Samoa - Overview of economy

As a small island country in the South Pacific, Samoa (formerly Western Samoa) has an economy largely based on agriculture, government and tourist services, and remittances from Samoans living abroad. The majority of households in Samoa are dependent on subsistence production for at least part of their food supply and other basic items. At the same time, most households rely on cash income to provide basics that are not available from subsistence. In other words, food products grown or caught for personal consumption—such as taro, coconut, banana, fish, and crayfish—are also sold to generate cash for village households.

The export economy mainly relies on agricultural products. The most important of these are coconut products such as copra (the dried flesh of the coconut), copra meal, coconut oil, and coconut cream. In the early 1990s taro (a tropical Asian plant) was an important export but was destroyed by disease in 1993 and is only starting to re-emerge as an export. In the late 1990s the development of a commercial fishing operation illustrated the competitive advantage Samoa has in this industry, with its proximity to fish canning facilities in American Samoa. Timber has been a modest source of export income in the past, but is not likely to be significant for 25 years when recently planted trees mature.

Manufacturing in Samoa is mainly to supply the domestic market, although there have been some initiatives to foster export manufacturing using tax breaks. Tourism grew steadily through the 1990s and has

considerable potential, especially if tourism infrastructure is developed.

Besides tourism, remittances and international aid offset Samoa's annual trade imbalance. Remittances from relatives overseas are an important source of income for many families in Samoa and a significant source of foreign exchange for the country. The largest source of remittance income, comes from the Samoan population living in New Zealand. Another substantial amount comes Samoan communities in Hawaii and California. International aid contributes about one-quarter of gross domestic product (GDP) and supports many of the govern-ment's development projects. The largest aid donors are Japan, Australia, and New Zealand followed by multilateral aid agencies such as the Asian Development Bank.