Micronesia, Federated States of - Economy



Other than US payments, the Micronesian economy is markedly underdeveloped. A clothing plant in Yap employs 500 workers in the country's largest private-sector industrial enterprise. The subsistence economy is thought to generate about 25% of GDP, but statistics from the government are incomplete and unreliable.

In 1993, the United States, whose aid constitutes a large share of GDP, enlisted the Asian Development Bank in a plan to devise and implement an economic development scheme for the country. In 1995, an economic summit was convened to discuss some solutions. Privatization was high on the list of recommendations and Yap has already initiated a plan to reduce government employment by 37%. The ADB-led summit also recommended resources be spent in the development of fisheries and tourism, two sectors with substantial potential. In recent years, licensing fees paid by foreign fisherman for tuna fishing in Micronesia's Exclusive Economic Zone have provided between $18–24 million annually.

The Second National Development Plan, for the years 1992– 96, featured as its primary objective decreasing dependence on aid and, at the same time, making better use of its aid. Little has been done, however. It is estimated that after US-led grants end in 2002, per-capita GDP could drop to below $500.

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May 7, 2007 @ 8:08 am
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