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World > Africa > Cote d'Ivoire > Economy (Notes)

Cote d'Ivoire - Economy (Notes)


ECONOMY
The Ivoirian economy is largely market-based and depends heavily on the agricultural sector. Between 60% and 70% of the Ivoirian people are engaged in some form of agricultural activity. The economy performed poorly in the 1980s and early 1990s, and high population growth coupled with economic decline resulted in a steady fall in living standards. A majority of the population remains dependent on smallholder cash crop production. Principal exports are petroleum, cocoa, coffee, cotton, pineapples, tuna, and tropical woods. Principal U.S. exports are rice and wheat, plastic materials and resins, kraft paper, agricultural chemicals, telecommunications, and oil and gas equipment. Principal U.S. imports are cocoa and cocoa products, petroleum, rubber, and coffee.

Foreign Direct Investment Statistics
Direct foreign investment plays a key role in the Ivoirian economy, accounting for between 40% and 45% of total capital in Ivoirian firms. France is overwhelmingly the most important foreign investor. In recent years, French investment has accounted for about one-quarter of the total capital in Ivoirian enterprises, and between 55% and 60% of the total stock of foreign investment capital.

Infrastructure
By developing country standards, Cote d'Ivoire has an outstanding infrastructure. There is an excellent network of more than 8,000 miles of paved roads; good telecommunications services, including a public data communications network, cellular phones, and Internet access. There are two active ports. Abidjan's is the most modern in West Africa and the largest between Casablanca and Cape Town. There is regular air service within the region and to and from Europe and modern real estate developments for commercial, industrial, retail, and residential use. Abidjan remains one of the most modern and livable cities in the region. Its school system is good by regional standards and includes an international school--whose enrollment dropped sharply due to the November 2004 crisis--based on U.S. curriculum and several excellent French-based schools.

Recent political and economic problems have delayed Cote d'Ivoire's planned public investment program. The government's public investment plan accords priority to investment in human capital, but it also will provide for significant spending on economic infrastructure needed to sustain growth. Continued infrastructure development has been brought into question because of private sector uncertainty. In the new environment of government disengagement from productive activities and in the wake of recent privatization, anticipated investments in the petroleum, electricity, water, and telecommunications sectors, and in part in the transportation sector, will be financed without any direct government intervention. A return to political and economic stability is critical if Cote d'Ivoire is to realize its potential in the region.

Major Trends and Outlooks
Since the colonial period, Cote d'Ivoire's economy has been based on the production and export of tropical products. Agriculture, forestry, and fisheries account for a substantial part of GDP and of exports. Cote d'Ivoire produces 40% of the world's cocoa crop and is a major exporter of bananas, coffee, cotton, palm oil, pineapples, rubber, tropical wood products, and tuna. The 1994 devaluation of the CFA franc and accompanying structural adjustment measures increased the international competitiveness of the agricultural, light industrial, and service sectors. However, reliance on commodity exports exposes the economy to the ups and downs of international price swings. To reduce the economic exposure to price variability, the government encourages export diversification and intermediate processing of cocoa beans. In recent years, petroleum exports have risen significantly, and petroleum is now the country?s largest foreign exchange earner.

The 1994 devaluation of the CFA franc helped return Cote d'Ivoire to rapid economic growth until the slowdown evident by 1999. Increased aid flows, rigorous macroeconomic policies, and high international commodity prices, along with devaluation, yielded 6%-7% annual GDP growth rates from 1994-98. Cote d'Ivoire also benefited from Paris Club debt rescheduling in 1994, a London Club agreement in 1996, and the 1997 G-7 decision to include Cote d'Ivoire in the IMF-World Bank debt forgiveness initiative for highly indebted poor countries.

In the past several years, economic decline has resulted in declining living standards. Falling commodity prices along with government corruption and fiscal mismanagement brought the economy to its knees by the end of 1999. At that point, the coup d'etat and the subsequent institution of the military junta government caused the loss of foreign assistance. Private foreign investment declined precipitously. Government internal and external debt ballooned. As a result, the Ivoirian economy contracted 2.3% in 2000. The government signed a Staff Monitoring Program with the IMF in July 2001, but plans for a subsequent Poverty Reduction and Growth Facility were disrupted by the onset of the crisis in September 2002. The signs of economic and business recovery were encouraging in the mid-year of 2002, but the political and social crisis that began in September 2002 undermined all the efforts to resume cooperation with international donors. The economy has been in a slow decline since the outbreak of the armed rebellion in late 2002, with a cutoff of most external assistance (except humanitarian aid), mounting domestic and foreign arrearages, and a drastic slowdown in foreign and domestic investment.

The country is in substantial arrears to the World Bank and other international financial institutions. GDP growth is anemic, reaching 1.6% in 2005, buoyed largely by growing oil and gas revenues, along with steady cocoa exports. Strong economic growth is not expected until peace is firmly reestablished and international financial institutions conclude agreements to reduce the country?s large debt profile. However, with the gradual reintegration of the country, the economy in the north may begin to revive after a prolonged slump caused by the four-year-long division of the country.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions - CFA Franc BCEAO Exchange Rates
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions
CFA Franc BCEAO Exchange Rates


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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