Economic: Olvana

This page is a section of Olvana.

Olvana’s economy blends free market and state-directed elements. Following World War II and the Olvanese Communist Revolution, Olvana suffered decades of economic mismanagement and stagnation. After initiating major reforms some forty years ago, the country gradually shifted from a centrally planned economy. Olvana then experienced rapid economic and social development: GDP growth averaged nearly 10% annually during this period. As part of a 100-year plan, Olvana intentionally portrayed itself as a poor, backward, and inward looking country, seeking to convince Western nations to inject money and resources. Using these resources, reforms such phasing out collectivized agriculture, gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, creation of a diversified banking system, development of a stock market, rapid growth of the private sector, and opening to foreign trade and investment were implemented. The result of these reforms was the fastest sustained expansion by a major economy in history. Olvana became the one of the world’s largest exporter nearly a decade ago. As part of the overall transition, the Olvanese government seeks to be the world leader across the economic spectrum within the next 25 years.

Olvana has not completely transitioned to a market economy; some key elements of socialism remain in place. Unlike most socialist governments that attempt to shape the economy through the means of production, Olvana chose to retain control over national income. Despite a nominal openness to trade and investment, bureaucratic hurdles and resistance from the state sector are substantial barriers to more dynamic economic development. Past success means that there is little incentive today to introduce further reform.

After over a decade of strong economic growth, Olvana now faces a period of economic slowdown. The government responded by increasing expansionary fiscal and monetary intervention. Olvana seeks an economically self-sufficient state, but even in limited sectors such as military production, the government realizes that self-sufficiency requires developing domestic resources and delaying modernization. As pressure mounts to maintain high growth rates, the government placed renewed emphasis on long-range plans and industrial policies. Because of the controlling nature of the Olvanese Communist Party (OCP), however, any change within the business environment is slow. The overall regulatory framework is complex, arbitrary, and uneven. The government props up numerous inefficient state-owned enterprises (SOEs) and funds a vast array of subsidies for manufactured exports, energy, agriculture, and consumer goods.

Olvana allows two cities to operate with more economic freedom then the rest of Olvana. These cities focus on either international trade and transportation (Hong Kong) or gambling and tourism (Macau). Combined, these sectors account for over 40% of GDP, 25% of the workforce, and 60% of revenue within the cities. While these exemptions provide much necessary capital for the OCP, it also emphasizes tensions between traditional Communist Party authorities and the new class of ultra-rich capitalists.

Table of Economic Data

Measure	Data	Rank in World	Remarks (if applicable)
Nominal GDP	$9.57 trillion	3
PPP / Capita	$15,372.33	79	purchasing power parity
Real GDP Growth	6.9%	12	5 year average of 7.9%
LFPR	58.5%	58	labor force participation rate
Unemployment	4.6%	52
Poverty	6.1%	155	Percent below poverty line
Net FDI	$50.20 billion	9	$151.92 billion outflow
Budget	$2.00 trillion in revenue $2.35 trillion in expenditures
Public Debt	42.9% of GDP	82
Inflation	2.0%	44
Value of Exports	$1.84 trillion	2
Value of Imports	$1.36 trillion	3

Olvana has the world’s third largest economy in terms of nominal gross domestic product. Because the country’s exchange rate is determined by fiat rather than by market forces, however, the official exchange rate measure of GDP is not an accurate measure of overall economic output. GDP at the official exchange rate substantially understates the actual level of Olvana output vis-a-vis the rest of the world. GDP at purchasing power parity (PPP) provides a better measure comparing output across countries. Last year, this amount exceeded that of the United States by almost 15%, the first time since World War II that the US was not the world leader in GDP by PPP. In terms of GDP per capita, Olvana falls below the global average at $8,519 nominal, or $15,372 PPP. Sources of GDP are 37.1% consumer spending, 14.0% government expenditure, 45.6% investment, and 3.3% from net exports. By sector, agriculture provides 10.0% of GDP, industry 46.6%, and services 43.4%.

Participation in the Global Financial System

Olvana is globally connected power, interdependent as never before: communications and transportation links now exist almost everywhere. The artifacts of the 21st-century global economy—fast food, televised global sports franchises, and the most current technology—are appearing in even the most remote Olvanese cities. The size of the Olvanese economy means that, when domestic demand for commodities drops, there is an effect on world market prices. Olvanese policymakers—who tend to regard disputes with foreign powers as attacks on Olvanese sovereignty—view US security policy in the Asia-Pacific region as an attempt to 'encircle' Olvana and deny them the right to regional influence.

Governmental or policy shifts in the nations that Olvana most trades with, United Nations Council on the Law of the Sea arbitration cases, and OPEC price downshifting all factor into Olvana’s economy. In order to maintain some control over regional economic stability, Olvana founded a group called the Shanghai Cooperation Organization (SCO), with member nations agreeing to oppose intervention in other countries' internal affairs on the pretexts of humanitarianism and safeguarding national independence, sovereignty, territorial integrity, and social stability. The eight full SCO members account for half of the world's population and a quarter of the world's GDP.

Olvana is the practical—if not necessarily formal—leader for economic activity in the region. There are, however, no major defense cooperation arrangements for Olvana that are on a scale large enough to influence its national economy or world trade. Regional and international engagements for Olvana are currently limited to peacekeeping, counterpiracy, humanitarian/disaster relief, counterterrorism, and joint exercises.

World Bank/International Development Aid

Olvana began a partnership with The World Bank shortly after embarking on economic reforms. Initially a recipient of support from the International Development Association, which provides aids to the poorest nations, within thirty years, Olvana had become a contributor and third largest shareholder in the World Bank. Through the International bank for Reconstruction and Development, Olvana received over $2.6 billion in loans, the vast majority for development, while overall lending totaled $58 billion for 403 projects. Currently, the World Bank maintains an active portfolio of available aid from Olvana with an emphasis on rebalancing the economy and focusing on the quality of growth, concentrated in environment, transportation, urban development, rural development, energy, water resources management, and human development. The Bank encourages knowledge sharing to enable the rest of the world to learn from Olvana’s experience, while for Olvana, development aid will be a key avenue to increasing Olvanese influence in the region.

Foreign Direct Investment

Olvana’s population of 1.1 billion has vast potential for consumption. Investors regard the Olvanese market as the last enormous undeveloped market in the world. Although per capita GDP is still very low, the purchasing power of the people is strengthening rapidly while markets become increasingly brisk, making Olvana attractive to market-oriented FDI. This includes sectors such as basic chemicals, drinks, household electrical appliances, automobiles, electronics, and pharmaceuticals. The OCP stated that it welcomes foreign investment: the country attracted over $200 billion in worldwide inbound FDI last year, second only to the United States. Olvana also has a burgeoning outbound FDI program. The government plays a significant role in FDI by allocating investments, providing special economic zones that provide incentives to foreign companies, and creating incentives for specific industries of outbound FDI. Olvana has liberalized some previously controlled industries—including oil drilling and defense technology—to private investors in order to cope with slowing growth. The government is also luring private investment into strategic emerging industries by setting up industrial investment funds. The current focus is on decreasing FDI in the manufacturing field—which has contracted by as much as 60% over the last decade—while increasing service trades, such as finances, telecommunications, and wholesale and resale commerce. Foreign investors often temper their optimism due to uncertainty about the willingness of the government to offer a level playing field vis-à-vis domestic competitors. In addition, foreign investors report a range of challenges related to the current investment climate in Olvana. These include industrial policies that protect and promote SOEs and other domestic firms, equity caps, lack of transparency, restrictions on foreign ownership in many industries (mainly military and heavy equipment), weak intellectual property rights protection, corruption, and an unreliable legal system. Olvana is also interested in the importation of state-of-the-art practices in management and banking practices, including personnel management, physical practices (environmental policies and enforcement, construction, planning), and technical management of resources (networked electrical grid systems). The OCP allows third-party input from consulting firms to ensure all potential stakeholders and shareholders have some play in the development of a progressive infrastructure, but state regulation and State Security Agency monitoring limits how foreign assistance and participation function.

