Marshall Islands - Overview of economy

Given its small size in terms of population, its inaccessible location, and the absence of any minerals apart

from phosphates (which are not currently exploited), it is surprising that the economy of the Marshall Islands generates as much income for its citizens as it does. The per capita gross domestic product (GDP) was estimated at $1,670 ( purchasing power parity , 1998 est.), and this rate would just squeeze the Marshall Islands into the lower-middle income group. In addition, the Marshall Islands receive very substantial receipts from the United States—partly aid and partly rents for the use of military bases—which add more than 50 percent to the income that is generated domestically.

Most employment is in the services sector, which, because of the receipts from the United States, is able to support health workers, teachers, and government administrators. The agriculture sector is quite small in terms of both its contribution to total output and employment. The small industry sector, primarily engaged in crop and fish processing, is about what would be expected given the general level of development of the islands.

Coconut products and fish are the main exports, and these earnings are supplemented by tourism. Almost everything, aside from some food products, is imported and, without U.S. aid there would be a drastic fall in imports.

The growth of the economy varies from year to year and is affected by the impact of climatic conditions on agriculture. In recent years, output has declined by 2 percent to 5 percent per year, although El Niño weather conditions caused severe disruption in 1996, when output fell by 13 percent.