According to cheeroutdoor, the economy of Micronesia is largely based on tourism and fisheries. The tourism industry is driven by the tropical climate, stunning beaches, and rich culture of the islands. Tourism is a major contributor to the Micronesian economy, with over 1 million visitors coming to the country each year. The island nation also has an important fishing industry, with tuna and other fish being harvested from its waters. Fish production accounts for around 15% of exports in Micronesia. Agriculture also plays an important role in the country’s economy, with crops such as coconuts and bananas being grown for export. The country is also home to a number of mineral resources, including gold and copper. Mining operations are limited due to environmental concerns, but some small-scale mining does take place in certain areas of the country. Manufacturing is limited in Micronesia due to lack of infrastructure and resources; however, some products are produced for export such as seafood processing. In recent years, there has been a shift towards a more service-based economy as financial services become more prominent in the region. The banking sector has seen significant growth in recent years with many international banks establishing branches in Micronesia. There is also increasing investment into renewable energy sources such as solar power which could help to reduce reliance on fossil fuels and contribute to economic growth in future years.
The service industries, which are dominated by public administration, contribute most of GDP. However, at least half the population still relies on agriculture and fishing. The majority of agriculture consists of cultivation and animal husbandry (pigs and poultry) for their own livelihood. Breeding of bananas, coconuts, jams, cassava and breadfruit occupies only a small part of the area. An important source of income is the leasing of fishing water to Japanese companies.
There is almost no industry, but construction and small crafts (sewing, carpet weaving, boat building) have some significance. Exports (consisting mainly of fish, handicraft products and bananas) cover only a small part of imports. The country also has a growing tourism industry.
Tourism and gastronomy
According to COUNTRYAAH, the country has great potential for tourism, but the poorly developed infrastructure is an obstacle. With financial support from the United States, efforts are being made to improve airports and ports, among other things. Many of the approximately 20,000 annual tourists visit war scenes from World War II and the ruin city of Nan Madol on Phnpei. Around the islands there are good opportunities for deep sea diving.
Note: the capital city of Micronesia is Palikir with a population of 7,900 (estimate 2013). Other major cities include Weno (Chuuk State) with a population of 12,900, Kitti (Pohnpei State) with a population of 7,900 (2013 estimate).
The basis of domestic cuisine consists of fish, seafood, coconuts, breadfruit, taro, bananas and cassava. The fish is usually served grilled. Mangrove crab with fried breadfruit is a specialty, but it can be difficult to get hold of. On the other hand, it is easy to find Japanese and Chinese restaurants, imported canned meats and other Western whole canned foods. Poultry is common and is often included in the Asian-inspired rice dishes. Coconut milk is the usual drink.
Economy and business
The basis for the economy is US economic aid, a growing fishing industry, growing tourism and agriculture as well as self-sufficiency fishing and a growing fishing industry. US aid has been gradually reduced since 1986. Public business is the main driver of the economy.
Fishing is the most important natural resource. Agriculture is run almost exclusively for self-sufficiency, covers 60 percent of the country’s needs and employs nearly half of its citizens; main products are bananas, copra, cassava, sweet potatoes and pepper. The industry is very little developed and mainly based on coconut products. At Kosrae there is a fish processing company. Craft production is small. Private sector growth is slow.
Large distances hamper business development in Micronesia, abbreviated as FM by abbreviationfinder.org.
Most of the imports (including finished goods, foods and medicines) are from the United States. Major exporting countries are the United States and Japan.
The political life of the country revolved, in the early years of the 2000s, around the question of the renewal of the Pact of Free Association with the United States which, signed in 1982 and entered into force in 1986, would expire in November 2001. The negotiations were started in 1999 and continued in the following years, in the search for an economic agreement that would satisfy both signatories. Having reiterated the close relations in the field of military defense, the most controversial points concerned the extent of the economic aid granted by the United States and the period of their duration. In May 2003, An agreement was reached which provided for a twenty-year plan of financial assistance from Washington, amounting to more than one and a half billion dollars, to be granted in a decreasing manner over the years to help achieve the country’s economic independence. Approved by the US Congress in November 2003 and subsequently amended by the representatives of both governments in June 2004, the new pact was coldly received by public opinion who considered it worse than the previous one in terms of financial aid.
Internal politics, which was still characterized by the lack of political parties, remained essentially unchanged. However, there was a change at the top of the state: in the elections that took place in March 2003 the outgoing president L. Falcam was defeated and, therefore, was replaced by JJ Urusemal. Over the next few years a series of financial scandals swept the ruling class, naturally generating widespread discontent throughout the country. On the international level, Micronesia continued the battle within the United Nations (UN) against environmental pollution which, by destroying the coral reef, threatened the very integrity of the coasts.