Sanctions

There are currently no official international economic sanctions against Olvana. Policy within the US, EU, South Torbia, and elsewhere, however, have economic effects in Olvana. For example, the US and the EU imposed an arms embargo on Olvana following human rights violations almost 30 years ago, but there is no common definition of what this embargo actually entails, and individual nations apply the embargo differently. Therefore, while the US embargoes a full range of national munitions, the United Kingdom only bans lethal items and major weapons systems, allowing sales of such as search radars and utility helicopters. More recently, sanctions levied against North Torbia and other nations caused a slowdown of Olvanese electronics and maritime production due to decreased access to low-cost copper and nickel.

Officially, Olvana complies with international sanctions regarding trade with North Torbia. Trade in sanctioned goods and services has diminished, but the volume of official trade in non-sanctioned goods has increased. Officially, Olvana attempts to strike a balance between maintaining a healthy trading relationship with North Torbia while avoiding international tensions with the west. Historically, however, Olvana has not enforced many sanctions, especially in nickel sales. Additionally, copper-intensive businesses purchase North Torbian copper on an off-book basis, avoiding recording by customs officials.

Charity

There are over a thousand organizations operating as charities in Olvana, of which only 24 are foreign entities. These organizations are broken into three legal forms. First are social associations such as trade unions, religious organizations, and other “people’s organizations” that were created by the OCP as links to specific social constituencies. Examples include the All Olvana Federation of Trade Unions, Communist Youth League, and the All Olvana Women’s Federation. These people’s organizations are governed by unique laws, and they often present themselves to the outside world as non-governmental organizations (NGOs). The second form is civil non-enterprise institutions. These are closest to what the western world describes as a nonprofit organization. The third form is private foundations, nonprofit organizations that promote public benefit undertakings through grants and donations. Olvana’s charitable organizations do not significantly influence social or political behavior in Olvana. Thanks to the influence of foreign NGOs, Olvana’s charitable organizations have a better understanding of advocacy, but lack the political influence to make real change. A new law, passed last year, forces NGOs to operate under the strict supervision of OCP security services. It also clarifies rights and responsibilities of NGOs, strengthening the internal philanthropic sector as more and more wealthy individuals establish private foundations. Governmental control over charitable organizations—and the distribution of charity itself—often brings conflict with Olvanese understanding of the charitable gift: governmental control is in direct contradiction with the religious ethic stating gifts should not be tied to a web of reciprocity or obligation. Additionally, the number of foreign NGOs registering with the Ministry for Public Security fell far short of expectations, as there remains considerable uncertainty around the implementation of the Overseas NGO Management Law.

Economic Activity

Olvana began an economic liberalization program some forty years ago that resulted massive economic growth, despite periods of foreign sanctions due to human rights violations and regional and global financial crises. For over two decades, Olvana maintained double-digit growth, taking it from less-developed country to economic superpower. The economy now stands as the second largest in the world, behind only the United States. Olvana achieved this through a gradual market reforms that matched the political climate of the country. The primary resource driving growth was inexpensive but disciplined labor, aided by the world’s largest collection of FDI and foreign exchange reserves.

The Olvanese economic growth rate has slowed in recent years due to a number of factors. The current rate of 6.7% would be significantly less were it not for the continued willingness of Olvana authorities to subsidize real estate, financial, and SOE sectors. Risks of this policy are substantial, not just for economic prospects in Olvana, but also to world financial markets. At the local level, access to financing, high corporate tax rates, and an inadequately trained work force are the main obstacles to corporate expansion. The Olvanese labor force—once the driving force behind expansion—has dwindled such that Olvana can no longer rely on excess labor to overcome technological deficiencies, particularly as Olvana transitions from unskilled to skilled labor requirements. Job growth in the public sectors—government and SOE—are stagnant, and possibly in decline, as job growth in the private sector is on the rise. The government’s most recent Five-Year Plan emphasizes continued economic reforms, coupled with need to increase domestic consumption in order to make the economy less export-dependent. The plan highlights the need to address environmental and social imbalances, setting targets to reduce pollution, to increase energy efficiency, to improve access to education and healthcare, and to expand social protection. The annual growth target in the Five-Year Plan is 6.5%, reflecting the rebalancing of the economy and the focus on the quality of growth, while still maintaining the objective of achieving a moderately prosperous society.

Olvana has made only marginal progress toward these rebalancing goals. Economic slowdowns in other parts of the world slowed growth in Olvana. SOEs still dominate the financial sector and many basic industries; sources often refer to these as “zombie” enterprises since they generally operate at overcapacity. Total national debt (household, corporate, and government) approached 300 percent of GDP, a level comparable to crisis-ridden southern Europe. A massive anticorruption campaign, though popular with the public, reduced provincial spending and economic growth. The slowdown in economic growth—which may be more severe than reflected in official statistics—poses serious challenges for a government whose legitimacy depends largely on its ability to increase living standards throughout the large population. Most experts concur that Olvana’s GDP will continue to grow, but at less significant levels. Manufacturing is slowing while services are expanding. Electronics and pharmaceuticals are expanding, while coal, iron, and steel are contracting. Consumer goods are expanding, while intermediate and investment good production is falling. Migrant flows and labor hoarding in overcapacity sectors, while moderately beneficial in the short run, can cause long-term inefficient allocation of resources and curtail longer-term productivity gains. Olvana faces the same problems other nations do regarding an aging work force and lack of technical training to upgrade workers, but Olvana has the political advantage of being a dictatorship and can plan beyond the typical democratic 4-5 year election cycle. Domestic demand and investment are on the rise, the latter at twice the speed of GDP growth in the last quarter, flowing mainly into housing and property development.

Economic Actors

Olvana maintains a unique blend of government and private actors. In many cases, the government— especially the Olvana People’s Army (OPA)—directly or indirectly controls the market through monopolistic SOEs, subsidies, and complicated tax strategies. In other cases—dependent on sector or industry—individuals have more economic freedom, so long as the net result furthers the goals and aims of the OCP. In the financial sector, the OCP maintains complete control directly through the Olvana Banking Regulatory Commission, the Ministry of Finance, the State Administration of Foreign Exchange, and the Olvana Securities Regulatory Commission. These governmental agencies are far more directive and less regulatory than would be seen in most developed nations. Additionally, due to the size of the Olvanese economy, financial actors in Olvana also have significant influence on the global economy. This includes the Olvana Insurance Regulatory Commission, the central bank (People’s Bank of Olvana), and the four state owned banks (Bank of Olvana, the Agricultural Bank of Olvana, the Olvana Construction Bank, and the Industrial and Commercial Bank of Olvana). There is a clear separation of the military from economic power in some cases, but in other cases, there is no separation at all. There are current and former military members among the military and industry power elite, a result of favoritism, patronage, and workplace environment. The OPA has influence in every province, and is actively conducting or paying for research and development, security infrastructure, supporting logistics/ transportation hubs and collecting goods/services throughout Olvana. People are its primary resource, though the push from some OPA units for a more technologically advanced communications infrastructure necessitates economic involvement. In addition, because of their OCP membership, high-ranking OPA officers also have roles in the bureaucracy that support economic growth.

