What type of economy does Madgascar have?

Question

Capitalist? Socialist? Mixed?

Answer 1

From the World Factbook, mainatined by the CIA:

"Having discarded past socialist economic policies, Madagascar has since the mid 1990s followed a World Bank- and IMF-led policy of privatization and liberalization. This strategy placed the country on a slow and steady growth path from an extremely low level. Agriculture, including fishing and forestry, is a mainstay of the economy, accounting for more than one-fourth of GDP and employing 80% of the population. Exports of apparel have boomed in recent years primarily due to duty-free access to the US. Deforestation and erosion, aggravated by the use of firewood as the primary source of fuel, are serious concerns. President RAVALOMANANA has worked aggressively to revive the economy following the 2002 political crisis, which triggered a 12% drop in GDP that year. Poverty reduction and combating corruption will be the centerpieces of economic policy for the next few years."

Answer 2

Check the link

Answer 3

Main article: Economy of Madagascar
Structural reforms began in the late 1980s, initially under pressure from international financial institutions, notably the World Bank. An initial privatization program (1988-1993) and the development of an export processing zone (EPZ) regime in the early 1990s were key milestones in this effort. A period of significant stagnation from 1991-96 was followed by 5 years of solid economic growth and accelerating foreign investment, driven by a second wave of privatizations and EPZ development. Although structural reforms advanced, governance remained weak and perceived corruption in Madagascar was extremely high. During the period of solid growth from 1997 through 2001, poverty levels remained stubbornly high, especially in rural areas. A six-month political crisis triggered by a dispute over the outcome of the presidential elections held in December 2001 virtually halted economic activity in much of the country in the first half of 2002. Real GDP dropped 12.7% for the year 2002, inflows of foreign investment dropped sharply, and the crisis tarnished Madagascar's budding reputation as an AGOA standout and a promising place to invest. Following resolution of the crisis, the economy rebounded with GDP growth of over 10% in 2003. Currency depreciation and rising inflation in 2004 have hampered economic performance, but growth for the year reached 5.3 percent, with inflation reaching around 25% at the end of the year. In 2005 inflation was brought under control by tight monetary policy (the "Taux Directeur", or central bank rate, was raised to 16% and reserve requirements for banks tightened), and growth will reach around 6.5% in 2005.

Following the 2002 political crisis, the government attempted to set a new course and build confidence, in coordination with international financial institutions and the donor community. Madagascar developed a recovery plan in collaboration with the private sector and donors and presented it at a "Friends of Madagascar" conference organized by the World Bank in Paris in July 2002. Donor countries demonstrated their confidence in the new government by pledging $1 billion in assistance over five years. The Malagasy Government identified road infrastructure as its principle priority and underlined its commitment to public-private partnership by establishing a joint public-private sector steering committee.

In 2000, Madagascar embarked on the preparation of a Poverty Reduction Strategy Paper (PRSP) under the Heavily Indebted Poor Countries (HIPC) Initiative. The boards of the IMF and World Bank agreed in December 2000 that the country had reached the decision point for debt relief under the HIPC Initiative and defined a set of conditions for Madagascar to reach the completion point. In October 2004, the boards of the IMF and the World Bank determined that Madagascar had reached the completion point under the enhanced HIPC Initiative.

The Madagascar-U.S. Business Council was formed in Madagascar in 2002. The U.S.-Madagascar Business Council was formed in the United States in May 2003, and the two organizations continue to explore ways to work for the benefit of both groups.

The government of President Ravalomanana is aggressively seeking foreign investment and is tackling many of the obstacles to such investment, including combating corruption, reforming land-ownership laws, encouraging study of American and European business techniques, and active pursuit of foreign investors. President Ravalomanana rose to prominence through his agro-foods TIKO company, and is known for attempting to apply many of the lessons learned in the world of business to running the government. Some recent concerns have arisen about the conflict of interest between the policies pursued by President and the activities of his firms. Most notable among them the preferential treatment for rice imports initiated by the government in late 2004 when responding to a production shortfall in the country.

Madagascar's sources of growth are tourism; textile and light manufacturing exports (notably through the EPZs); agricultural products (the country is the world's leading producer of vanilla, accounting for about half the world's export market); and mining. Tourism targets the niche eco-tourism market, capitalizing on Madagascar's unique biodiversity, unspoiled natural habitats, national parks and lemur species. Exports from the EPZs, located around Antananarivo and Antsirabe, consist the most part of garment manufacture, targeting the US market under AGOA and the European markets under the Everything But Arms (EBA) agreement. Agricultural exports consist of low volume high value products like vanilla, litchies and essential oils. Mining investment is beginning to take off following the introduction of a new law opening the country up to foreign mining companies. A large mining investment by Rio Tinto in the Fort Dauphin region, to exploit ilmenite (titanium dioxide), is expected by late 2005, and other projects in ilmenite (Ticor/Kumba in Tulear) and nickel (Dynatec/Implats near Tamatave) could also be launched in the coming months. Despite the democratically elected Mayor of Fort Dauphin supporting the ilmenite mining project, outside environmental groups led by World Wide Fund for Nature have stymied development, constraining the local population to the endemic poverty caused by 70% unemployment as documented in Mine Your Own Business.