European
market and proximity to EU aspirant economies. In 2000, Austria
moved to further cut government spending and raise taxes to meet EMU
deficit targets after facing unexpected difficulties in reducing the
public deficit. To meet increased competition from both EU and
Central European countries, Austria will need to emphasize
knowledge-based sectors of the economy and continue to deregulate
the service sector. Growth is expected to remain at about 3% in 2001.

Azerbaijan:
Azerbaijan's most prominent products are oil, cotton,
and natural gas. Azerbaijan's oil production declined through 1997
but has registered an increase every year since. Negotiation of 19
production-sharing arrangements (PSAs) with foreign firms, which
have thus far committed $60 billion to oil field development, should
generate the funds needed to spur future industrial development. Oil
production under the first of these PSAs, with the Azerbaijan
International Operating Company, began in November 1997. Azerbaijan
shares all the formidable problems of the former Soviet republics in
making the transition from a command to a market economy, but its
considerable energy resources brighten its long-term prospects. Baku
has only recently begun making progress on economic reform, and old
economic ties and structures are slowly being replaced. An obstacle
to economic progress, including stepped up foreign investment, is
the continuing conflict with Armenia over the Nagorno-Karabakh
region. Trade with Russia and the other former Soviet republics is
declining in importance while trade is building up with Turkey,
Iran, UAE, and the nations of Europe. Long-term prospects will
depend on world oil prices, the location of new pipelines in the
region, and Azerbaijan's ability to manage its oil wealth.

Bahamas, The:
The Bahamas is a stable, developing nation with an
economy heavily dependent on tourism and offshore banking. Tourism
alone accounts for more than 60% of GDP and directly or indirectly
employs 40% of the archipelago's labor force. Moderate growth in
tourism receipts and a boom in construction of new hotels, resorts,
and residences led to an increase of the country's GDP by an
estimated 3% in 1998, 6% in 1999, and 4.5% in 2000. Manufacturing
and agriculture together contribute only 10% of GDP and show little
growth, despite government incentives aimed at those sectors.
Overa