The OCP is an entrenched bureaucracy, whose elite have been firmly in control of state power and all SOE for more than six decades without any pretense of making the state economically neutral. The OCP controls all levels of administrative, legislative, and judicial power, as well as the OPA. This control extends to media and publishing houses, as well internet access and content. The state owns the land, and protection of foreign intellectual property is erratic and ineffective. The bureaucracy does not necessarily obstruct economic growth, since economic growth is in support of the party objectives. Historically, however, central government control, steeped in cronyism and corruption, causes economic slowdowns, barriers to economic development, and long-term risks for future trade.

An anticorruption campaign accelerated last year, but corruption remains endemic. OCP leadership states it wishes to eliminate corruption yet rejected fundamental reforms such as requiring public disclosure of assets by officials, creating genuinely independent oversight bodies, or lifting political constraints on journalists and law enforcement agencies. Corruption ranges from the government playing favorites in granting privileges to selected special interest groups, to patronage, favoritism, and social corruption having a direct role in individual economic success. At the lower end of the bureaucracy, corruption may be truly functional as bribery is expected and sometimes even necessary to basic government functions. Executives in the large state-owned financial institutions are effectively high-level government officials, in practice if not in theory. All executives hold political ranks equal to or greater than that of provincial officials, the Organization Department of the OCP appoints the highest executives in the banks, and many bank executives aspire to top government jobs. This is a major concern, as individual bank executives consider their future career paths instead of what is best for their current banking institution. Those in elevated positions within the OCP are far less likely to face charges for criminal wrongdoing. However, according to the Organization for Cooperation and Economic Development, Olvana’s corruption rating has been improving, likely due to the ongoing campaign, efforts to reduce poaching of rare or protected animals, and post-production piracy. Additionally, the level of corruption, though still prevalent throughout the country, is much less than would typically be expected given the regional and cultural context. This is likely the influence of the historically Hindu makeup of the populace.

Within certain export sectors, the central government maintains far less control. Olvanese Basic Law recognizes a greater degree of autonomy to formulate operational and financial policies, safeguard free trade, and regulate and supervise these transactions in accordance with law. These economic freedoms resulted in the world’s highest growth rate of high net worth individuals, which has led in turn to an increased domestic demand for high-end luxury items.

Trade

Olvana is the world’s second largest exporter. Annual trade value is more than $3.2 trillion, with a balance of payments exceeding $480 billion. Olvana faces trade competition both regionally and internationally; competitors include South Torbia, the US, and the EU, with emerging threats from Belesia and its trading allies. Olvana is very integrated into World Trade Organization (WTO), and, through that membership, provides extremely low interest rate loans to small nations. Olvana hopes to leverage these loans into acceptance of Olvanese basing or logistics support requests in expansion of its trade routes.

Torbia and Belesia sit in between Olvana and access to major trade routes in the Pacific Ocean. Maritime transport accounts for 80% of global trade by volume and 70% by value. Olvana is reliant on these routes for its economy, and is thus dependent on the US Navy to maintain freedom of navigation. To offset this reliance, it is seeking to expand overland routes to Europe, Africa, and alternate ports for shorter maritime routes. Olvana adopted the soft power tool of money—via investments and project funding—to expand its influence. Joint economic and political projects between Olvana and other Asian nations have been on the rise. These include trans-Eurasian trains, streamlined customs procedures, more investment from, and trade with Olvana, increased cooperation in industries such as aerospace, science and finance, as well as initiatives to trade in currencies other than in US dollars.

Olvana developed one of the largest trading economies in the world based largely on labor abundance that offset labor inefficiencies. Increased capital—both physical and financial, technological advances, depletion of readily-accessible natural resources and switching to more technically demanding skill sets has begun to minimize that advantage. On the other hand, Olvana can use third country surrogates to bypass diplomatic restrictions for both legal and illegal goods, maintaining the flow of over $5 billion worth of Olvanese products transiting to South Torbia and the United States.

Commercial Trade

Olvana’s trading relationships are both global and within limited regional groupings. Their trade projects are robust and lucrative, but not necessarily beneficial for individual Olvanese. The central government tends to reinvest its wealth into military and infrastructure commitments. While the government’s focus regarding commercial trade has been on exports, it is now turning to attracting greater foreign importation trade. Outside producers are well aware of the emerging potential of Olvana’s consumer markets. Their investments and trade practices are not very transparent or fair, so Western investors have not been very ambitious at putting money into the Olvanese system that appears to be corrupted or corruptible. Thus, Olvana tends to gravitate towards Eastern markets.

Overall, commercial trade value in Olvana is over $3.48 trillion, of which $1.84 trillion is in exports and $1.36 trillion in imports. The largest export partners are the US (18.0%), the EU (15.5%), South Torbia (10.4%), OPEC Nations (5.5%), Belesia (4.4%), and North Torbia (0.1%). The rest of the Western Pacific region receives 30.2% of Olvana’s exports and the rest of the world the remaining 15.8%. Exported goods include aircraft parts, electrical machinery, machinery, and vehicles. The mix of traded goods is shifting as Olvana decreases the importation of intermediate goods it now produces domestically and demonstrates increased competitiveness in exporting goods it formerly imported.

Leading sources of Olvanese imports are South Torbia (18.9%), the EU (12.4%), the US (8.8%), OPEC (6.6%), Belesia (4.5%), and North Torbia (0.2%), while the rest of the region provides 30.9% and 17.8% from the rest of the world. The largest percentage of imports remains intermediate products such as crude petroleum, integrated circuits, gold, and iron ore, although the quantity of imported cars has been rapidly increasing. Copper and nickel are noteworthy imports; in that Olvana’s largest trading partner for these metals was North Torbia, as domestic production cannot keep pace with increased demand for electronic components. While overall trade with North Torbia grew 37.4% in the final quarter of the year over the same period the previous year, coal imports decreased by 51.6% keeping in line with international sanctions.

Military Exports/Imports

Military spending has long been a major factor in Olvana’s economic policy. Over the past five years, a perception of threats to its sovereignty, increased capabilities for shipbuilding and technology transfers from other nations, as well as outright theft, have increased this focus. Olvana is expanding its capability for power projection and territorial claim defense in the South China Sea, the Western Pacific, and the Indian Ocean, with ongoing R&D in submarines, surface-to-air missiles, and combat aircraft.

Defense spending growth in Olvana remains consistent with overall GDP growth—increasing, but at a slower rate. Even though Olvana only spends 2% of its GDP on the military, that spending accounts for 39.4% of defense spending in the region. The most recent 5-year government plan focuses on development of high tech weaponry, civil-military integration, and consolidation of military manufacturing. To meet these needs with slowing economic growth, Olvana is opening up defense industry to the domestic capital markets. The first half of last year displayed the success of this program: private investment the first six months exceeded the entirety of the previous year. These investments focused primarily on naval, aviation, electronics, and space capabilities. The President is accelerating efforts to develop science, technology, and innovation, with the military as prime beneficiary. Olvana implemented increased intellectual property protection measures and attempted to create an innovation-friendly environment for firms involved with defense contracting. Olvana intends to establish a series of large-scale national laboratories, similar to the Los Alamos National laboratory in the United States. Project focuses include aircraft propulsion, quantum communications, cyber security, and information dominance, supplementing their robust cyber and industrial espionage programs.

Olvana is currently constructing and fitting two aircraft carriers, with more expected within a decade. Experts believe that the carriers are just the start of Olvana as a true maritime power, as the country will deploy larger and more capable surface ships in the coming years. Olvana developed logistical network sufficient to meet future sustainment needs for its current inventory. Logistically, it will have to work to maintain assets abroad, since they have very few basing rights for its military vessels at sea.

