ratsiraka, government

officials stole millions of dollars in funds ear-marked for aid and development

activities.

More generally, corruption is extremely costly to developing economies. Corruption

breeds poorly performing economies by discouraging private sector development,


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scaring off foreign investors, undermining government credibility, and impeding

poverty alleviation. The kleptocrats believe that they stand to gain more from taking a

large share of a stable or shrinking economy than from a shrinking portion of an

increasing economy. Economies based on natural resource extraction, like

Madagascar, are particularly prone to kleptocracy.

y E conomic colonialism

Despite achieving independence in 1960, Madagascar is still largely run like a colony

with an economy closely tied to resource extraction. Lack of investment in sustainable

industries has retarded Madagascar's economic development significantly.

New president Marc Ravalomanana is working to move away from the old system

and attract foreign investment that will build sustainable business models (though

resource extraction, especially mining, will still play an important part in developing

Madagascar's economy).

y Lack of infrastructure

According to CIA figures, Madagascar has 49,827 km of roads, of which just 5,780

km are paved. These figures are probably optimistic; many of Madagascar's "paved

roads" are in terrible shape, filled with potholes and or wide enough for only a singlevehicle. Cyclones and other weather conditions often wipe out roads and bridges

making travel even more difficult.

New president Marc Ravalomanana has initiated a major infrastructure improvement

program in an effort to boost the Malagasy economy. This plan is likely to bring

economic benefits but may have high social costs with increased access affecting

traditional Malagasy culture and perhaps spreading AIDS from cities to the

countryside. Currently Madagascar has one of the lowest HIV / AIDS rates in Africa.

y G eographic isolation

Madagascar's geographic isolation increases the cost of trade. This isolation is not all

bad it is a large part of why Madagascar has such incredible biodiversity and unique

cultural practices.


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y Relatively small population

A small population is not necessarily a bad thing but it does not really help the

economy. Because Madagascar's population is relatively small (and poor), it will

continue to be underserved as a market for international firms. With less than 20million people, foreign corporations lack the incentive to develop, transport, and

market many goods in Madagascar.

y E ducational system

Madagascar's children lack an adequate educational system. Being poor makes it

difficult for the government to spend much on education and until recently most kids

lacked basic educational supplies. Textbooks available to Malagasy children taught

them nothing of local fauna (emphasis on European and African animals not lemurs,

tenrecs, and chameleons) or much about their own country and unique cultural

identity.

New president Marc Ravalomanana has put major emphasis on improving

Madagascar's educational system including providing training for teachers and

distributing backpacks and school supplies for children. International organizations

are using radio as a tool for educating adults in remote areas about issues such as

conservation while others work with local farmers to improve crop yields. The

government has begun teaching English in schools.

y E nvironmental degradation

Madagascar's environmental degradation is severe. Perhaps 90% of Madagascar's

forests are gone while 25-30% of the country burns every year from agricultural fires.

Soil erosion robs the country's agricultural capacity and further impoverishes rural

populations. Conserving what remains of Madagascar's wild lands and biodiversity iskey to the country's future economic development.


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B IB LIO G R A PHY

www.forbes.com

www.imf.com

www.worldbank.com

www.google.com

www.wikipedia.com

world 's 10 worst economiesss

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