The economy of Samoa is dependent on agricultural exports, development aid and private financing from overseas. The country is vulnerable to devastating storms, earthquakes, tsunamis. Agriculture employs two-thirds of the labor force, and furnishes 9% of exports, featuring coconut cream, coconut oil and copra. Outside a large automotive wire harness factory, the manufacturing sector mainly processes agricultural products. Tourism is an expanding sector; more than 70,000 tourists visited the islands in 1996 and 120,000 in 2014.[4] The Samoan Government has called for[when?] deregulation of the financial sector, encouragement of investment, and continued fiscal discipline. Observers point to the flexibility of the labor market as a basic strength factor for future economic advances.[citation needed]
Unloading a lighter at Apia Wharf, around 1975–1985.
New Zealand is Samoa's principal trading partner, typically providing between 35% and 40% of imports and purchasing 45%–50% of exports. Australia, American Samoa, the United States, and Fiji are also important trading partners. Its main imports are food and beverages, industrial supplies, and fuels. The primary sector (agriculture, forestry, and fishing) employs nearly two-thirds of the labor force and produces 17% of GDP. Samoa's principal exports are refined petroleum, fish, and coconut products.[5]
Fishing has had some success in Samoan waters, but the biggest fisheries industry (headed by Van Camp and StarKist) has been based in American Samoa. StarKist Management announced that it was going ahead with setting up at Asau a blast-freezer project to be operational by 2002. This announcement dispelled a growing suspicion about the genuine motives of StarKist to move to Samoa. The proposed blast-freezer operations in Asau were expected to bring this village back to life.[citation needed]
Non-conventional sources of revenue
Samoa annually receives important financial assistance from abroad. More than 100,000 Samoans who live overseas provide two sources of revenue. Their direct remittances have amounted to $12.1 million per year recently, and they account for more than half of all tourist visits. In addition to the expatriate community, Samoa also receives roughly $28 million annually in official development assistance from sources led by China, Japan, Australia, and New Zealand. These three sources of revenue—tourism, private transfers, and official transfers—allow Samoa to cover its persistently large trade deficit.[citation needed]
In the late 1960s, Potlatch Forests, Inc. (a US company), upgraded the harbour and airport at Asau on the northern coast of Savai'i and established a timber operation, Samoa Forest Products, for harvesting tropical hardwoods. Potlatch invested about US$2,500,000 in a state-of-the-art sawmill and another US$6,000,000 over several years to develop power, water, and haul roads for their facility.[6] Asau, with the Potlatch sawmillers and Samoa Forest Products, was one of the busiest parts of Savai'i in the 1960s and 1970s; however, the departure of Potlatch and the scaling down of the sawmill has left Asau a ghost town in recent years.[citation needed]
In addition to smaller productions of other agricultural products.[7]
Manufacturing
Until 2017 industry accounted for over one-quarter of GDP while employing less than 6% of the work force. The largest industrial venture was Yazaki Samoa, a Japanese-owned company processing automotive wire harnesses for export to Australia under a concessional market-access arrangement. The Yazaki plant employed more than 2,000 workers and made up over 20% of the manufacturing sector's total output. Net receipts amounted to between $1.5 million and $3.03 million annually, although shipments from Yazaki was counted as services (export processing) and therefore did not officially appear as merchandise exports. Yazaki Samoa closed down in 2017,[8] but in the same year Fero, a New Zealand manufacturer producing wiring units, set up in Samoa in the same plant used by Yazaki.[9]
Natural disasters
This section needs to be updated. Please help update this article to reflect recent events or newly available information.(March 2021)
The effects of three natural disasters in the early 1990s were overcome by the middle of the decade, but economic growth cooled again with the regional economic downturn. Long-run development depends upon upgrading the tourist infrastructure, attracting foreign investment, and further diversification of the economy.[citation needed]
Two major cyclones hit Samoa at the beginning of the 1990s. Cyclone Ofa left an estimated 10,000 islanders homeless in February 1990; Cyclone Val caused 13 deaths and hundreds of millions of dollars in damage in December 1991. As a result, gross domestic product declined by nearly 50% from 1989 to 1991. These experiences and Samoa's position as a low-lying island state punctuate its concern about global climate change.[citation needed]
Further economic problems occurred in 1994 with an outbreak of taro leaf blight and the near collapse of the national airlinePolynesian Airlines. Taro, a root crop, traditionally was Samoa's largest export, generating more than half of all export revenue in 1993. But a fungal blight decimated the plants, and in each year since 1994 taro exports have accounted for less than 1% of export revenue. Polynesian Airlines reached a financial crisis in 1994, which disrupted the tourist industry and eventually required a government bailout.[citation needed]
The government responded to these shocks with a major program of road building and post-cyclone infrastructure repair. Economic reforms were stepped up, including the liberalization of exchange controls.[citation needed] GDP growth rebounded to over 6% in both 1995 and 1996 before slowing again at the end of the decade.[10]
Future prospects
This section needs to be updated. Please help update this article to reflect recent events or newly available information.(March 2021)