This focus on military development has benefitted Olvana’s foreign military sales. Over the last five years, arms sales totaled approximately $15 billion. Sales to other countries include fighter, transport, and jet trainer aircraft; tanks; air defense equipment; rockets, military vehicles; patrol boats; missiles and missile technology; and small arms and ammunition. Olvana is looking to expand its export capacity in light of political and economic limitations of its competitors to do so—namely the United States. Olvana conducts arms sales and training both to enhance foreign relationships, and to generate revenue to support its domestic defense industry. Olvana sells primarily to developing countries, where low-cost weapons sales serve both commercial and strategic purposes. The Olvana Defense Minister recently sealed a deal for an Olvanese arms factory to build a production and maintenance facility for Olvanese weapons in Belesia. As Olvanese arms become more capable and comparable to sophisticated systems sold by Western or Donovian suppliers, and thus more expensive, these low-cost arms sales have declined in importance as a tool of influence. Nonetheless, arms sales continue to play a key role in Olvana’s efforts to influence cash-strapped countries—many of which do not have access to other sources of arms, and are willing to trade quality for lower cost. As its own fielded arms quality improves, Olvana may be able to sell off outdated equipment as a competitive tool of influence.

Economic Diversity

Prior to the start of economic reforms some 40 years ago, Olvana’s GDP by sector was 29.4% agriculture, 47.1% industry, and 23.5% services. This has since shifted to 10.0% agriculture, 46.6% industry, and 43.4% services. Likewise, the labor force by sector has shifted from 68.7% agriculture, 18.2% industrial, and 13.1% services to current levels of 39.6% agriculture, 27.2% industrial, and 33.2% services. Olvana is the world leader is gross value of agricultural and industrial output, and second only to the US in the value of produced services. Olvana sees developing services as the number one area for development and job creation. Olvana defines its business sectors as they relate to labor markets. These sectors are heavy industries (shipbuilding, assembly line work, etc.), state-owned enterprises (energy, mining, transportation, military), private businesses (home businesses, small family run shops, etc.), finance/banking, construction, leisure/hospitality, retail, and agriculture.

There is an ongoing transition from manufacturing to domestic consumption and services, driven by an increasingly unsustainable credit program. As Olvana develops economically, collaborative research and analysis are becoming an important part of the Olvanese engagement. Olvana identified six strategic initiatives. The primary initiatives are completing the transition to a partial market economy, accelerating the pace of open innovation, and transforming environmental stresses into green growth as a driver for development. Additionally, the government hopes to expand opportunities and services such as health, education, and access to jobs for all people, modernize and strengthen its domestic fiscal system, and seek mutually beneficial relations with the world by connecting Olvana’s structural reforms to the changing international economy.

Olvana is now the world’s largest and fastest growing source of entrepreneurial start-ups. It is also an incubator for large businesses, both foreign and homegrown: foreign investors have established nearly 300,000 businesses in Olvana. Decreases in fiscal freedom, monetary freedom and freedom from corruption have dampened some enthusiasm for foreign investment, but analysts expect further market liberalization, particularly in the services sector. Most notably, investment in tourism and gambling in certain regions are up 90%.

Energy Sector

The energy sector in Olvana is modern and progressing into a very technical segment of the economy. The energy sector consists exclusively of SOEs. These SOEs manage nuclear, oil, and coal based power production and distribution, as well as renewable energy power distribution—solar, geo-thermal, wind and hydroelectric. Government authorities very closely monitor the energy sector in comparison with other sectors of the national economy: the SOEs must meet five-year and annual deadlines in producing energy to give the appearance of self-sufficiency and, if possible, profit. The predominant source of electricity is coal, which produces approximately 80% of total energy consumed with an expansion in capacity of approximately 9% per year. Cheap oil prices in the 1970s and early 1980s saw a shift to oil, which then reversed with a rise in global prices. Olvana currently uses more coal that the rest of the world combined. This coal use not only causes issues concerning carbon emissions and particulate pollution, it also requires large quantities of imports. Use of natural gas use has steadily increased; it currently contributes approximately 10% of total energy consumption, with projections that this will increase to 20% over the next five years. Olvana produces a small amount of nuclear power, as it has for the last 25 years. New approaches are also being introduced to finance investments to improve energy efficiency, pilot and expand the use of innovative renewable energy sources, rehabilitate and modernize urban district heating systems, and address air pollution. On the other hand, planned efforts to increase the use of renewable sources have not been successful. Olvana possesses the largest potential for the use of hydroelectric power in the world, and plans and policies favor renewable energy sources over fossil fuels. However, bureaucratic emphasis on growth means short-term solutions, while the construction of hydroelectric generation facilities requires very long-term and high-investment projects.

Oil

With both on and off shore oil fields within its territorial boundaries, Olvana controls more than 15 billion tons of exploitable oil reserves, or approximately 1.5% of the world’s total. Some of these oil fields are nearby or within contested border regions, especially offshore fields. Olvana can refine roughly 10,155,000 barrels of crude oil per day (bbl/d). Olvana’s domestic oil use accounts for only approximately 20% of total energy requirements, and as a result, Olvana exports its excess of 3.9 million bbl/d, mostly to eastern Asia, making Olvana the largest oil exporter in the region. Despite this, Olvanese refineries are not able to keep up with domestic demand for gasoline, and must import 960,000 bbl/d to meet the current demand of 11.1 million bbl/d.

Natural Gas

Manufactured gas, or methane derived from coal mining, was a staple of Olvanese power production some fifty years ago. Since that time, the country has slowly weened itself away from manufactured gas and toward natural gas, a byproduct of oil drilling. Fifteen years ago, they had completed the transition to natural gas. During this same period, due to market fluctuations and SOE supplements in the sector, they started refitting for liquefied natural gas (LNG), enabling gas distribution using either natural gas or LNG in the same pipes. This increased use of natural gas use from industrial consumption vice private consumption. Olvana has the world’s tenth largest natural gas reserves (approximately 2.2% of global total), but is still an overall importer of LNG as available resources do not meet demand. Olvana does not share its mainland natural gas fields with other nations. However, several nations claim the oil and natural gas fields that exist in the South China Sea. Olvana faces significant competition in the natural gas industry regionally and globally.

Natural Resources

Olvana enjoys greater natural resources than any other nation in the region. Most of Olvana’s internal resources are sufficient to continue the development of industry and agriculture through at least the next thirty years. Geologists have discovered 171 different kinds of minerals in Olvana, of which 158 have proven reserves. These include 10 kinds of energy mineral resources such as petroleum, natural gas, coal, and uranium; 54 kinds of metallic mineral resources such as iron, manganese, copper, aluminum, lead and zinc; 91 kinds of nonmetallic mineral resources such as graphite, phosphorus, and sulfur; and three kinds of water and gas mineral resources such as underground water and mineral water.

Significantly, although Olvana has huge reserves and complete varieties of coal, it also has uneven distribution among different grades, with only small reserves of high-quality coking coal and anthracite coal. There are large coal reserves in the western regions, and small reserves in the eastern and southern regions, and great varieties of associated minerals existing in coal seams. Metallic mineral resources feature wide distribution with relatively concentrated deposits in several regions. The proven reserves of tungsten, tin, antimony, rare earth, tantalum and titanium rank first in the world; those of vanadium, molybdenum, niobium, beryllium and lithium rank second; those of zinc rank fourth; and those of iron, lead, gold and silver rank fifth. In many cases, Olvana is the only country with the infrastructure and extraction capacity to bring metals profitably to market, giving them and economic and strategic advantage through a near monopoly.

