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Economy - overview: US Government assistance is the mainstay of this tiny island economy. Agricultural production is concentrated on small farms, and the most important commercial crops are coconuts, tomatoes, melons, and breadfruit. Small-scale industry is limited to handicrafts, fish processing, and copra. The tourist industry, now a small source of foreign exchange employing less than 10% of the labor force, remains the best hope for future added income. The islands have few natural resources, and imports far exceed exports. Under the terms of the Compact of Free Association, the US provides roughly $65 million in annual aid. Negotiations were underway in 1999 for an extended agreement. Government downsizing, drought, a drop in construction, and the decline in tourism and foreign investment due to the Asian financial difficulties caused GDP to fall in 1996-98. GDP: |
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The government is the largest employer, employing 30.6% of the work force, down by 3.4% since 1988. GDP is derived mainly from payments made by the United States under the terms of the Compact of Free Association. Direct U.S. aid accounted for 60% of the Marshalls' $90 million budget. The economy combines a small subsistence sector and a modern urban sector. In short, fishing and breadfruit, banana, taro, and pandanus cultivation constitute the subsistence sector. On the outer islands, production of copra and handicrafts income provide cash income. The modern service-oriented economy is located in Majuro? and Ebeye?. It is sustained by government expenditures and the U.S. Army installation at [Kwajalein Atoll]?. The airfield there also serves as a second national hub for international flights. The modern sector consists of wholesale and retail trade; restaurants; banking and insurance; construction, repair, and professional services; and copra processing. Copra cake and oil are by far the nation's largest exports. A tuna loining plant employs 300 workers, mostly women, at $1.50 per hour. Copra production, the most important single commercial activity for the past 100 years, now depends on government subsidies. The subsidies, more a social policy than an economic strategy, help reduce migration from outer atolls to densely populated Majuro and Ebeye. Marine resources, including fishing, aquaculture, tourism development, and agriculture, are top government development priorities. The Marshall Islands sells fishing rights to other nations as a source of income. In recent years, the Marshall Islands has begun to offer ship registrations under the Marshall Islands flag. As a small nation, the Marshall Islands must import a wide variety of goods, including foodstuffs, consumer goods, machinery, and petroleum products. GDP: |
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