mployment during the
past decade were macroeconomic stagnation, the declining level of
investment in plant and equipment, company restructuring, flat
domestic consumption, structural rigidities in the labor market,
lack of competition in the service sector, and high interest rates.
The modernization and integration of the eastern German economy
continues to be a costly long-term process, with annual transfers
from west to east amounting to roughly $80 billion. The former
government of Chancellor Gerhard SCHROEDER launched a comprehensive
set of reforms of labor market and welfare-related institutions. The
current government of Chancellor Angela MERKEL has initiated other
reform measures, such as a gradual increase in the mandatory
retirement age from 65 to 67 and measures to increase female
participation in the labor market. Germany's aging population,
combined with high chronic unemployment, has pushed social security
outlays to a level exceeding contributions, but higher government
revenues from the cyclical upturn in 2006-07 and a 3% rise in the
value-added tax pushed Germany's budget deficit well below the EU's
3% debt limit. Corporate restructuring and growing capital markets
are setting the foundations that could help Germany meet the
long-term challenges of European economic integration and
globalization, although some economists continue to argue the need
for change in inflexible labor and services markets. Growth may fall
below 2% in 2008 as the strong euro, high oil prices, tighter credit
markets, and slowing growth abroad take their toll.

Ghana
Well endowed with natural resources, Ghana has roughly twice
the per capita output of the poorest countries in West Africa. Even
so, Ghana remains heavily dependent on international financial and
technical assistance. Gold and cocoa production, and individual
remittances, are major sources of foreign exchange. The domestic
economy continues to revolve around agriculture, which accounts for
about 35% of GDP and employs about 55% of the work force, mainly
small landholders. Ghana opted for debt relief under the Heavily
Indebted Poor Country (HIPC) program in 2002, and is also benefiting
from the Multilateral Debt Relief Initiative that took effect in
2006. Thematic priorities under its current Growth and Poverty
Reduction Strategy, which also provides the framework for
development partner assist