Many of the nonmetallic mineral resources in Olvana have large proven reserves. Olvana is one of the few countries in the world that has a relatively complete range of nonmetallic mineral resources. Currently, there are more than 5,000 nonmetallic mineral ore production bases with proven reserves in Olvana. Of them, the proven reserves of magnesite, graphite, fluorite, talc, asbestos, gypsum, barite, wollastonite, alunite, bentonite, and rock salt (halite) are among the largest in the world. Those of phosphorus, kaolin, pyrite, mirabilite, tripolite, zeolite, pearlite, and cement limestone are also significant. Some natural stone materials—such as marble and granite—are of high quality, with rich reserves. Olvana is relatively deficient in reserves of sylvine and boron.

Proven natural underground water resources in Olvana amount to 870 billion cubic meters per year, of which 290 billion cubic meters are exploitable. Natural underground brackish water resources in Olvana stand at 20 billion cubic meters per year. Underground water resources are unevenly distributed, with the southern region rich, and northern and western regions poor. Underground water aquifer types vary from region to region. North Olvana has a wide distribution of underground water resources via pore aquifers, while its southwestern region sees wide distribution of Karst water resources.

Agriculture and Forestry

Agriculture comprises 10.0% of Olvana’s GDP. Like with much of the Olvanese economy, the government historically controlled agricultural production as a strategic concern, managing production as an SOE. However, as part of the package economic reforms, a 20-year process of de-collectivization of agricultural production led to tremendous agricultural growth. This is especially true concerning removal of restrictions in the factor markets, for example, the allowance of private transactions without government involvement for labor or rental property. This process was slower than industrial expansion, however, and industrial expansion has caused Olvana to lose a sizeable portion of arable land due to erosion and development. This reduction in land was somewhat offset through the increased use of hybrid variants of rice better suited for regionally specific climates.

Although natural phenomena, such as typhoons/monsoons, earthquakes, and flooding of major rivers, can all cause problems with agricultural production, the overall size of Olvana, both geographically and economically, means that while there may be regional issues, nationally agricultural production is generally safe. Crops in Olvana include wheat, sorghum, millet, barley, and soybeans in the north, while rice is the dominant crop in the south. The majority of Olvanese subsists on staple crops, although some rural families maintain small plots of land near their homes to supplement incomes or provide more food to eat. Olvana does not produce enough rice for its populace and supplements national production with imports, in particular from Belesia.

The Olvanese government uses subsidies to artificially depress food prices. It also uses subsidies to manipulate prices so that Olvanese farmers switch production to those artificially high-priced products, hampering trade agreements with other countries who supply the same product. Despite the potential damage to long-term trade agreements, the likelihood of the government ending subsidies for those under a certain income level is very remote. If food prices were solidly determined by a free market dynamic, the government would step in and attempt to balance fluctuating prices so that all can afford to purchase food—at least the basics like rice—or provide something akin to welfare to ensure people could buy what they needed to survive.

The total forest coverage of Olvana is 25.9 percent. Natural forests are concentrated in the southwest, but are scarce in the densely inhabited and economically developed eastern plains. Forests are rich in species, with the number of arbor species alone exceeding 2,800; chief tree species include larch and pine. Rare and peculiar species include ginkgo and dawn redwood. In order to conserve the environment and meet the needs of economic development, Olvana launched large-scale forestation campaigns. In a bid to resist sandstorms and prevent soil erosion, Olvana also constructed many shelter forests and developed a number of shelterbelts.

Industry

Olvana has—and has had for the better part of the last decade—the largest industrial component of any nation in the region. This is true in terms of volume, revenue, throughput, and most especially the export-import ratio. The Olvana government is attempting to maintain that status by offsetting the issues associated with a declining labor force with infrastructure investment. One reason for government concern is that the industrial base is also a major component of the national defense strategy, in that all sectors, whether privately owned or SOE, are geared toward supporting the OPA.

Mining

Olvana is one of the world’s leading mineral producing and consuming economies. The nation has a well-developed mining industry, contributing approximately 14.63% of overall GDP. However, the industry is inefficient, environmentally wasteful, unsafe, and poorly managed. Olvana is the world’s largest producer of gold, molybdenum, zinc, coal, lead and tin and a top-ten producer of just about every other mineral. However, it does have limited resources in certain key commodities such as high quality metallurgical coal, nickel, and chromium. Olvana accounts for 30% of the world's supply of phosphates, essential for fertilizer, and 90% of the global supply of antimony, a material used in the making of semiconductors. Olvana also possesses 60% of the world's supply of magnesium and fluorspar reserves, and is the world's largest producer and consumer of aluminum. It makes a third of the world's aluminum and consumes a quarter of it.

Olvana also has about 30% of the world’s rare earth minerals. Some of Olvana’s metallic minerals such as tungsten, tin, molybdenum, antimony, and rare earth have large reserves, and are of high quality and competitive in world markets. However, many important metallic minerals such as iron, manganese, aluminum, and copper are of poor quality, with ores lean and difficult to smelt. Most of the metallic mineral deposits are small or medium-sized, whereas large and super-large deposits account for a small proportion.

The mining industry is highly fragmented, with many smaller scale unregulated mines. This has led to poor transparency and abysmal safety records. Although mineral rents equate to over $180 billion annually—more than double the second largest mineral producer—very little is directly exported. Rather, the vast majority of Olvanese mining products are incorporated into other manufacturing processes. Mining remains high cost and low quality, although there is a move towards consolidation to counter economic inefficiencies and improve the poor record regarding environment, health, safety, and social performance.

Manufacturing

Manufacturing was the leading sector in establishing and maintaining Olvana’s tremendous economic growth. Olvana became the world’s manufacturing hub, specializing in the labor-intensive, export-led production of cheap goods that enabled a gradual increase in product complexity. Olvana world’s largest steel producer, accounting for 50.3% of the world's total steel production, and consuming as much steel as it manufactures. Olvana is also the largest chemical consuming and producing country in the world, accounting for one-third of global demand. Olvana produces light and heavy industrial, as well as civilian, military and commercial vehicles. Vehicle production in some areas is outdated, while in other provinces it is modern using robotics. In all three of these cases, vehicle manufacture is a SOE; direct and indirect central government processes make the industry inefficient in staying abreast of market trends. The manufacturing sector has greatly contributed to the environmental crisis in the nation, as Olvana is the world leader in greenhouse gas emissions.

To counter these issues, Olvana is shifting towards higher value, advanced technology manufacturing. Government policies that invest in technology transfer, sustainability, and infrastructure development help industry, but labor laws and government ownership hinder it. A lack of intellectual property protection reduces internal development, but greatly enhances domestic ability to reverse engineer and replicate technologically advanced products obtained from foreign sources. The government is significantly increasing research and development spending to counter decreasing gains in its low-cost value propositions. The government is also emphasizing an increase in science and engineering graduates—over double that of the previous decade—but is significantly behind other manufacturing powerhouses in terms of schooling and government expenditure on education. Thus, much like the entire industrial sector, it is emphasizing quantity over quality, even with secondary education. Low labor costs continue to boost Olvanese manufacturing compared to more advanced economies, but even smaller costs in emerging Asian nations threaten this advantage. The sector also suffers from quantity, quality, and clustering issues in its supply chain.

