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Tuvalu, Economy

Tuvalu is listed by the United Nations as one of the world’s least developed countries. The Tuvaluan government requested this distinction in 1986 in order to qualify for loans from relief organizations such as the World Bank and the International Monetary Fund (IMF). The economy is mainly a subsistence one, especially on the outer islands. Tuvalu depends heavily on economic assistance for government and other major expenditures. Income from a trust fund established by Australia, New Zealand, and the United Kingdom in 1987 provides about half of the government’s recurring budget requirements. Other important sources of revenue include the sale of postage stamps designed for collectors, the sale of licenses to foreign fleets fishing within Tuvalu's exclusive economic zone, and remittances from Tuvaluans working in the phosphate mining operation on Nauru and on ships around the world. In 1994 the gross domestic product (GDP) was estimated at $8 million, or about $800 per person.

Subsistence activities, particularly fishing and the cultivation of food crops such as coconuts, taro, pandanus, bananas, and payaya, dominate the domestic economy. Only about one-quarter of the total labor force engages in paid employment; about half of the wage earners work in the government service sector. The only major export is copra, the dried meat of the coconut, although small amounts of handicrafts are also exported. Imports, which far outweigh exports in value, include food, mineral fuels, machinery, and manufactured goods. Leading purchasers of exports are South Africa, Colombia, Belgium, and the Fiji Islands; imports come chiefly from the Fiji Islands, New Zealand, the United Kingdom, and the United States. The unit of currency is the Australian dollar (1.72 Australian dollars equal U.S.$1; 2000 average). Tuvalu also circulates its own coins locally.

Funafuti contains the only airport and the only major port. The airlines of the Fiji Islands, Nauru, and the Marshall Islands provide service to Funafuti. A shipping line provides limited international service, and a small government freighter shuttles among the outer islands. Roads are few and are surfaced with crushed coral rock. Diesel-powered generators provide electricity on Funafuti and some of the outlying islands. The government runs an AM radio station and publishes a biweekly newspaper.


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