Economy

Agriculture, including fishing and forestry, is the mainstay of the economy of Madagascar, accounting for 34% of GDP and contributing more than 70% to export earnings. Industry features textile manufacturing and the processing of agricultural products.

The Malagasy economy took a brief downturn during the 1980s when Coca-Cola, the world's leading purchaser of vanilla, switched to the New Coke formula that contained synthetic vanillin. The situation reversed itself when the company reintroduced its classic formula.

Growth in output in 1992-97 averaged less than the growth rate of the population, held back by antigovernment strikes and demonstrations, a decline in world coffee demand, and the erratic commitment of the government to economic reform.

Madagascar's new sources of growth are tourism; textile and light manufacturing exports (notably through the EPZs); agricultural products (the country is the world's leading producer of vanilla, accounting for about half the world's export market); and mining. Tourism targets the niche eco-tourism market, capitalising on Madagascar's unique biodiversity, unspoiled natural habitats, national parks and lemur species. Exports from the EPZs, located around Antananarivo and Antsirabe, consist the most part of garment manufacture, targeting the US market under AGOA and the European markets under the Everything But Arms (EBA) agreement.

Agricultural exports consist of low volume high value products like vanilla, lychees and essential oils. Mining investment is beginning to take off following the introduction of a new law opening the country up to foreign mining companies.