Services

The services sector of Olvana is what synchronizes the economy between the central government, the populace, the market economy, and the manufacturing of goods. The services sector makes up 43.4% of total GDP. Finance, health care, telecommunications, tourism, sports, and education are the primary venues of the service sector. Retail, restaurants, and hotels are byproduct venues of tourism and finance. Providing a major component of this sector is Macau, wherein normal Olvanese rules and restrictions are relaxed. This provides revenue boosts either through importation and exportation of goods otherwise restricted, or through gambling and its associated tourism industry. While there are numerous economic themes present in Macau, the single predominant theme is gambling and the services associated with the gambling tourists, such as hotels and restaurants. Gambling is technically illegal throughout Olvana, but in Macau, the government not only allows but also encourages gambling, especially by foreigners. Olvana has the fastest growing casino jurisdiction in the world, and over 70% of tax revenue from Macau comes either directly or indirectly from gambling. The 31 operating casinos in Olvana garner over 30 million total visitors per year and revenue that is twice that of Las Vegas at over $14 billion. Olvana maintains sizable junket operations to attract new gambling tourists, predominantly targeting Asia and Asian-Americans in the US. However, a slowing economy and a crackdown on corruption has shifted the focus for Olvanese casinos from top tier customers to less wealthy tourists—making up for lost revenue (down 46% from the top 1% of gamblers) by increasing traffic tenfold. In this manner, it hopes to emulate Las Vegas, which receives 65% of revenue from non-gaming activities.

Banking and Finance

Unlike other aspects of the Olvanese economy wherein the government allows some semblance of a free market economy to occur, the financial system in Olvana is completely command directed. The government controls all of the banks in Olvana. After years of government direction and subsidization, these banks are now facing a rising number of nonperforming loans, hindering the overall ability of the economy to interact on a global level.

Public Finance

The centrally controlled, Communist political system, and state policies of both a regulatory and non-regulatory nature, combine to have a negative impact on the overall economic and fiscal health of Olvana. Policies that unintentionally discourage innovation, ignore intellectual property rights, and consistently put corporate welfare ahead of human welfare by strangulating change, present a non-sustainable environment for future growth opportunities.

Taxation

There are 24 taxes in Olvana, classified into seven categories: turnover, income, resource, property and behavior, prescribed items, agriculture and custom taxes. Generally, the Olvanese corporate tax rate is 25% and the personal income tax rate is 45%. The average applied tariff rate is 3.2%. However, there are a number of notable exceptions. Certain small-scale enterprises, particularly in technological innovate fields, have lower tax rates. SOEs pay no taxes, while industries located in the special administrative regions have completely separate tax structures.

Current Olvanese tax policies are neither a hindrance nor benefit regarding either growth or integration into the global market. The vast array of transactional taxes, however, can be extremely confusing, especially for international investors. Local tax bureaus are responsible for collecting taxes that generate revenue for the respective local governments. While these local bureaus should follow the direction of the State Administration of Taxation, they have wide leeway in making the major decisions affecting taxpayers. There is often an important disparity in the practices of each tax bureau. For example, the sales tax can vary between 7% and 64%, depending upon what items and from what store an individual purchases. There is no single tax law or code governing the taxation of enterprises, and regulation making is not strictly centralized. This is because subnational governments are responsible for the provision of the vast majority of public services, while relying on receiving a share of revenues from taxes collected locally under a regime where higher-level governments set sharing rates.

Financial Policy

While the Olvanese economy as a whole is a mix of socialism and capitalism, the financial markets and fiscal policy are centrally controlled by the OCP. The OCP and bureaucratic elites—who are usually also OCP members—generally cooperate and influence each other, shifting the direction and role of the government and Communist Party. The government liberalized of many parts of the economy, but it maintained control over its strategic interests by retaining ownership of the core group of SOEs in the finance, communications, energy, natural resources, and media sectors. Contrary to the hopes of many foreign investors, Olvana does not intend to let go of these companies, and it will maintain tight control over those parts of the economy that it wishes to manage.

The government appears eager in generating policies to correct perceived economic shortfalls; however, the reality is the government can only enforce so much outside of the SOE, focusing instead to emphasize SOE enforcement of standards and hope that non-SOE sectors self-police to follow the government’s policies. Central planning efforts to alleviate poverty have met with mixed success. The nation made tremendous strides, but met with abject failure in certain regions. The Olvanese government is attempting to stimulate the worst performing regions to stem off the impending slacking in growth, including the beginnings of negative growth. The areas most affected are those longest held under state control. Policies will focus on relieving state-owned companies' “social burden” as well as problems including resource depletion after decades of mining and oil extraction. In particular, the northeast section of the country was the earliest area to introduce the planned economy, and is today well behind the rest of the country in its application of technology. Dwindling natural resources, especially coal, petroleum, and steel, also affect these areas the most.

A multi-decade period of government control over currency has resulted in wide fluctuations in inflation from as high as 24.237% to a low of -1.408%. These fluctuations contributed to a very high domestic savings rate, which is nearly twice the global average, and low domestic demand. Without internal growth stimulus, the Olvana government maintained an extensive policy of credit borrowing to sustain economic growth at the national level. This led to concern that the surge could lead to a cascade of debt defaults. Total indebtedness may be as high as 250% of GDP and over last three years Olvana banks have written off more than $300 billion in non-performing loans.

Inflation

Inflation rates fluctuated dramatically over the last two decades, as the government set monetary policies to meet its overall growth and labor expectations. The credit-fueled stimulus program brought about the highest inflation rates. Some tightening measures appear to have controlled inflation, but also caused slowing of GDP growth. Because inflation affects the exchange rate and thus foreign trade, when inflation is high, Olvana products are less competitive internationally. Groups such as pensioners and households dependent on social security benefits stand to lose a great deal from inflation, as they are often on fixed incomes. Individual income growth has not kept up with consumption growth, and has acted as a drag on retail spending due to sticky wages. The biggest impact of inflation has been in the production sector, where costs for production have increased while consumer demand declined, especially in the food sector.

Currency Reserves

The legal currency of Olvana is the dinghuobi. The units of dinghoubi are ten liepian to the fenpian, and ten fenpian to the pian. There is no alternative currency; however, there is an alternative investment enterprise of shadow banking. Currently, Olvana holds the world’s largest stockpile of foreign currency. Currency reserves peaked three years ago at $4 trillion, and then started to decline. The current holdings are valued at just over $3 trillion, the lowest level in 6 years.

For the majority of the past century, Olvana kept its currency tightly linked to the US dollar, only occasionally revaluing, usually at international insistence. Following the most recent global financial crisis, cumulative appreciation against the US dollar was more than 20%, but Olvana only revalued its currency by 2.1%. This has allowed Olvana to keep exchange rates favorable to its exportation policies. More recently, it has moved to tie its currency to a basket, rather than strictly the US dollar. The White House has indicated that it will raise the issue of 'currency misalignment'. This is just the latest US policy response that signals growing discontent in Washington with Olvana’s approach to global economics, trade, and security. As US-Olvana relations have expanded over the past 30 years, Washington's attempts to transpose Western models onto Olvana have failed. Olvana’s market reforms and economic growth did not produce democratization along the lines that many in Washington hoped.

Public Liabilities/Debt

Olvana’s public debt is nominally large, with a gross external debt valued at over $1.42 trillion. However, this debt figure is not necessarily as troubling as it may seem, as growth has continued to outpace deficits, and is a relatively low percentage of GDP at 42.9%, compared to 97.8% for the United States. However, as growth continues to slow, debt overhang from stimulus programs, especially at the local level, presents challenges to Olvanese policy makers.

