Since World War II, Palau has been financially dependent on the United States. In 1994, U.S. assistance exceeded $35 million and Japan provided another $10 million. Under its Compact of Free Association with Palau, the United States will give the country about $500 million by the year 2010.
Subsistence agriculture and fishing are important economic activities. Tourism has also become increasingly important and, despite a generally poor infrastructure, there is growing interest among Asian investors, particularly from Japan and Taiwan. Fishing and tourism ventures are largely foreign-owned. Exports include seafood, copra, and handicrafts. Palauans rely heavily on imported goods, trading mostly with Japan and the United States. The basic unit of currency is the United States dollar.
The government of Palau employs about half of the nation's 6,000 salaried workers. Most Filipino workers are employed in low-paying jobs in construction, tourism, and domestic service. Some tension exists between local residents and foreign workers. Some Palauans claim that foreign workers keep the minimum wage too low to live comfortably in an economy dependent on imported goods.
Cargo ships visit Palau frequently, particularly from Japan and the United States. Palau has three airports. The largest, Palau International Airport, is on Babelthuap near Koror. Palau Paradise Air, based in Babelthuap, is the sole domestic carrier; it offers flights to Peleliu and Angaur islands. There is also international air service several times weekly. In 1994 Palau had about 61 km (about 38 mi) of roads, but most were in poor condition. There is no public transportation.
Palau has one radio station and one television station, which are broadcast from Koror. There is also one cable television station. A biweekly newspaper is published in Koror. In addition, a newspaper covering Palau is published weekly on Saipan in the Northern Mariana Islands and distributed in Palau.