Cape Verde Macro-Economic Analysis

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Cape Verde|
“Most Improved Country”|

Introduction
Cape Verde is a small country that spans ten islands and is 570 kilometers off the coast of Western Africa. There is very little rainfall per year and the land on most of the islands are of volcanic origin. On several of the islands the land is fairly flat, sandy and dry, whereas the rest of the islands are covered in rocky land. It, therefore, lacks in natural resources and has experienced severe droughts. Agriculture is made difficult by lack of rain and is restricted to only four islands for most of the year. It is ironic that the country is called “Verde” meaning “Green,” even though most of the land is not green. Due to the scarcity of agriculture, most of the nation's GDP comes from the service industry; more specifically tourism, light manufacturing industries, and fisheries. Cape Verde's economy has been steadily growing since the late 1990s, and it is now officially considered a country of average development. Through an economic analysis of Cape Verde, we will see the connections between its economy, society, and government. The analysis will recognize not only the flaws and struggles of the country, but will pose possible solutions to its problems. Government: Past and Present

Learning about a country’s government is essential to figuring out their economic details. Uninhabited on their discovery in 1456, the Cape Verde islands became part of the Portuguese empire in 1495. Portuguese people began establishing settlements throughout the islands, especially along the ports. They were still governed by the Portuguese government and abided by all the same laws; however, the Portuguese government did not have much involvement with the settlements. Therefore, without strong sustainable investment from the homeland’s government the people grew increasingly discontent with them. However, the Portuguese continued to refuse to provide the local authorities with more autonomy, or self-governing. This discontent aggravated and culminated in 1956, when a movement led by Amílcar Cabral laid the stepping stones for independence for Cape Verde. Cabral and a group of fellow Cape Verdeans and Guineans organized the African Party for the Independence of Guinea and Cape Verde (PAIGC), which demanded improvement in economic, social and political conditions in Cape Verde and Portuguese Guinea. The PAIGC began forming armed rebellions against the Portuguese government in Guinea, but were more passive in Cape Verde. In 1974, following the coup in Portugal, after which Portugal began abandoning its colonial empire, the islands were granted a transitional government comprising of Cape Verdeans and Portuguese officials. Eventually, the Cape Verdeans elected a national assembly which drafted a declaration of independence on July 5, 1975. Their government became known as the African Party for the Independence of Cape Verde, or the PAICV. Until 1990, the PAICV ruled Cape Verde as a one party democratic system; however, opposition began building up towards a multiparty government. On Jan. 13, 1991, the first multiparty elections since independence resulted in the ruling PAICV losing its majority to the new Movement for Democracy Party (MPD). This was a major event in Cape Verde’s history because it sealed their intentions to become a self-reliant country. The only problem now was how could they stabilize their economy? GDP: A Breakdown

What is Gross Domestic Product (GDP)? GDP is defined as the overall goods and services produced within a country’s boarders during a given year. The GDP of a country is an important piece of data which measures the size of the economy of a country. To calculate GDP, you add the amount of money spent on consumption, investments, government expenditures, exports, and imports. Once you find out what the GDP is, you can change it into dollars by using purchasing power parity (PPP) or exchange rates and then you can find out the growth rate and GDP per...
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