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Mr. Douglas A. Scott and Mr. Christopher Browne


The Pacific region was settled thousands of years ago, predominantly by Melanesian people in Papua New Guinea, Solomon Islands, and Vanuatu; Micronesians in Kiribati; both Melanesians and Micronesians in Fiji; and Polynesians in Tonga and Western Samoa. Most of the inhabitants resided in closely knit coastal communities, which were governed by powerful local chiefs. Fertile soil, except on coral atolls, and plentiful fish enabled living standards to be kept above subsistence levels in these economies. An ample diet, in terms of calories and protein, and a generally equable climate contributed to relatively long life expectancy. Explorers from Spain and Portugal in the sixteenth century, from the Netherlands in the seventeenth century, and from the United Kingdom in the eighteenth century were primarily interested in trade in precious metals and spices. Except for the spread of diseases, against which local inhabitants lacked immunity, the life of the region was unaffected by these contacts.

Ms. Hali J Edison


The Republic of the Marshall Islands (RMI) consists of a group of atolls and islands in the central Pacific with a total land area of 20,000 square kilometers and 750,000 square miles of ocean. Two-thirds of the population of about 58,000 live in the two major urban centers, Majuro and Ebeye. Like other small Pacific island countries, the country is remote from major markets, and the economy is highly dependent on U.S. financing provided through the amended Compact of Free Association (covering 2004-23). Economic activity is dominated by the public sector, and a small private sector developed mainly to meet the demands of the government and its workers. Small contributions also come from agriculture, fisheries, and tourism. As a result of large external assistance, economic conditions are relatively favorable by regional standards, with a per capita GDP of around $2,500.

Mr. Charles Frederick Kramer


The Federated States of Micronesia (FSM) comprises about 600 islands, stretching 1,800 miles across the central Pacific. The total landmass of about 700,000 square kilometers is spread over a sea area of 1 million square miles, including its exclusive economic zone. With the remote location, small population of 110,000, and narrow resource base, Micronesia has much in common with other Pacific island countries. Economic and social conditions are relatively favorable by regional standards, with per capita GDP of around $2,000, primarily because of very high external grants under the two successive Compacts of Free Association with the United States (Box 11.1). At the same time, there is a need for major adjustment efforts because external assistance will be reduced in coming years.