The
government of the Marshall Islands
The government of the Marshall Islands operates under a mixed parliamentary-presidential system as set forth in its Constitution. Elections are held every four years in universal suffrage (for all citizens above the age of 18), with each of the 24 ...
is the largest employer, employing 30.6% of the work force, down by 3.4% since 1988.
GDP
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is often ...
is derived mainly from payments made by the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
under the terms of the amended
Compact of Free Association
The Compact of Free Association (COFA) is an international agreement establishing and governing the relationships of free association between the United States and the three Pacific Island sovereign states of the Federated States of Micronesia (F ...
. Direct U.S. aid accounted for 60% of the
Marshall Islands
The Marshall Islands ( mh, Ṃajeḷ), officially the Republic of the Marshall Islands ( mh, Aolepān Aorōkin Ṃajeḷ),'' () is an independent island country and microstate near the Equator in the Pacific Ocean, slightly west of the Internati ...
' $90 million budget. The economy combines a small subsistence sector and a modern urban sector.
Subsistence economy
The subsistence economy consists of
fishing
Fishing is the activity of trying to catch fish. Fish are often caught as wildlife from the natural environment, but may also be caught from stocked bodies of water such as ponds, canals, park wetlands and reservoirs. Fishing techniques inclu ...
and
breadfruit
Breadfruit (''Artocarpus altilis'') is a species of flowering tree in the mulberry and jackfruit family (Moraceae) believed to be a domesticated descendant of ''Artocarpus camansi'' originating in New Guinea, the Maluku Islands, and the Philippi ...
,
banana
A banana is an elongated, edible fruit – botanically a berry – produced by several kinds of large herbaceous flowering plants in the genus ''Musa''. In some countries, bananas used for cooking may be called "plantains", distinguis ...
,
taro
Taro () (''Colocasia esculenta)'' is a root vegetable. It is the most widely cultivated species of several plants in the family Araceae that are used as vegetables for their corms, leaves, and petioles. Taro corms are a food staple in Africa ...
, and
pandanus
''Pandanus'' is a genus of monocots with some 750 accepted species. They are palm-like, dioecious trees and shrubs native to the Old World tropics and subtropics. The greatest number of species are found in Madagascar and Malaysia. Common names ...
cultivation. On the outer islands, production of
copra
Copra (from ) is the dried, white flesh of the coconut from which coconut oil is extracted. Traditionally, the coconuts are sun-dried, especially for export, before the oil, also known as copra oil, is pressed out. The oil extracted from copr ...
and
handicraft
A handicraft, sometimes more precisely expressed as artisanal handicraft or handmade, is any of a wide variety of types of work where useful and decorative objects are made completely by one’s hand or by using only simple, non-automated re ...
s provide cash income. The modern service-oriented economy is located in
Majuro
Majuro (; Marshallese: ' ) is the capital and largest city of the Marshall Islands. It is also a large coral atoll of 64 islands in the Pacific Ocean. It forms a legislative district of the Ratak (Sunrise) Chain of the Marshall Islands. The ato ...
and
Ebeye
Ebeye ( ; Marshallese: , or in older orthography, ; locally, , , after the English pronunciation) is the most populous island of Kwajalein Atoll in the Marshall Islands, as well as the center for Marshallese culture in the Ralik Chain of the arc ...
. It is sustained by government expenditures and the
U.S. Army
The United States Army (USA) is the land service branch of the United States Armed Forces. It is one of the eight U.S. uniformed services, and is designated as the Army of the United States in the U.S. Constitution.Article II, section 2, cl ...
installation at
Kwajalein Atoll
Kwajalein Atoll (; Marshallese: ) is part of the Republic of the Marshall Islands (RMI). The southernmost and largest island in the atoll is named Kwajalein Island, which its majority English-speaking residents (about 1,000 mostly U.S. civilia ...
. The airfield there also serves as a second national hub for international flights.
Modern economy
The modern sector consists of
wholesale
Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...
and
retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and t ...
trade
Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.
An early form of trade, barter, saw the direct excha ...
;
restaurant
A restaurant is a business that prepares and serves food and drinks to customers. Meals are generally served and eaten on the premises, but many restaurants also offer take-out and food delivery services. Restaurants vary greatly in appearan ...
s;
banking
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Because ...
and
insurance
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...
; offshore companies registration; construction, repair, and professional services; and copra processing. Company formation in the Marshall Islands is available for residents and non-residents. Non-residents enjoy privacy benefits and zero local taxes.
