Economy of the Marshall Islands
Encyclopedia
The government
of the Marshall Islands
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 handicraft
s 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
; restaurant
s; 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 registration
s 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
:
purchasing power parity - $115 million (2001 est.)
GDP - real growth rate:
1% (2001 est.)
GDP - per capita:
purchasing power parity - $2 300 (2001 est.)
GDP - composition by sector:
agriculture:
15%
industry:
13%
services:
72% (1995)
Population below poverty line:
NA%
Household income or consumption by percentage share:
lowest 10%:
NA%
highest 10%:
NA%
Inflation rate (consumer prices):
5% (1997)
Labor force:
NA
Labor force - by occupation:
agriculture NA%, industry NA%, services NA%
Unemployment rate:
16% (1991 est.)
Budget:
revenues:
$80.1 million
expenditures:
$77.4 million, including capital expenditures of $19.5 million (FY95/96 est.)
Industries:
copra, fish, tourism, craft items from shell, wood, and pearls, offshore banking (embryonic)
Industrial production growth rate:
NA%
Electricity - production:
57 GWh (1994)
Electricity - production by source:
fossil fuel:
NA%
hydro:
NA%
nuclear:
NA%
other:
NA%
Electricity - consumption:
57 GWh (1994)
Electricity - exports:
0 kWh (1994)
Electricity - imports:
0 kWh (1994)
Agriculture - products:
coconut
s, cacao, taro
, breadfruit
, fruits; pig
s, chicken
s
Exports:
$28 million (f.o.b., 1997 est.)
Exports - commodities:
fish, coconut
oil, trochus shells
Exports - partners:
United States
, Japan
, Australia
Imports:
$58 million (f.o.b., 1997 est.)
Imports - commodities:
foodstuffs, machinery and equipment, fuels, beverages and tobacco
Imports - partners:
United States
, Japan
, Australia
, New Zealand
, Guam
, Singapore
Debt - external:
$125 million (FY96/97 est.)
Economic aid - recipient:
approximately $65 million annually from the US
Currency:
1 United States dollar (US$) = 100 cents
Exchange rates:
US currency is used
Fiscal year:
1 October - 30 September
capital of Majuro
said power authorities, private companies and entrepreneurs had been experimenting with coconut oil
as an alternative to diesel fuel for vehicles, power
generators and ships. Coconut tree
s abound in the Pacific's tropical island
s. Copra
, from 6 to 10 coconut
s makes 1 litre oil
.
Politics of the Marshall Islands
Citizens of the Marshall Islands live with a relatively new democratic political system combined with a hierarchical traditional culture.There have been some incidents of human rights concern, however, such as undue government pressure on the judiciary and the press.The territorial claim by the...
of the Marshall Islands
Marshall Islands
The Republic of the Marshall Islands , , is a Micronesian nation of atolls and islands in the middle of the Pacific Ocean, just west of the International Date Line and just north of the Equator. As of July 2011 the population was 67,182...
is the largest employer, employing 30.6% of the work force, down by 3.4% since 1988. GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
is derived mainly from payments made by the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
under the terms of the Compact of Free Association
Compact of Free Association
The Compact of Free Association defines the relationship that three sovereign states—the Federated States of Micronesia , the Republic of the Marshall Islands and the Republic of Palau—have entered into as associated states with the United States.Now sovereign nations, the three freely associated...
. 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
Fishing
Fishing is the activity of trying to catch wild fish. Fish are normally caught in the wild. Techniques for catching fish include hand gathering, spearing, netting, angling and trapping....
and breadfruit
Breadfruit
Breadfruit is a species of flowering tree in the mulberry family, Moraceae, growing throughout Southeast Asia and most Pacific Ocean islands...
, banana
Banana
Banana is the common name for herbaceous plants of the genus Musa and for the fruit they produce. Bananas come in a variety of sizes and colors when ripe, including yellow, purple, and red....
, taro
Taro
Taro is a common name for the corms and tubers of several plants in the family Araceae . Of these, Colocasia esculenta is the most widely cultivated, and is the subject of this article. More specifically, this article describes the 'dasheen' form of taro; another variety is called eddoe.Taro is...