The collapse of taro exports in 1994 has had the unintended effect of modestly diversifying Samoa's export products and markets. Prior to the taro leaf blight, Samoa's exports consisted of taro ($1.1 million), coconut cream ($540,000), and "other" ($350,000). Ninety percent of exports went to the Pacific region, and only 1% went to Europe. Forced to look for alternatives to taro, Samoa's exporters have dramatically increased the production of copra, coconut oil, and fish. These three products, which combined to produce export revenue of less than $100,000 in 1993, now account for over $3.8 million. There also has been a relative shift from Pacific markets to European ones, which now receive nearly 15% of Samoa's exports. Samoa's exports are still concentrated in coconut products ($2.36 million worth of copra, copra meal, coconut oil, and coconut cream) and fish ($1.51 million) but are at least somewhat more diverse than before.[citation needed]
Tourism
In 1972 more than 85,000 visitors arrived in Samoa, contributing over $12 million to the local economy. One-third came from American Samoa, 28% from New Zealand, and 11% from the United States. Arrivals increased in 2000, as visitors to the South Pacific avoided the political strife in Fiji by traveling to Samoa instead.[citation needed]
Tourism numbers and revenue more than doubled in the decade 2007–2016. Samoa received 122,000 visitors in 2007 and 145,176 visitors in 2016. About 46% came from New Zealand, 20% from Australia and 7% from the United States. Samoans living overseas accounted for about 33% of all tourist numbers.[11][pageneeded]
Responding to the COVID-19 pandemic in 2020, Samoa banned all international flights, inbound and outbound.[12]
The service sector accounts for more than half of GDP and employs approximately 30% of the labor force.[citation needed]
The economy of American Samoa is a traditional Polynesian economy in which more than 90% of the land is communally owned. Economic activity is strongly linked to the United States, with which American Samoa conducts the great bulk of its foreign trade. Tuna fishing and processing plants are the backbone of the private sector, with canned tuna being the primary export. Transfers from the U.S. federal government add substantially to American Samoa's economic well-being. Attempts by the government to develop a larger and broader economy are restrained by Samoa's remote location, its limited transportation, and its devastating hurricanes.
The economy of the Cook Islands is based mainly on tourism, with minor exports made up of tropical and citrus fruit. Manufacturing activities are limited to fruit-processing, clothing and handicrafts.
The economy of the Dominican Republic is the seventh largest in Latin America, and is the largest in the Caribbean and Central American region. The Dominican Republic is an upper-middle income developing country with important sectors including mining, tourism, manufacturing, energy, real estate, infrastructure, telecommunications and agriculture. The Dominican Republic is on track to achieve its goal of becoming a high-income country by 2030, and is expected to grow 79% in this decade. The country is the site of the single largest gold mine in Latin America, the Pueblo Viejo mine.Although the service sector is currently the leading employer of Dominicans, agriculture remains an important sector in terms of the domestic market and is in second place in terms of export earnings. Tourism accounts for more than $7.4 billion in annual earnings in 2019. Free-trade zone earnings and tourism are the fastest-growing export sectors. A leading growth engine in the Free-trade zone sector is the production of medical equipment for export having a value-added per employee of $20,000 USD, total revenue of $1.5 billion USD, and a growth rate of 7.7% in 2019. The medical instrument export sector represents one of the highest-value added sectors of the country's economy, a true growth engine for the country's emerging market. Remittances are an important sector of the economy, contributing $8.2 billion in 2020. Most of these funds are used to cover household expenses, such as housing, food, clothing, health care and education. Secondarily, remittances have financed businesses and productive activities. Thirdly, this combined effect has induced investment by the private sector and helps fund the public sector through its value-added tax. The combined import market including the free-trade-zones amounts to a market of $20 billion a year in 2019. The combined export sector had revenues totaling $11 billion in 2019. The consumer market is equivalent to $61 billion in 2019. An important indicator is the average commercial loan interest rate, which directs short-term investment and stimulates long-term investment in the economy. It is currently 8.30%, as of June 2021.
The economic activity of the Federated States of Micronesia consists primarily of subsistence agriculture and fishing. The islands have few mineral deposits worth exploiting, except for high-grade phosphate. The potential for a tourist industry exists, but the remoteness of the location and a lack of adequate facilities hinder development. Financial assistance from the US is the primary source of revenue, with the US pledged to spend $1.3 billion in the islands in 1986–2001. Geographical isolation and a poorly developed infrastructure are major impediments to long-term growth.
The economy of Palau consists primarily of subsistence agriculture and fishing. The government is the major employer of the work force, relying heavily on financial assistance from the United States. The population enjoys a per capita income of more than twice that of the Philippines and much of Micronesia. Long-term prospects for the tourist sector have been greatly bolstered by the expansion of air travel in the Pacific and the rising prosperity of leading East Asian countries.