Copra cake and oil are by far the nation's largest exports. A
tuna
A tuna is a saltwater fish that belongs to the tribe Thunnini, a subgrouping of the Scombridae (mackerel) family. The Thunnini comprise 15 species across five genera, the sizes of which vary greatly, ranging from the bullet tuna (max length: ...
processing plant employs 300 workers, mostly women, at $1.50 per hour.
Copra
Copra (from ) is the dried, white flesh of the coconut from which coconut oil is extracted. Traditionally, the coconuts are sun-dried, especially for export, before the oil, also known as copra oil, is pressed out. The oil extracted from copr ...
production, the most important single commercial activity for the past 100 years, now depends on government subsidies. The subsidies, more a social policy than an economic strategy, help reduce migration from outer atolls to densely populated Majuro and Ebeye.
Marine resources, including
fishing
Fishing is the activity of trying to catch fish. Fish are often caught as wildlife from the natural environment, but may also be caught from stocked bodies of water such as ponds, canals, park wetlands and reservoirs. Fishing techniques inclu ...
, aquaculture, tourism development, and agriculture, are top government development priorities. The Marshall Islands sells
fishing rights to other nations as a source of income. In recent years, the Marshall Islands has begun to offer
ship registration
Ship registration is the process by which a ship is documented and given the nationality of the country to which the ship has been documented. The nationality allows a ship to travel internationally as it is proof of ownership of the vessel.
Inter ...
s under the Marshall Islands flag. As a small nation, the Marshall Islands must import a wide variety of goods, including
foodstuff
Food is any substance consumed by an organism for nutritional support. Food is usually of plant, animal, or fungal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals. The substance is inge ...
s, consumer goods, machinery, and
petroleum products
Petroleum products are materials derived from crude oil (petroleum) as it is processed in oil refineries. Unlike petrochemicals, which are a collection of well-defined usually pure organic compounds, petroleum products are complex mixtures. The m ...
.
Coconut oil
Power authorities, private companies, and entrepreneurs are experimenting with
coconut oil
frameless , right , alt = A cracked coconut and a bottle of coconut oil
Coconut oil (or coconut butter) is an edible oil derived from the wick, meat, and milk of the coconut palm fruit. Coconut oil is a white solid fat; in warmer climates duri ...
as an alternative to
diesel fuel
Diesel fuel , also called diesel oil, is any liquid fuel specifically designed for use in a diesel engine, a type of internal combustion engine in which fuel ignition takes place without a spark as a result of compression of the inlet air and t ...
for vehicles, power generators, and ships. Coconut trees abound in the Pacific's tropical islands. One liter of oil can be produced from the
copra
Copra (from ) is the dried, white flesh of the coconut from which coconut oil is extracted. Traditionally, the coconuts are sun-dried, especially for export, before the oil, also known as copra oil, is pressed out. The oil extracted from copr ...
of 6–10 coconuts.
Digital currency
In February 2018, the Marshallese government enacted the
Sovereign Currency Act of 2018
Sovereign Currency Act of 2018 is a statute of the Legislature of the Marshall Islands which was passed on February 26, 2018. The Act creates and issues a digital decentralized currency (“ cryptocurrency”) that will be used as a legal tender ...
to develop a national digital currency, the Marshallese Sovereign (SOV), that would reduce the country's dependence on the U.S. dollar.
The SOV plan prompted a vote of no confidence in President Hilda Heine, who was in favour of the scheme, in November 2018, which failed when parliament deadlocked on the question.
The SOV is intended to serve as a second legal tender for the Marshall Islands, alongside the U.S. dollar; however, the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
has stated that it does not meet the definition of a central bank digital currency. The IMF also raised concerns about macroeconomic and financial integrity risks associated with the digital currency. Despite the objections of the IMF, the U.S. Treasury Department, and banks, the Marshallese government has continued to work toward the development of the SOV. The country is using
Algorand
Algorand is a proof-of-stake blockchain cryptocurrency protocol. Algorand's native cryptocurrency is called ALGO.
History
Algorand was founded in 2017 by Silvio Micali, a professor at MIT. Algorand is composed of a company and a foundation. ...
open-source blockchain technology for the SOV
ledger
A ledger is a book or collection of accounts in which account transactions are recorded. Each account has an opening or carry-forward balance, and would record each transaction as either a debit or credit in separate columns, and the ending or ...
.
Gross domestic product
GDP
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is often ...
:
purchasing power parity - $150 million (2011 est.)
GDP - real growth rate:
3% (2011 est.)
GDP - per capita:
purchasing power parity - $2 500 (2011 est.)