, and pandanus
Pandanus
Pandanus is a genus of monocots with about 600 known species. They are numerous palmlike dioecious trees and shrubs native of the Old World tropics and subtropics. They are classified in the order Pandanales, family Pandanaceae.-Overview:...
cultivation constitute the subsistence sector. On the outer islands, production of copra
Copra
Copra is the dried meat, or kernel, of the coconut. Coconut oil extracted from it has made copra an important agricultural commodity for many coconut-producing countries. It also yields coconut cake which is mainly used as feed for livestock.-Production:...
and handicraft
Handicraft
Handicraft, more precisely expressed as artisanic handicraft, sometimes also called artisanry, is a type of work where useful and decorative devices are made completely by hand or by using only simple tools. It is a traditional main sector of craft. Usually the term is applied to traditional means...
s income provide cash income. The modern service-oriented economy is located in Majuro
Majuro
Majuro , is a large coral atoll of 64 islands in the Pacific Ocean, and forms a legislative district of the Ratak Chain of the Marshall Islands. The atoll itself has a land area of and encloses a lagoon of...
and Ebeye
Ebeye
Ebeye is the most populous island of Kwajalein Atoll in the Marshall Islands, as well as the center for Marshallese culture in the Ralik Chain of the archipelago. Settled on 80 acres of land, it has a population of more than 15,000. Over 50% of the population is estimated to be under the age of...
. 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
Wholesale
Wholesaling, jobbing, or distributing is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services...
and retail
Retail
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
trade
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
; restaurant
Restaurant
A restaurant is an establishment which prepares and serves food and drink to customers in return for money. Meals are generally served and eaten on premises, but many restaurants also offer take-out and food delivery services...
s; banking and insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
; construction, repair, and professional services; and copra processing. Copra cake and oil are by far the nation's largest exports. A tuna
Tuna
Tuna is a salt water fish from the family Scombridae, mostly in the genus Thunnus. Tuna are fast swimmers, and some species are capable of speeds of . Unlike most fish, which have white flesh, the muscle tissue of tuna ranges from pink to dark red. The red coloration derives from myoglobin, an...
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 registration
Ship registration
Ship registration is the process by which a ship is documented and authorised by some country; it is usual to say that the ship sails under the flag of the country of registration . International law requires that every merchant ship be registered in a country, called its flag state...
s 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
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
:
purchasing power parity - $115 million (2001 est.)
GDP - real growth rate:
1% (2001 est.)
GDP - per capita:
purchasing power parity - $2 300 (2001 est.)
GDP - composition by sector:
agriculture:
15%
industry:
13%
services:
72% (1995)
Population below poverty line:
NA%
Household income or consumption by percentage share:
lowest 10%:
NA%
highest 10%:
NA%
Inflation rate (consumer prices):
5% (1997)
Labor force:
NA
Labor force - by occupation:
agriculture NA%, industry NA%, services NA%
Unemployment rate:
16% (1991 est.)
Budget:
revenues:
$80.1 million
expenditures:
$77.4 million, including capital expenditures of $19.5 million (FY95/96 est.)
Industries:
copra, fish, tourism, craft items from shell, wood, and pearls, offshore banking (embryonic)
Industrial production growth rate:
NA%
Electricity - production:
57 GWh (1994)
Electricity - production by source:
fossil fuel:
NA%
hydro:
NA%
nuclear:
NA%
other:
NA%
Electricity - consumption:
57 GWh (1994)
Electricity - exports:
0 kWh (1994)
Electricity - imports:
0 kWh (1994)
Agriculture - products:
coconut
Coconut
The coconut palm, Cocos nucifera, is a member of the family Arecaceae . It is the only accepted species in the genus Cocos. The term coconut can refer to the entire coconut palm, the seed, or the fruit, which is not a botanical nut. The spelling cocoanut is an old-fashioned form of the word...
s, cacao, taro
Taro
Taro is a common name for the corms and tubers of several plants in the family Araceae . Of these, Colocasia esculenta is the most widely cultivated, and is the subject of this article. More specifically, this article describes the 'dasheen' form of taro; another variety is called eddoe.Taro is...
