Country Profiles



The Caroline Islands are a widely scattered archipelago in the western Pacific Ocean; they became part of a UN Trust Territory under US administration following World War II. The eastern four island groups adopted a constitution in 1979 and chose to become the Federated States of Micronesia. (The westernmost island group became Palau.) Independence came in 1986 under a Compact of Free Association with the US, which was amended and renewed in 2004. Present concerns include large-scale unemployment, overfishing, overdependence on US foreign aid, and state perception of inequitable allocation of US aid.



Official Languages  



United States Dollar



Oceania, island group in the North Pacific Ocean, about three-quarters of the way from Hawaii to Indonesia


Total: 702 Sq. km Land: 702 Water: 0 Sq. km


Tropical; heavy year-round rainfall, especially in the eastern islands; located on southern edge of the typhoon belt with occasionally severe damage
Natural resources

Timber, marine products, deep-seabed minerals, phosphate

Land use

Agricultural land: 25.5% arable land 2.3%; permanent crops 19.7%; permanent pasture 3.5%forest: 74.5%other: 0% (2011 est.)



Economic activity consists largely of subsistence farming and fishing, and government, which employs two-thirds of the adult working population and receives funding largely - 58% in 2013 – from Compact of Free Association assistance provided by the US. The islands have few commercially valuable mineral deposits. The potential for tourism is limited by isolation, lack of adequate facilities, and limited internal air and water transportation. Under the terms of the original Compact, the US provided $1.3 billion in grants and aid from 1986 to 2001. The US and the Federated States of Micronesia (FSM) negotiated a second (amended) Compact agreement in 2002-2003 that took effect in 2004. The amended Compact runs for a 20-year period to 2023; during which the US will provide roughly $2.1 billion to the FSM. The amended Compact also develops a Trust Fund for the FSM that will provide a comparable income stream beyond 2024 when Compact grants end. The country's medium-term economic outlook appears fragile because of dependence on US assistance and lackluster performance of its small and stagnant private sector..

Agriculture Products

Taro, yams, coconuts, bananas, cassava (manioc, tapioca), sakau (kava), Kosraen citrus, betel nuts, black pepper, fish, pigs, chickens


Tourism, construction; specialized aquaculture, craft items (shell and wood)

Exports Commodities

Fish, sakau (kava), betel nuts, black pepper

Imports Commodities

Food, beverages, clothing, computers, household electronics, appliances, manufactured goods, automobiles, machinery and equipment, furniture, tools

Useful Links

Government of Federated States of Micronesia

Federation of Micronesia legal information

Kosrae Chamber of Commerce

Micronesia council of Chamber of Commerce