GDP - composition by sector:
''agriculture:''
22%
''industry:''
18%
''services:''
60% (2008)
The islands have few natural resources, and their imports far exceed exports. According to the CIA, the value of exports in 2013 was approximately $53.7 million while estimated imports were $133.7 million. Agricultural products include coconuts, tomatoes, melons, taro, breadfruit, fruits, pigs and chickens. Industry is made up of the production of copra and craft items, tuna processing and tourism. The CIA estimates that the GDP in 2016 was an estimated $180 million, with a real growth rate of 1.7% while the GDP per capita was $3,300.
Marshall Island productivity
Population below poverty line:
NA%
Household income or consumption by percentage share:
''lowest 10%:''
NA%
''highest 10%:''
NA%
Inflation rate (consumer prices):
5% (2007)
Labor force:
NA
Labor force - by occupation:
agriculture 48%, industry 12%, services 40% (2008)
Unemployment rate:
8% (2011 est.)
Budget:
''revenues:''
$169.5 million
''expenditures:''
$112.1 million, including capital expenditures of $19.5 million (FY08/09 est.)
Industries:
copra, fish, tourism, craft items from shell, wood, and pearls, offshore banking (embryonic)
Industrial production growth rate:
NA%
Electricity - production:
114 GWh (2008)
Electricity - production by source:
''fossil fuel:''
NA%
''hydro:''
NA%
''nuclear:''
NA%
''other:''
NA%
Electricity - consumption:
57 GWh (1994)
Electricity - exports:
0 kWh (1994)
Electricity - imports:
0 kWh (1994)
Agriculture - products:
coconut
The coconut tree (''Cocos nucifera'') is a member of the palm tree family ( Arecaceae) and the only living species of the genus ''Cocos''. The term "coconut" (or the archaic "cocoanut") can refer to the whole coconut palm, the seed, or the ...
s,
cacao,
taro
Taro () (''Colocasia esculenta)'' is a root vegetable. It is the most widely cultivated species of several plants in the family Araceae that are used as vegetables for their corms, leaves, and petioles. Taro corms are a food staple in Africa ...
,
breadfruit
Breadfruit (''Artocarpus altilis'') is a species of flowering tree in the mulberry and jackfruit family (Moraceae) believed to be a domesticated descendant of ''Artocarpus camansi'' originating in New Guinea, the Maluku Islands, and the Philippi ...
, fruits;
pig
The pig (''Sus domesticus''), often called swine, hog, or domestic pig when distinguishing from other members of the genus '' Sus'', is an omnivorous, domesticated, even-toed, hoofed mammal. It is variously considered a subspecies of ''Sus s ...
s,
chicken
The chicken (''Gallus gallus domesticus'') is a domesticated junglefowl species, with attributes of wild species such as the grey and the Ceylon junglefowl that are originally from Southeastern Asia. Rooster or cock is a term for an adult m ...
s
Exports:
$132 million (f.o.b., 2008 est.)
Exports - commodities:
fish,
coconut
The coconut tree (''Cocos nucifera'') is a member of the palm tree family ( Arecaceae) and the only living species of the genus ''Cocos''. The term "coconut" (or the archaic "cocoanut") can refer to the whole coconut palm, the seed, or the ...
oil, trochus shells
Exports - partners:
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
,
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
,
Australia
Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
,
New Zealand
New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island count ...
Imports:
$125 million (f.o.b., 2008 est.)
Imports - commodities:
foodstuffs, machinery and equipment, fuels, beverages and
tobacco
Tobacco is the common name of several plants in the genus '' Nicotiana'' of the family Solanaceae, and the general term for any product prepared from the cured leaves of these plants. More than 70 species of tobacco are known, but the ...
Imports - partners:
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
,
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
,
Australia
Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
,
New Zealand
New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island count ...
,
Guam
Guam (; ch, Guåhan ) is an organized, unincorporated territory of the United States in the Micronesia subregion of the western Pacific Ocean. It is the westernmost point and territory of the United States (reckoned from the geographic cent ...
,
Singapore
Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
Debt - external:
$68 million (2008 est.)
Economic aid - recipient:
approximately $40 million annually from the US
Currency:
1 United States dollar (US$) = 100 cents
Exchange rates:
US currency is used
Fiscal year:
1 October - 30 September
See also
*
Ministry of Finance (Marshall Islands)
Ministry of Finance of the Marshall Islands is a government ministry in the Marshall Islands responsible for providing a management system for public finances to manage revenue and fiscal functions of the Government of the Marshall Islands.
The m ...
*
Marshall Islands
The Marshall Islands ( mh, Ṃajeḷ), officially the Republic of the Marshall Islands ( mh, Aolepān Aorōkin Ṃajeḷ),'' () is an independent island country and microstate near the Equator in the Pacific Ocean, slightly west of the Internati ...
References
{{Oceania in topic, Economy of