|Djibouti's fledgling economy depends on a large foreign expatriate
community, the maritime and commercial activities of the Port of Djibouti,
its airport, and the operation of the Addis Ababa-Djibouti railroad.
During the civil war (1991-94), there was a significant diversion of
government budgetary resources from developmental and social services to
military needs. France is insisting that future aid be conditional on an
overhaul of Djibouti's dilapidated state finances in conjunction with the
International Monetary Fund. Agriculture and industry are little
developed, in part due to the harsh climate, high production costs,
unskilled labor, and limited natural resources. Only a few mineral
deposits exist in the country, and the arid soil is unproductive--89% is
desert wasteland, 10% is pasture, and 1% is forested. Services and
commerce provide most of the gross domestic product.
Djibouti's most important economic asset is its strategic location on the shipping routes between the Mediterranean Sea and the Indian Ocean--the Republic lies on the west side of the Bab-el-Mandeb, which connects the Red Sea and the Gulf of Aden. Its port is an important transshipment point for containers. It also functions as a bunkering port and a small French naval facility. Business increased at Djibouti port when hostilities between Eritrea and Ethiopia denied Ethiopia access to the Eritrean port of Assab. Djibouti became the only significant port for landlocked Ethiopia, handling all its imports and exports, including huge shipments of U.S. food aid in 2000 during the drought and famine. In 2000, Jebel Ali Port Mangers, who manage the port of Dubai, took over management of Djibouti’s port. This was part of a regional management scheme that also included the port of Beirut. As a result, the Port of Djibouti has increased its efficiency and is positioned to be a major port and transshipment port for the Red Sea.
The Addis Ababa-Djibouti railroad is the only line serving central and southeastern Ethiopia. The single-track railway--a prime source of employment--occupies a prominent place in Ethiopia's internal distribution system for domestic commodities such as cement, cotton textiles, sugar, cereals and charcoal.
Principal exports from the region transiting Djibouti are coffee, salt, hides, dried beans, cereals, other agricultural products, wax and salt. Djibouti itself has few exports, and the majority of its imports come from France. Most imports are consumed in Djibouti, and the remainder goes to Ethiopia and northwestern Somalia. Djibouti's unfavorable balance of trade is offset partially by invisible earnings such as transit taxes and harbor dues. In 1999, U.S. exports to Djibouti totaled $26.7 million while U.S. imports from Djibouti were less than $100,000.
The city of Djibouti has the only paved airport in the republic. Djibouti has one of the most liberal economic regimes in Africa, with almost unrestricted banking and commerce sectors.
purchasing power parity - $574 million (2000 est.)
SOURCES: The World Factbook, U.S. Department of State
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