Marshall Islands economy: Not a very bright future.

The Republic of Marshall Islands, though an independent state, is so dependent on U.S. aid that its economy would not count or much without such aid.

Subsistence agriculture, small scale industry restricted to a few products, and a budding tourist industry make up for the major part of the nation’s economic activities, as well as its GDP. The major agricultural produce of the Islands are coconuts, breadfruit, tomatoes, melons, etc. Industries include processing of copra and tuna, and handicrafts production.

There are many aquaculture farms on the Islands where giant clams and sea cucumbers are farmed. Tourism is picking up, and is seen as an important part of the economy for the future. Snorkeling and scuba diving are popular activities that tourists come looking for. Especially the presence of World War II wrecks in the waters off Marshall Islands draw hordes of tourists, mainly from the U.S.

The Government is making efforts to capitalize on these limited attractions and facilities to make the most of it. The Marshall Islands are facing the typical problems of small, isolated Islands that do not have rich resources and are far away from major markets. Further, they are forced to import much more than they have the capacity to export. The rising sea level on account of global warming is threatening their very existence.

According to a report published by the Asian Development Bank, the Marshall Islands would record a low growth rate for 2009, at only 0.5%, while inflation is expected to come down to 9% from a high of 29.4% in 2008. Public debt of the Islands is said to be very high. The United States is the major benefactor of the Islands, though Japan, of late, has contributed substantial sums of money for the Islands development.

The U.S. and the Marshall Islands have a Compact of Free Association, under which the U.S. and the Islands make contributions that will be used in future, to set up a Trust in 2023, that would pay out annuities in perpetuity to Marshall Islands. But otherwise, the future does not appear to be too bright for the Marshall Islands.

Cook Islands economy: Small and struggling.

The case of the economic development of the Cook Islands is a typical one of small islands isolated from large markets, small domestic markets, lack of resources, and compulsion to import large quantities of essentials. In addition, natural disasters striking at regular intervals set the economy back by a few years. Hence, there is always a tug of war between economic progress and regress.

The economic base of the Cook Islands is made up of agriculture that provides sustenance to one third of the workforce. The major agricultural produce is copra, citrus fruit, bananas, pawpaws, yams, coffee, and pineapples. Among industries may be mentioned tourism, fruit processing, clothing, fishing and handicrafts.

New Zealand is the country’s major trading partner, as well as benefactor. Economic aid from New Zealand offsets the budgetary deficits and stabilizes the economy of Cook Islands.

The services sector contributes 75% to the Island’s GDP, while industry about 10%, and agriculture about 15%. The unemployment rate is said to be about 12% and the inflation rate is rising steadily. The country exports fish, jewelry, handicrafts, and black pearls. In fact, black pearls are the major export item. Imports include foodstuffs, textiles, timber, capital goods and fuels.

Presently, the Cook Islands are being supported by the Asian Development Bank under the Economic Recovery Support Program. The global financial crisis has affected the Cook Islands’ economy, ad this support from the ADB is expected to help the country tide over its short-term problems.

The Government has initiated several measures including provision of support to the vulnerable sections of society. It is also trying to curb the high inflation rate and developing infrastructure by way of airports, roads, water supply, etc., to give proper direction and thrust to the process of economic development.

Guernsey economy: Rough seas ahead.

An attractive tax haven, with low taxes, no exchange controls, and no restrictions on inward or outward investment, or on repatriation of profits, dividends, interest income, etc., Guernsey, a British Overseas Territory, is an attractive destination for businesses looking for minimal formalities of incorporation and ease of operations. Other facilities that help the Island attract international firms are good communications, and professional services. Of course, the proximity to the EU markets is a big plus for firms to set up shop.

However, it must be said to the credit of the Islands’ Administration, that it does not allow all and sundry firms to establish themselves there. It is quite selective in this matter, and does not offer any incentives to foreign investors and tight fisted in immigration matters.

Next to financial services, tourism occupies an important place in the country’s development, though it cannot be said to be booming. Guernsey also benefits from its expatriate citizens who remit money home in good amounts every year.

Guernsey does have its share of problems that are related to integration with the EU, taxation issues, and budget deficits. The difference in its earnings and expenditure is said to be uncomfortably low, and may force the Island to take unpopular measures to shore up its economy.

The Islands Administration has taken steps to improve the investment environment and has also built up sizeable reserves to help it in the transition in 2010. Guernsey needs to diversify its economic base by expanding upon the existing but depleting sources of revenues like horticulture, floriculture, etc. The coming years may be a difficult time for the Islands and require some deft handling to escape the worst effects of the economic downturn that has gripped the better part of the world.