More than half of the economy of Belarus is owned and operated by the state. The government's insistence on maintaining a centrally planned socialist economy and encouraging private and foreign investment has not been successful. Belarus's economic progress has fallen behind neighboring countries, many of which have adopted free market economic practices. Yet Belarus has a high capacity for progress. It has a relatively educated and skilled labor force (4.44 million in 1999) and it is situated in a strategic location of Europe. Industrial production (34 percent of GDP) dominated the economy in 1999, employing 28.9 percent of the workforce, but services employed almost half of the total workforce.
The lack of a free market system and human rights violations, such as the arrest of peaceful political activists and the control of radio and television stations, has discouraged substantial amounts of foreign investment. The country is short of foreign exchange reserves and has a relatively high inflation rate (more than 150 percent per year for 1998 and 1999). By March 2000, Belarus had not reached many of the economic goals through which it could receive additional International Monetary Fund