The Micronesia Federation has a small business
development. According to
countryaah, the basis for the economy is assistance from
the United States, a rapidly growing fishing industry, as
well as agriculture and self-sufficiency fishing. Tourism
has been growing significantly since 2000. Statistical data
are uncertain, but gross domestic product (GDP) per capita
was estimated at US $ 1930 in 2003, with very different
distribution between the states, where Yap led by approx.
twice as high as Chuuk.
Since 1986, when an association agreement came into
force, US aid has been gradually reduced. The agreement was
renewed in 2003 and guarantees the Micronesia Federation a
total US aid of 1.8 billion. In the period up to 2024. In
order to reduce dependence on the United States, a
comprehensive "reform package" was adopted in 1995 with
support from the Asian Development Bank. The state is by far
the largest employer, although the public sector has shrunk
somewhat in line with declining US aid.
Until 2003, US and Australian aid accounted for a total
of approx. 50% of GDP and 1/3 of the
public revenue. The association agreement with the US was
renewed in 2003 and guarantees a total of 1.8 billion. USD
in the period up to 2023. The economy can be characterized
as dualistic with a modern money-based economy established
largely in the few urban centers and, by the way, most
natural households. The salaried population comprises only
around 26% of the workforce. Most of the inhabitants still
live in traditional large families, and within these are
taken great responsibility in providing for each other.
Public sector is the driving force in the economy, and the
state salaries amounts to about 1/3of
GDP. The private business sector is mainly based on the
public sector's purchase of goods and services. Tourism has
been growing since the turn of the millennium by approx.
10,000 visits annually. An important attraction is diving,
first and foremost in the Chuuk Lagoon where a lot of
shipwrecks have been around since the Second World War. The
ruined town of Nan Madol on the island of Pohnpei also
attracts a relatively large number of visitors.
Agriculture is practiced almost exclusively for
self-sufficiency; covers approx. 60% of the country needs
and employs almost half of the workforce. The most important
agricultural products are bananas and coconuts (copra) for
export, as well as cassava, breadfruit and sweet potatoes
for own use. Pepper is grown in Pohnpei.
Fish is the most important natural resource. Micronesia
is believed to have the richest tuna banks in the world.
Fishing revenues have shown strong growth since the
mid-1990s. Then a local commercial fishing started and
revenue from foreign license fishing skyrocketed. Shellfish
is also a significant source of income.
The industry is very poorly developed and mainly
comprises only coconut products such as copra and oil, a
fish processing company in Kosrae and some small scale craft
In 2003, the total value of imports was USD 110 million,
while exports amounted to USD 20 million. Imports include
food, consumables and finished goods, machinery and
transport equipment, as well as fuel. About. 80% of exports
are fish and primarily go to the US and Japan. Other export
products are shellfish, textiles, copra and black pepper.
Transport and Communications
Transport is poorly developed, and the enormous distances
hinder the development of the Micronesia Federation as a
country. All four main islands have an international airport
connected to neighboring islands in the Pacific. Only Air
Continental has international flights to the Federation of
Micronesia, while inland traffic is largely provided by
ships, only some of the outer islands have an airport
connection with the main islands. Most of the ship traffic
between the islands is state-organized.