(2005-07) seized the assets of Occidental Petroleum for
alleged contract violations and imposed a windfall revenue tax on
foreign oil companies, leading to the suspension of free trade
negotiations with the US. These measures, combined with chronic
underinvestment in the state oil company, Petroecuador, led to a
drop in petroleum production in 2007. PALACIO's successor, Rafael
CORREA, raised the specter of debt default - but Ecuador has paid
its debt on time. He also decreed a higher windfall revenue tax on
private oil companies, then sought to renegotiate their contracts to
overcome the debilitating effect of the tax. This generated economic
uncertainty; private investment has dropped and economic growth has
slowed significantly.

Egypt
Occupying the northeast corner of the African continent, Egypt
is bisected by the highly fertile Nile valley, where most economic
activity takes place. In the last 30 years, the government has
reformed the highly centralized economy it inherited from President
Gamel Abdel NASSER. In 2005, Prime Minister Ahmed NAZIF's government
reduced personal and corporate tax rates, reduced energy subsidies,
and privatized several enterprises. The stock market boomed, and GDP
grew about 5% per year in 2005-06, and topped 7% in 2007. Despite
these achievements, the government has failed to raise living
standards for the average Egyptian, and has had to continue
providing subsidies for basic necessities. The subsidies have
contributed to a sizeable budget deficit - roughly 7.5% of GDP in
2007 - and represent a significant drain on the economy. Foreign
direct investment has increased significantly in the past two years,
but the NAZIF government will need to continue its aggressive
pursuit of reforms in order to sustain the spike in investment and
growth and begin to improve economic conditions for the broader
population. Egypt's export sectors - particularly natural gas - have
bright prospects.

El Salvador
The smallest country in Central America, El Salvador has
the third largest economy, but growth has been modest in recent
years. Robust growth in non-traditional exports have offset declines
in the maquila exports, while remittances and external aid offset
the trade deficit from high oil prices and strong import demand for
consumer and intermediate goods. El Salvador leads the region in
remittances per capita with inflows e