The economy of Seychelles is based on fishing, tourism, processing of coconuts and vanilla, coir rope, boat building, printing, furniture and beverages. Agricultural products include cinnamon, sweet potatoes, cassava (tapioca), bananas, poultry and tuna.
Vanuatu's economy is primarily agricultural; 80% of the population is engaged in agricultural activities that range from subsistence farming to smallholder farming of coconuts and other cash crops.
This page is an overview of the economy of Wallis and Futuna.
The economy of Fiji is one of the most developed among the Pacific islands. Nevertheless, Fiji is a developing country endowed with forest, mineral and fish resources. The country has a large agriculture sector heavily based on subsistence agriculture. Sugar exports and the tourism industry are the main sources of foreign exchange. There are also light manufacturing and mining sectors.
The economy of São Tomé and Príncipe, while traditionally dependent on cocoa, is experiencing considerable changes due to investment in the development of its oil industry in the oil-rich waters of the Gulf of Guinea.
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 amended Compact of Free Association. Direct U.S. aid accounted for 60% of the Marshall Islands' $90 million budget.
A per capita GDP of $3,200 ranks Solomon Islands as a lesser developed nation. Over 75% of its labour force is engaged in subsistence farming and fishing.
The economy of Saint Kitts and Nevis has traditionally depended on the growing and processing of sugar cane; decreasing world prices have hurt the industry in recent years. Tourism, export-oriented manufacturing, and offshore banking activity have assumed larger roles in Saint Kitts and Nevis. Most food is imported. The government has undertaken a program designed to revitalize the faltering sugar sector. It is also working to improve revenue collection in order to better fund social programs. In 1997, some leaders in Nevis were urging separation from Saint Kitts on the basis that Nevis was paying far more in taxes than it was receiving in government services, but the vote on cessation failed in August 1998. In late September 1998, Hurricane Georges caused approximately $445 million in damages and limited GDP growth for the year.
The economy of Dominica is reliant upon agriculture, particularly bananas, with the financial services industry and passport sales becoming increasingly the island's largest source of income. Banana production employs, directly or indirectly, upwards of one-third of the work force. This sector is highly vulnerable to weather conditions and to external events affecting commodity prices. The value of banana exports fell to less than 25% of merchandise trade earnings in 1998 compared to about 44% in 1994.
The economy of Mozambique is $14.396 billion by gross domestic product as of 2018, and has developed since the end of the Mozambican Civil War (1977–1992). In 1987, the government embarked on a series of macroeconomic reforms, which were designed to stabilize the economy. These steps, combined with donor assistance and with political stability since the multi-party elections in 1994, have led to dramatic improvements in the country's growth rate. Inflation was brought to single digits during the late 1990s, although it returned to double digits in 2000–02. Fiscal reforms, including the introduction of a value-added tax and reform of the customs service, have improved the government's revenue collection abilities.
The economy of Niue is heavily dependent upon aid from New Zealand. Government expenditures regularly exceed revenues, and grants from New Zealand make up the shortfall and are used to pay wages to public employees. Niue has cut government expenditures by reducing the public service by almost half.
The economy of the Northern Mariana Islands benefits substantially from financial assistance from the United States and tourism. The rate of funding has declined as locally generated government revenues have grown. An agreement for the years 1986 to 1992 entitled the islands to $228 million for capital development, government operations, and special programs. Since 1992, funding has been extended one year at a time. The Commonwealth received funding of $11 million for infrastructure, for FY96/97 through FY02/03, with an equal local match.
The economy of Guam depends mainly on US military spending and on tourist revenue. Over the past 20 years, the tourist industry grew rapidly, creating a construction boom for new hotels, golf courses and other tourist amenities. More than 1.1 million tourists visit Guam each year including about 1,000,000 from Japan and 150,000 from Korea. Setbacks in the 1990s include numerous super-typhoons, a M7.8 earthquake, and a Korean airline crash.
The Republic of Kiribati's per capita Gross National Product of US$1,420 (2010) makes it the poorest country in Oceania. Phosphates had been profitably exported from Banaba Island since the turn of the 20th century, but the deposits were exhausted in 1979. The economy now depends on foreign assistance and revenue from fishing licenses to finance its imports and development budget.
Tonga's economy is characterized by a large nonmonetary sector and a heavy dependence on remittances from the half of the country's population that lives abroad, chiefly in Australia, New Zealand, and the United States. Much of the monetary sector of the economy is dominated, if not owned, by the royal family and nobles. This is particularly true of the telecommunications and satellite services. Much of small business, particularly retailing on Tongatapu, is now dominated by recent Chinese immigrants who arrived under a cash-for-passports scheme that ended in 1998.
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