Economy of Tuvalu

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The economy of Tuvalu is constrained by its remoteness and lack of economies of scale. Virtually the only jobs in the islands that pay a steady wage or salary are with the government. Subsistence farming and fishing remain the primary economic activities, particularly off the capital island of Funafuti. There is no apparent large income disparity among the residents.

The Australian dollar (A$) is the currency of Tuvalu. Tuvalu's GDP per capita was about US$1,200 in 2001. Only 30% of the labour force participates in the formal wage economy. The remaining 70% are primarily in rural subsistence and livelihood activities. There is high youth unemployment and few new jobs being created. Meanwhile, there has been an inflow of people from the outer islands to Funafuti. Practical policies are needed for improvements to the livelihoods of the growing numbers of young Tuvaluans who aspire to a more affluent lifestyle than older generations.

About 500 Tuvalu men are employed abroad at any given time as sailors, primarily on German-owned ships. Another 300 sailors are in Tuvalu on leave between rigorous, 12-plus-month cruises. Remittances from seafarers is a major source of income for families in the country. In 2002, the Asian Development Bank approved an assistance package to upgrade the Tuvalu Maritime Training Institute which trains young Tuvaluans so they can work aboard foreign vessels.

The Tuvalu Trust Fund (TTF), a prudently managed overseas investment fund, has contributed roughly 11% of the annual government budget each year since 1990. With a capital value of about 2.5 times GDP, the TTF provides an important cushion for Tuvalu's volatile income sources from fishing and royalties from the sale of the dot-TV domain. With an initial capital of about A$27 million at independence, it now totals about A$76 million.

Tuvalu is considered a safe country of unspoiled natural beauty and friendly people. However, due to its remoteness and the cost of travelling to the island (the current airfare to and from Fiji and the Marshall Islands on Air Fiji is around $600), only a handful of tourists visit Tuvalu annually. Air Kiribati has started service from Fiji to Tuvalu to Kiribati, but its long-term success is still in doubt. Almost all visitors are government officials, aid workers, NGO officials or consultants.

Government revenues largely come from sales of stamps and coins, fishing licenses, income from the TTF, and from the lease of its highly fortuitous .tv Internet Top Level Domain (TLD). Domain name income paid most of the cost of paving the streets of Funafuti and installing street lighting in mid-2002. The man widely credited with reviving Tuvalu's economy is an Canadian entrepreneur, Jason Chapnik, who broached the idea of marketing the country's TLD in the late 1990s. Chapnik and his Toronto company,, were awarded the marketing contract by the Tuvalu government on condition that he advance a cash payment of US$50 million. Chapnik failed to deliver on this promise, and the contract eventually passed into other hands.

 This article incorporates public domain material from websites or documents of the CIA World Factbook.

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