Island in Trust

Many small-scale economies depend on or are affected significantly by subsidies granted by foreign powers. An especially interesting example of this form of financial dependence is Micronesia, a Pacific archipelago that has been a trust territory of the United States since 1947. During the 197Os, appropriations from the U.S. government to Micronesia amounted to more than $1000 per capita. The appropriations provided social services and capital improvement projects, along with employment opportunities for many local people. This book describes the impact of externally funded, public sector employment on the economy of Micronesia in general and of one island (Kosrae) in particular. Dr. Peoples shows how government employment affects the agricultural sector, consumption patterns, investment decisions by private businesses, allocation of labor, and the economies of individual households. He also shows how the island’s indigenous economic organization and cultural practices interact with U.S. policy to influence the pattern of economic change. Comparisons with other dependent areas examine the relevance of the Micronesian case to development studies in general.