Selling in the Pacific Islands could be called a micro-markets strategy. I posted earlier about selling in the Federal States of Micronesia (FSM), a market with an estimated 2012 GNP of $222 million – smaller than many cities elsewhere. The Republic of the Marshall Islands (RMI) is another micro-market, its 2012 GNP forecast at about $170 million. Unlike the FSM, where potential business is spread among four states, the economy of the Marshalls really means one, perhaps, two islands – though there are physically many more.
Things are a bit more upbeat in the Marshalls than in the FSM, GNP growing by a quite respectable 5.2% in FY2010. GNP growth was negative during the recession and quite low for years before that, so this healthy rise is welcome. It comes mostly from growth in the Marshalls’ fishing industry. What’s more, this growth looks solid for the next three years as more investment goes into fishing and airport expansion projects move into high gear. Though Marshallese imports are tiny by world standards, the pickup in economic activity raised imports of goods and services to nearly $180 million in 2010.
Economic activity centers on Majuro and Kwajalein. The latter acts as a brake on the economy as U.S. military spending spirals down. The American base on Kwaj has been a mainstay of the Marshallese economy for decades while the U.S. conducted first its nuclear tests at Bikini and later continued using Kwaj as the western terminus of the Pacific Missile Range test facility. Despite pumping money into the economy, especially on the neighboring island of Ebeye, nuclear testing displaced the Bikinians to Majuro where something of a slum grew up. Many Bikinians (and other Marshallese) have since moved to the mainland U.S. and to Hawaii, stressing social programs there.
Government spending drives most Marshallese economic activity - based on U.S. support under the Compact of Free Association. That said, the private sector is growing, based primarily on the fishing industry, copra production and construction (much of which takes us back to government spending). Coconut oil prices rose to very high levels in 2010, boosting the economy.
Formerly dominated by foreign fleets (most of whom paid for their fishing rights), the Marshalls now have at least eight modern purse seiners with three more expected in the next two years. There is a fish loining facility on Majuro, but it operates at a loss and is subsidized by sales of fishing rights. The Marshalls also has a small tropical fish collecting industry.
Tourism has been a disappointment despite outstanding fishing and some good diving. The hotel and restaurant sector has declined at a steep 9% annual rate since 2001.
You can find out more about economic activity in the Marshall Islands here.