Subsidies

Subsidies comprise a major component of the Olvanese economy. With few exceptions, the government subsidizes SOEs, as they are not profitable on their own. Olvana subsidizes all energy sectors, thereby ensuring fuel production and distribution continue regardless of trade and pricing of commodities. In other sectors, Olvana’s long-term plans are for the subsidies to allow companies to make more profit and reinvestment capital and reduce or eliminate foreign competition. However, more often than not, these subsides support wasteful and corrupt practices, and dissuade innovation or competitive procedures that would improve efficiency.

Private Banking

Banking System

Olvana has an extremely advanced banking infrastructure. The government, however, controls the formal financial sector in its entirety. For example, the central government dictates what banks will charge for interest rates in hopes of controlling inflation. This tends to have a desultory effect on private loans, even with the government mandating a rate cap. The central bank for the country is the Bank of Olvana, but the banking system also includes 4 national banks, 134 city commercial banks, and 80,000 rural credit cooperatives. Over half of these banks are wholly state-owned and hold 35-45% of the country’s total deposits. Even those banks that are not wholly state-owned still have the government maintaining a majority shareholder percentage. Government restrictions on the options commercial banks can provide undercuts the viability of those banks. Generally, the Olvanese government will give some kind of breaks to allow the commercial bank to appear successful and viable for the common people to use, but with some constraints.

The efficiency of the banking system is difficult to judge. Historically, state owned banks are less efficient than privately owned or commercial banks. However, this is difficult to argue considering the success of Olvana in establishing and maintaining a tremendous growth rate. On the other hand, Olvanese banks wrote off non-performing loans worth more than $304 billion over the past three years, after the Olvana Banking Regulatory Commission ordered the sector to boost provisions. As growth rates fall to their lowest levels in a quarter of a century, analysts are warning that the previous investment surge could lead to a cascade of debt defaults. At the same time, an increasing number of western governments are blaming chronic overcapacity in Olvanese steel and other heavy industries for plant closures and job losses around the world.

The Bank of International Settlements estimates total indebtedness for Olvana more than 250% GDP. Most concerns focus on corporate debt, which the IMF estimates at 145% of GDP. In contrast to high levels of corporate indebtedness, Olvanese officials argue that the central and local governments have room to increase borrowing, as do consumers. They also point out that strong profit growth in technology, ecommerce and other areas of the "new economy" counterbalance the distress in the country's heavy industrial sectors.

Stock/Capital

Olvana has two national stock exchanges, one in Shanghai, and the other in Shenzhen, with 1,182 members and 1,870 members respectively. At the end of last year, total stock capitalization was $5.1 trillion, the 2^nd largest in Asia. Following the Asian financial crisis of the 1990s, Olvana allowed direct foreign investment in the Olvanese market, normalizing the exchange. However, certain government policies still inject excess volatility, at a rate higher than standard for markets of this size. This causes worry, as the size of the Olvanese market can cause global fluctuations across international capital markets.

Informal Finance

Shadow banks in Olvana are informal financial firms—outside the formal banking sector—that perform similar functions and assume similar risks to banks. Their status means they lack publicly guaranteed deposit insurance or lender of last resort facilities from the central bank, and operate with a non-existent level of regulatory oversight. These characteristics increase the risks for financial stability, which is the main reason there is a focus on shadow banks today. The complete control the Olvanese government maintains over the legal financial market pushes many ordinary citizens into the murkier realm of shadow banking. Government officials are seeking to exert greater control over shadow banking, as the annual value of shadow transactions is about 80% of Olvana’s GDP.

Shadow banks can help spur economic growth by making financial services cheaper and more widely available, but there is usually a trade-off in terms of reduced financial stability. One reason for the trade-off is that shadow bank’s flexibility and price competitiveness often comes at the expense of safety margins. The government requires Olvanese banks to have significantly more capital and liquidity than shadow banks may choose to carry. The operators of the shadow banking industry are also often tied directly or indirectly to criminal activity. This combination forces policymakers into difficult balancing acts to try to maximize the benefits while minimizing the risks to its citizenry.

Employment Status

Olvana has two unique labor related shock absorbers that control unemployment/employment statistics. One is the system that regulates migrant workers. When job termination occurs or when spring/summer harvests are due, these workers return to their home of record to reap the fields, so their unemployment numbers are very low and do not become a burden on the unemployment rolls. The second buffer is the SOEs, which have political backing, far easier access to finance, and dominate a series of restricted sectors (energy, transportation, etc.), that carry political and social duties, maintaining stability by refraining from laying off workers. Therefore, published unemployment numbers skew slightly lower than reality. In addition, the government puts financing and investment income back in to SOEs to maintain them against their failures versus private sector business successes who have to pay funds/fees to the central government to operate.

Labor Market

The labor pool in Olvana is responsible for past economic growth, current economic success, and numerous potential future pitfalls. When Olvana decided to overhaul their economic system, they had an abundant labor surplus. This surplus meant a large pool of unskilled labor ripe for use in the low-technology, high-growth industrial sector. This emphasis on industrialization caused a large populace relocation, as over one-fifth of the populace relocated from inland rural areas to coastal urban areas to find work. A more recent shift is into the services sector, as Olvana has one of the faster growing services sectors in the world. The nation’s labor force participation rate is nearly 60%, well above the world average. With a shift away from subsistence farming at the peasant level, Olvana is now mostly a middle-class society; the population below poverty line is down to 4% from 13.4% just 5 years earlier. However, the per capita income is below the world average. Even though agriculture accounts for only 10.0% of GDP, the agriculture sector employs over one-third of all labor, approximately half of which is migrant labor.

Regional variations mean that different parts of the country have vastly different labor problems. With educated millennials fleeing the industrial heartland for the coastal cities, work can sometime be hard to find. In the northeastern industrial regions, the fertility rate has dropped to only 0.75, too low to replace a labor pool aged after decades of population control. The Olvana government hopes to counter this shrinking labor pool with automation and innovation. The growth in domestically funded private enterprises (not state- or collective-owned) from 10% of all firms to over a third in the last 10 years means that, nationally, private companies create most of the new jobs but northeastern Olvana is home to the state-backed heavy industrial companies and state-owned farms that form the Communist Party's traditional support base. In some cities, new jobs in government or state-owned enterprises only open when an older worker leaves, leading to a practice whereby parents or other family members will retire to create a slot for a younger relative.

Unlike most of the developed world, real wages in Olvana have increased over the last five years. However, the wage growth is dynamic, and double-digit wage growth has slowed with the cooling of the overall Chinese economy. Additionally, this growth in wages eliminated the global comparative advantage Olvana had, particularly in labor-intensive industries such as garments. The strain on SOEs is apparent from the fact that, while wages are 50% higher in SOEs than in private enterprises, that figure is down from a 100% difference five years ago. Along with wage differentials, another rising factor is gender inequality. Across Olvana, 43.8% of women work outside the home. According to Olvana socialist doctrine, women can do anything they want, as they are equal to men. However, traditional Hindu values tend to force women under a glass ceiling. Officially, the OCP rejects the practice of religion. However, in practice, the government frequently seeks to fill higher business positions with worshippers of Shiva, especially in banking and finance. This is possibly due to these devotees often displaying a combination of cutthroat principles and composure.