, breadfruit
Breadfruit
Breadfruit is a species of flowering tree in the mulberry family, Moraceae, growing throughout Southeast Asia and most Pacific Ocean islands...
, fruits; pig
Pig
A pig is any of the animals in the genus Sus, within the Suidae family of even-toed ungulates. Pigs include the domestic pig, its ancestor the wild boar, and several other wild relatives...
s, chicken
Chicken
The chicken is a domesticated fowl, a subspecies of the Red Junglefowl. As one of the most common and widespread domestic animals, and with a population of more than 24 billion in 2003, there are more chickens in the world than any other species of bird...
s
Exports:
$28 million (f.o.b., 1997 est.)
Exports - commodities:
fish, coconut
Coconut
The coconut palm, Cocos nucifera, is a member of the family Arecaceae . It is the only accepted species in the genus Cocos. The term coconut can refer to the entire coconut palm, the seed, or the fruit, which is not a botanical nut. The spelling cocoanut is an old-fashioned form of the word...
oil, trochus shells
Exports - partners:
United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
Imports:
$58 million (f.o.b., 1997 est.)
Imports - commodities:
foodstuffs, machinery and equipment, fuels, beverages and tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
Imports - partners:
United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
, Guam
Guam
Guam is an organized, unincorporated territory of the United States located in the western Pacific Ocean. It is one of five U.S. territories with an established civilian government. Guam is listed as one of 16 Non-Self-Governing Territories by the Special Committee on Decolonization of the United...
, Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
Debt - external:
$125 million (FY96/97 est.)
Economic aid - recipient:
approximately $65 million annually from the US
Currency:
1 United States dollar (US$) = 100 cents
Exchange rates:
US currency is used
Fiscal year:
1 October - 30 September
Coconut oil
On September 15, 2007, Witon Barry, of the Tobolar Copra processing plant in the Marshall IslandsMarshall Islands
The Republic of the Marshall Islands , , is a Micronesian nation of atolls and islands in the middle of the Pacific Ocean, just west of the International Date Line and just north of the Equator. As of July 2011 the population was 67,182...
capital of Majuro
Majuro
Majuro , is a large coral atoll of 64 islands in the Pacific Ocean, and forms a legislative district of the Ratak Chain of the Marshall Islands. The atoll itself has a land area of and encloses a lagoon of...
said power authorities, private companies and entrepreneurs had been experimenting with coconut oil
Coconut oil
Coconut oil is an edible oil extracted from the kernel or meat of matured coconuts harvested from the coconut palm . Throughout the tropical world, it has provided the primary source of fat in the diets of millions of people for generations. It has various applications in food, medicine, and industry...
as an alternative to diesel fuel for vehicles, power
Electric power
Electric power is the rate at which electric energy is transferred by an electric circuit. The SI unit of power is the watt.-Circuits:Electric power, like mechanical power, is represented by the letter P in electrical equations...
generators and ships. Coconut tree
Tree
A tree is a perennial woody plant. It is most often defined as a woody plant that has many secondary branches supported clear of the ground on a single main stem or trunk with clear apical dominance. A minimum height specification at maturity is cited by some authors, varying from 3 m to...
s abound in the Pacific's tropical island
Island
An island or isle is any piece of sub-continental land that is surrounded by water. Very small islands such as emergent land features on atolls can be called islets, cays or keys. An island in a river or lake may be called an eyot , or holm...
s. Copra
Copra
Copra is the dried meat, or kernel, of the coconut. Coconut oil extracted from it has made copra an important agricultural commodity for many coconut-producing countries. It also yields coconut cake which is mainly used as feed for livestock.-Production:...
, from 6 to 10 coconut
Coconut
The coconut palm, Cocos nucifera, is a member of the family Arecaceae . It is the only accepted species in the genus Cocos. The term coconut can refer to the entire coconut palm, the seed, or the fruit, which is not a botanical nut. The spelling cocoanut is an old-fashioned form of the word...
s makes 1 litre oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....
.