g
knowledge-based sectors of the economy, and encouraging greater
labor flexibility and greater labor participation by its aging
population.

Azerbaijan
Azerbaijan's high economic growth in 2006 and 2007 is
attributable to large and growing oil exports. Azerbaijan's oil
production declined through 1997, but has registered an increase
every year since. Negotiation of production-sharing arrangements
(PSAs) with foreign firms, which have committed $60 billion to
long-term oilfield 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. A consortium of Western oil companies began
pumping 1 million barrels a day from a large offshore field in early
2006, through a $4 billion pipeline it built from Baku to Turkey's
Mediterranean port of Ceyhan. By 2010 revenues from this project
will double the country's current GDP. 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. Several other
obstacles impede Azerbaijan's economic progress: the need for
stepped up foreign investment in the non-energy sector, the
continuing conflict with Armenia over the Nagorno-Karabakh region,
pervasive corruption, and elevated inflation. Trade with Russia and
the other former Soviet republics is declining in importance, while
trade is building with Turkey and the nations of Europe. Long-term
prospects will depend on world oil prices, the location of new oil
and gas pipelines in the region, and Azerbaijan's ability to manage
its energy wealth.

Bahamas, The
The Bahamas is one of the wealthiest Caribbean
countries with an economy heavily dependent on tourism and offshore
banking. Tourism together with tourism-driven construction and
manufacturing accounts for approximately 60% of GDP and directly or
indirectly employs half of the archipelago's labor force. Steady
growth in tourism receipts and a boom in construction of new hotels,
resorts, and residences had led to solid GDP growth in recent years,
but tourist arrivals have been on the decline