Economic: Gabal

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Throughout most of the 19^th and 20^th Century, the economy on Gabal predominantly focused on timber logging and chromite mining, with the export of molave lumber and chromium providing the nation’s only income, apart from overseas investment. The industrial focus had gradually shifted as the clearcutting of molave (vitex parviflora) opened up accessibility for chromite mining. The revenue obtained from the exportation of these products combined with a relatively small population made Gabal one of the wealthiest nations in the world in terms of gross domestic product per capita. In the latter part of the 20^th Century, mining produced about 2 million tons of high-grade chromite each year until readily accessible deposits were exhausted. However, once these reserves were exhausted, the economy collapsed, and Gabal struggled to recover. The Gabal government first attempted to become an offshore banking center, essentially the Pacific equivalent to Caribbean offshore banking. However, allegations of money laundering and transnational criminal connections resulted in the entire Gabal banking sector closing. This forced Gabal to seek alternate revenue streams. The twenty-year span of excessive spending and bad investments led to the classification of the nation as a fragile state. The Gabal government had invested initial surpluses of $1.05 billion from the timber and chromite industries to provide income when the resources ran out. By law, the government could not access these funds for 15 years, at which time the expected value would be over $4 trillion. However, an audit of the Gabal Royalties Trust Fund revealed that 85% of that investment had been lost through corruption and bad investments. Meanwhile, signs of past prosperity are all over the islands—unmaintained cars left to rust, restaurants in disrepair or closed. Gabalians who formerly had no worries about importing luxurious food or clothing now live on about $80 a week.

Gabal has a mixed market economy, meaning that at the local level, a predominantly free market economy exists, but the state centrally directs most of the international economic decisions. This is especially noticeable in the state-owned fishing and tourism enterprises that make up a significant portion of the economy. Combined, these enterprises contribute half of the GDP and a third of employment. However, governance of these enterprises is inconsistent and rife with tribal cronyism.

The diversification of the Gabal economy following the banking experiment debacle took two major routes that resulted in various non-sustainable surges to the Gabal economy. First, Gabal has continued to focus on exploitation of natural resources. This includes both surveying the islands for secondary deposits of chromite and issuing licenses to fish in its territorial waters to international conglomerates. With improved regional coordination and strong global market conditions, fisheries revenue has more than tripled in the last five years and now accounts for about 30% of domestic revenue. By contrast, chromite mining has become an increasingly marginal source of income as they have depleted the primary deposits while the deep mining of secondary deposits is yet to begin due to uncertainty regarding both quantity and location in tribally protected lands. Second, Gabal has had some measure of success expanding its tourism sector, marketing itself as a premier dive destination due to the number of WWII wrecks offshore. This action, combined with economic diversification and boosted by strong aid flows, has returned the Gabal economy to growth, expanding by as much as 17.3% per year for the last five years. However, while there has been a significant improvement in the country’s overall economy, economic growth remains erratic, and the issues of inequality and distribution of wealth remain an ongoing concern.

Table of Economic Data

Measure	Data	Rank in World	Remarks (if applicable)
Nominal GDP	$350 million	186
PPP/Capita	$7854.80	118	Purchasing Power Parity
Real GDP Growth Rate	2.8%	38	Five-year average is 19.1%
LFPR	64.0%	32
Unemployment	23.0%	28
Poverty	24.0%	82	Percent below poverty line
Net FDI	$293 million	113	Entirely inbound
Budget	$522 million revenue $468 million expenditures		Revenue includes international aid
Public Debt	88.5% of GDP	24
Inflation	-1.3%	5	14.5% over last decade
Value of Exports	$246.64 million	176
Value of Imports	$646.20 million	187

Participation in the Global Financial System

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World Bank/International Development Aid

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Foreign Direct Investment

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Economic Activity

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Economic Actors

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Trade

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Commercial Trade

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Military Exports/Imports

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Economic Diversity

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Energy Sector

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Oil

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Natural Gas

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Agriculture

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Mining

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Manufacturing

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Steel

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Automotives

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Petrochemicals

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Defense Industries/Dual Use

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Services

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Banking and Finance

Public Finance

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Taxation

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Currency Reserves

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Private Banking

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Banking System

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Stock/Capital

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Informal Finance

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Employment Status

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Labor Market

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Employment

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Unemployment

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Illegal Economic Activity

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Summary

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