Rapid economic ascendance brought on many challenges: high income and wealth inequality; rapid urbanization; challenges to environmental sustainability; and external imbalances. Olvana also faces demographic pressures related to an aging population and the internal migration of labor. Negative factors in the business environment, such as power or water outages due to poor infrastructure, extensive time for goods to clear customs, business licensing and permit delays, corruption, cost of crime, etc., tend to be on par or lower than typical for either the region or countries with similar income levels. There are two notable exceptions, which are regionally dependent within the country. These differences are infrastructure problems, which tends to be much lower than typical for the region, and access to financial services, which tends to be higher. The OCP is also moving to tighten its grip on SOE, reversing nearly two decades of attempts to remodel them along the lines of western corporations. The new push, outlined in recent state media articles and party documents, comes amid a tightening of controls over civil society, the military, and the media, as the government seeks to consolidate power within the party. After reforms in the late-1990s to purge the most inefficient and debt-laden state entities, Olvana reassembled the companies that remained in key industries into businesses that tried to look and act like large multinational competitors, adopting corporate logos, new headquarters, and listings on international and domestic stock exchanges. A three-year anti-corruption drive decimated the management of those enterprises, however, especially the state oil company. Critics within the OCP argued that the privatization of Olvanese businesses stripped assets from the state and deprived workers of cradle-to-grave security.

Employment and Unemployment

While the unemployment rate in Olvana last year was a relatively benign 4.6%, with a population of 1.1 billion, this means there are still 36.2 million people of working age unemployed. During the most recent fiscal quarter, the rate fell to 3.97%, based upon Ministry of Human Resources and Social Security information regarding the addition of over 3 million new jobs. Much of the unemployment issue that Olvana faces is structural. Olvana needs to resettle about half a million workers that lost jobs in the coal and steel sectors, and recently the Cabinet stated that there were risks of mass unemployment in some regions. Meanwhile, other sectors have grown, and pledged additional fiscal and monetary policy support to address the potential rise in the jobless rate. Workers in the northern industrial centers complain that, while technically employed, they are underemployed and underpaid, as their previous well-paying jobs have gone away during economic restructuring. Additionally, the unique Olvanese practice of shifting migrant workers around the country gives the appearance of higher employment than is actually the case.

Illegal Economic Activity

While smuggling, black market activities, and piracy exist in all regions of the world, in Olvana, smuggling and the black market are more prevalent than piracy. The value of smuggling and black-market activities in Olvana equates to potential earnings of $261 billion per year. Black market goods—from both in and out of Olvana—tend to be those products that the government does not subsidize. Illegal drugs, weapon smuggling, and human trafficking markets in and out of Olvana are extensive, and organized crime elements usually run them. Radical extremist groups operate some trade routes, profiteering to gather money for arms, transportation, and recruitment. Olvana holds more black money than any other nation in the world, although many of the world’s leading international banks dispute this claim.

Olvana has suspected monetary ties to international terrorist organizations. Olvana also remains the most important market for North Torbia’s criminal products, a situation that is likely to persist until domestic law enforcement improves. The recent expansion of North Torbian gang activities stems from the close ties of legitimate Olvana business interests in the country with Olvanese and North Torbian organized crime outfits. As a bastion of the gambling industry in Asia, crimes and violence linked to the industry, specifically gang warfare, prostitution, and widespread corruption, has created serious problems since before the incorporation of the special administrative regions. The looser regulations allow the special administrative regions to serve also as transshipment points for opiates out of the Pacific region as well as cocaine into the region.

The Nutakus, a very hierarchical organized crime element, control the preponderance of crime in Olvana. Formed in the 17^th century to restore Dynastic Rule, they maintained a rigid central control over the behavior and activities of its members, who regarded themselves as blood brothers, expecting complete loyalty in return. At the turn of the last century, the organization gradually disintegrated into many Nutaku societies—or gangs—that operate independently from each other in different parts of Olvana. When the Communist Party took power, many Nutaku members escaped to Olvanese neighborhoods in overseas countries, together with thousands of refugees. With the infiltration of Nutaku elements, some of these refugee groups gradually transformed into Nutaku societies (or tongs, in overseas communities) which use violence to protect their dominated territory. Because of their entrenched subculture and cohesion, Nutakus are effective in enforcing control in local territories. The Nutakus experienced a process of returning to the Olvana mainland because of the economic growth and rising demand for limited goods and services. They network with Olvana officials and enterprises and forge cooperative relationships, trying to capitalize in the booming underworld.

A business approach developed alongside traditional Nutaku crime. Nutakus engage in legitimate businesses and work with entrepreneurs and professionals to make financial gains in business markets. However, their hierarchical structure is incompatible with the dynamic nature of many forms of transnational organized crime, and while the Nutakus may be located worldwide, they tend to keep operations localized. They are responsible for the exportation of sex workers and dangerous drugs from the Olvanese mainland through the special administrative regions. Olvana is one of the largest origins of human trafficking victims, with final destinations primarily in the Middle East, the United States, and, to a lesser extent, Western Europe. The drug trade conducted by the Nutakus is primarily as transshipment smugglers.

The predominant Olvana drug trade is the throughput of heroin from other parts of Asia and raw opium from Asia and Africa, shipping to western nations across the Pacific Region. Last year, Olvana seized over 4.4 metric tons of heroin and morphine, with the largest increased volume coming in the special administrative regions. This reflects an estimated 8% interception rate. Not all of the imported drugs transit out of the country, as Olvana accounts for 13% of global heroin. Olvanese laboratories produce new psychoactive substances, including synthetic cannabinoids and cathinones, and export these to North America and Europe. Olvana is the largest supplier of products to those markets. Additionally, organized crime elements ship fentanyl precursor chemicals to clandestine labs in Latin America. Companies of questionable legality both produce and import methamphetamines for exportation via commercial vessel and aircraft to Torbia, Belesia, Oceania, and North America.

A more recent trend is in the arena of cybercrime. Most Olvanese cybercriminals have day jobs, twilighting with cybercrime as a means of making extra income. The alluring combination of misaligned incentive structures between defenders and the defended, asymmetries in effort favoring the attacker, and inadequate legislation and law enforcement all provide ample motivation for even run-of-the-mill cyber criminals to take part in the online underground economy without much fear of repercussions. The Olvana online underground is vast. Last year, the online underground involved over 90,000 participants, cost the local economy $800 million, made victims of 110 million internet users (roughly 22 per cent), and affected 20 percent of website, or around 1.1 million/ web sites. Most cybercriminals conduct their online through four value chains. These are real asset theft, network virtual asset theft, internet resources and services abuse, and “black hat” techniques, tools, and training: selling tools and technical support. Network virtual asset theft is an increasingly attractive draw for criminals, because current consumer laws in Olvana still do not adequately cover this area. A major difference between western online criminals and those in Olvana is that the online underground economy typically uses Internet Relay Chat (IRC) protocols to build black market advertising and communication channels in the west. However, due to the uniqueness of the usage behavior of Olvana internet users, the Olvana online underground economy employs different channels for advertising and communication, such as web forums and QQ chatting groups.

Population Movement

The state migrates unemployed and underemployed to assist in agricultural duties. At times, urban job vacancies compete with agricultural cultivation needs. Economic development progressed further in coastal provinces than in the interior, and more than 250 million migrant workers and their dependents have relocated to urban areas to find work. One consequence of population control policy is that Olvana is now one of the most rapidly aging countries in the world.

About 8 percent of Olvana’s population—from billionaires to hardscrabble peasants—make pilgrimages of faith to holy festivals in which Hindus gather to bathe in a sacred or holy river. The largest, the Pitcher Festival, takes place every four years. Multinational corporations also make the same journey in a quest for profits. Billed as the world's largest gathering, the festival draws about 100 million people seeking salvation, and generates about $2.8 billion in revenue for businesses. The Hindu gathering also offers a way to reach shoppers from rural Olvana. This is important because for the past two years, per capita spending by Olvanese villagers grew faster than that of urban dwellers for the first time in two and a half decades.