rong
gain by the United States (3.5%). The developing nations also varied
in their growth results, with many countries facing population
increases that erode gains in output. Externally, the nation-state,
as a bedrock economic-political institution, is steadily losing
control over international flows of people, goods, funds, and
technology. Internally, the central government often finds its
control over resources slipping as separatist regional movements -
typically based on ethnicity - gain momentum, e.g., in many of the
successor states of the former Soviet Union, in the former
Yugoslavia, in India, in Iraq, in Indonesia, and in Canada.
Externally, the central government is losing decisionmaking powers
to international bodies, notably the EU. In Western Europe,
governments face the difficult political problem of channeling
resources away from welfare programs in order to increase investment
and strengthen incentives to seek employment. The addition of 80
million people each year to an already overcrowded globe is
exacerbating the problems of pollution, desertification,
underemployment, epidemics, and famine. Because of their own
internal problems and priorities, the industrialized countries
devote insufficient resources to deal effectively with the poorer
areas of the world, which, at least from an economic point of view,
are becoming further marginalized. The introduction of the euro as
the common currency of much of Western Europe in January 1999, while
paving the way for an integrated economic powerhouse, poses economic
risks because of varying levels of income and cultural and political
differences among the participating nations. The terrorist attacks
on the US on 11 September 2001 accentuated a further growing risk to
global prosperity, illustrated, for example, by the reallocation of
resources away from investment to anti-terrorist programs. The
opening of war in March 2003 between a US-led coalition and Iraq
added new uncertainties to global economic prospects. After the
coalition victory, the complex political difficulties and the high
economic cost of establishing domestic order in Iraq became major
global problems that continued through 2006.

Yemen
Yemen, one of the poorest countries in the Arab world,
reported average annual growth of 3.5% from 2000 through 2006. Its
economic fortunes depend mostly on oil. Oil revenues probably