constitutional government in free association with the US; the Compact of Free Association entered into force 21 October 1986
based on adapted Trust Territory laws, acts of the legislature, municipal, common, and customary laws
US dollar (USD)
US Government assistance is the mainstay of this tiny island economy. Agricultural production is primarily subsistence and is concentrated on small farms; the most important commercial crops are coconuts and breadfruit. Small-scale industry is limited to handicrafts, tuna processing, and copra. The tourist industry, now a small source of foreign exchange employing less than 10% of the labor force, remains the best hope for future added income. The islands have few natural resources, and imports far exceed exports. Under the terms of the Compact of Free Association, the US has provided more than $1 billion in aid since 1986. Negotiations have continued for an extended agreement. Government downsizing, drought, a drop in construction, the decline in tourism and foreign investment due to the Asian financial difficulties, and less income from the renewal of fishing vessel licenses have held GDP growth to an average of 1% over the past decade.
coconut products, marine products, deep seabed minerals
copra, fish, tourism, craft items from shell, wood, and pearls