Madagascar is a poor country, with over 70% of the population falling below the poverty level of $50 a year. Its agriculture-based economy supports a majority of the labor force. There are substantial mineral deposits; and industry, which accounted for 11% of GDP in 1999, is centered on food processing. Madagascar sponsored an Export Processing Zone in 1991 and important investments have been made in tourism. Government efforts to strengthen the market economy have been erratic while corruption and political instability continue to constrain growth. The country's infrastructure remains poor, with inadequate roads preventing the transportation of agricultural products from farm to market. Railroads and the port system are also undeveloped, although the telecommunications system is being revamped. The IMF and World Bank in 2000 released tranches of the Poverty Reduction and Growth Facility, and Structural Adjustment Credit, respectively, to assist the country in reducing poverty and implementing market reforms conducive to private sector development. Also in 2000, Madagascar was approved to receive debt relief under the IMF/World Bank Heavily Indebted Poor Countries (HIPC) initiative.
The agricultural sector, which accounted for 34% of GDP in 1999, is prone to cyclone damage and drought. Rice is the staple crop although Madagascar has sought to diversify crop production by promoting maize and potatoes. Cassava, bananas, and sweet potatoes are also important. Export crops are coffee, vanilla, and cloves, with coffee the most important. A decline in world coffee prices by 2003 had held back growth. The sugar sector has been revived with the help of French investments.
Though Madagascar has a considerable diversity of minerals, their remote locations have discouraged extraction. Chromite, graphite, and mica are exported along with gems such as topaz, garnets, and amethysts. Private mining interests have been invited to develop Madagascar's gold deposits, as well as ilmenite, zircon, rutile, nickel, platinum, and bauxite. There has also been renewed interest in Madagascar's oil potential.
Madagascar is rich in biodiversity, and many plants and animals found there exist nowhere else in the world. Hence, ecotourism is a sector of the economy with great potential for development.