Pacific Islands Of Micronesia: Doing business & staying in touch

In all four territories, subsistence agriculture is a key employer. Copra, coconuts, cassava and sweet potatoes are the major crops: yields are sufficient in some cases to sustain export markets. Fishing is similarly important. The Marshalls and Palau have developed small-scale light industries engaged in food-processing, boat-building and the like.

Service economies based on tourism and financial services have generally proved difficult to establish owing to the remoteness of the territories and the lack of infrastructure. Micronesia, Palau and the Northern Marianas have gone furthest in their efforts to overcome these obstacles. In particular, the establishment of an air link with Japan gave a major boost to tourism in the Northern Marianas but the lack of available workers led to the recruitment of large numbers of foreign workers (which accounts for the huge growth in the islands' population).

The region as a whole continues to rely heavily on foreign aid, mostly from the USA, from which it will receive millions of dollars in annual aid until 2023 when Trust Fund will eventually provide the islands with annual payments in perpetuity.

The Marshall Islands also has an offshore financial services industry. However, in 2002 the Marshall Islands were one of seven countries 'named and shamed' for their failure to tackle the issue of money-laundering.

As members of the Pacific Islands Forum, the islands have agreed to participate in a free trade zone, known as PICTA (Pacific Island Countries Trade Agreement), set up in 2002. Supporters of the Agreement contend that it will bring much-needed trade to the region; critics maintain that the islands are being run over by the globalisation bandwagon and small, fragile economies are being forced to open up before they are ready.