French Polynesia - Overview of economy

Until the 1960s, the French Polynesian economy was largely based on subsistence agriculture (raising enough to survive), but in 1962 France began nuclear testing in the islands. This attracted some 30,000 settlers to work in the Centre d'Expérimentations du Pacifique (CEP), a facility that changed the islands' economy forever. By 2000, only 1 in 8 French Polynesians was involved in agriculture. The rest were wage and salary earners in the territory's extensive service sector and various industries. The territory has the highest GDP per capita ($10,800, 1997 est.) in the South Pacific region.

Such progress can be credited to 2 factors: the strength of French Polynesia's tourist potential and continuing economic support from France. Both of these assets look secure for the immediate future. Tourism continues to climb, and new developments, such as the expansion of cruise ship facilities and the opening of isolated islands, have enhanced the industry's infrastructure and ensured its ongoing growth. French subsidization shows no signs of stopping; the French economy is one of the healthiest and fastest-growing in Europe, and both of its main political parties are committed to continued union.

Nevertheless, French Polynesia's overwhelming dependence on a single overseas patron leaves it highly vulnerable in the long term. France's long-range goal is for a more self-sustaining economy for the territory, and within the islands the independence movement is vocal. In the 1996 elections the Independent Front for the Liberation of Polynesia gained 10 of the Territorial Assembly's 41 seats. If this party should ever win a majority, it is highly likely to push for full independence. How the islands would adapt to such a change is unclear, but for it to achieve complete economic self-sufficiency, radical economic reorganization would be required.

A narrow economic base also makes the islands vulnerable. While tourism receipts continue to climb, and French Polynesia enjoys well-established "brand recognition" as a vacation destination, tropical storms are a recurring threat, and competition from other international beach resorts is increasingly sharp. Other industries are being developed, such as cultured pearls (already an important export earner) and coconut products (especially palm oil), mother-of-pearl, vanilla, handicrafts, and fish. But these too are niche industries, susceptible to shifting world prices, and may not be strong enough to be the basis of real diversification.