SAMOA

COUNTRY OVERVIEW

LOCATION AND SIZE.

Located in the South Pacific Ocean, about halfway between Hawaii and New Zealand and just east of the International Date Line. The country consists of 2 large islands—Savai'i to the west and Upolu to the east—and several smaller islands. It has a land area of 2,850 square kilometers (1,100 square miles) and a coastline of 403 kilometers (250 miles), making it slightly smaller than Rhode Island. The capital city, Apia is located on the north coast of Upolu.

POPULATION.

The population of Samoa was estimated at 169,200 in mid-2000, an increase of 17 percent since the census of 1991. In 2000 the birth rate stood at 30.3 per 1,000 people, while the death rate was 6.4 per 1,000. With a projected annual population growth rate of only 0.6 percent between 2000 and 2010, Samoa would have 179,000 by 2010; the U.S. Central Intelligence Agency (CIA) World Factbook 2001 estimated the population at 179,058 for 2001, though. The low growth rate resulted mainly from a high rate of outward-migration, which in 2000 was estimated at 17.6 per 1,000. This migration is mostly to the United States and New Zealand.

The population is predominantly of Samoan (Polynesian) ethnic origin, although about 7 percent also have European origins. Only 21 percent of the population live in an urban area, with Apia accounting for most of this. The urban growth rate is twice as high as the general growth rate, but at 1.2 percent per year still relatively low by Pacific standards.

OVERVIEW OF ECONOMY

As a small island country in the South Pacific, Samoa (formerly Western Samoa) has an economy largely based on agriculture, government and tourist services, and remittances from Samoans living abroad. The majority of households in Samoa are dependent on subsistence production for at least part of their food supply and other basic items. At the same time, most households rely on cash income to provide basics that are not available from subsistence. In other words, food products grown or caught for personal consumption—such as taro, coconut, banana, fish, and crayfish—are also sold to generate cash for village households.

The export economy mainly relies on agricultural products. The most important of these are coconut products such as copra (the dried flesh of the coconut), copra meal, coconut oil, and coconut cream. In the early 1990s taro (a tropical Asian plant) was an important export but was destroyed by disease in 1993 and is only starting to re-emerge as an export. In the late 1990s the development of a commercial fishing operation illustrated the competitive advantage Samoa has in this industry, with its proximity to fish canning facilities in American Samoa. Timber has been a modest source of export income in the past, but is not likely to be significant for 25 years when recently planted trees mature.

Manufacturing in Samoa is mainly to supply the domestic market, although there have been some initiatives to foster export manufacturing using tax breaks. Tourism grew steadily through the 1990s and has considerable potential, especially if tourism infrastructure is developed.

Besides tourism, remittances and international aid offset Samoa's annual trade imbalance. Remittances from relatives overseas are an important source of income for many families in Samoa and a significant source of foreign exchange for the country. The largest source of remittance income, comes from the Samoan population living in New Zealand. Another substantial amount comes Samoan communities in Hawaii and California. International aid contributes about one-quarter of gross domestic product (GDP) and supports many of the govern-ment's development projects. The largest aid donors are Japan, Australia, and New Zealand followed by multilateral aid agencies such as the Asian Development Bank.

POLITICS, GOVERNMENT, AND TAXATION

Traditionally, political power in Samoa was held by matai (chiefs), whose positions were generally inherited, although individuals with charisma and power can earn positions. The matai system survives to the present day, but was changed during the colonial and post-colonial periods. Political turbulence characterized the 19th century in Samoa, during which matai-lead governments formed and reformed, often with support from traders, missionaries, and other foreigners. In 1899 the colonial powers of Germany, Great Britain, and the United States resolved this impasse for their own purposes by signing a treaty granting Germany control of Western Samoa and the United States control of Eastern (American) Samoa. Western Samoa, however, was occupied by New Zealand during World War I and was a colony of that country until it gained independence in 1962. In the 1920s the Mau movement, advocating non-payment of tax and whose ultimate goal was independence, was formed. The movement was suppressed by New Zealander troops in the late 1920s but it remains a symbol of nationalism to the present day.

Samoa has a parliamentary system with the Paramount Chief of Samoa as the ceremonial head of state. Until 1991, members of Parliament were elected by the matai, but in that year universal suffrage for all citizens 21 years and over was introduced. Tradition is still maintained, however, since only matai can be elected to 1 of the 49 parliamentary seats. There are 2 main parties, the Human Rights Protection Party and the Samoa National Development Party, but these parties tend to revolve around personalities more than political positions that allow them to be labeled left, center, or right.

Until recently the main domestic sources of government revenue were trade tariffs and, to a lesser extent, income taxes. In 1994, a value added goods and services tax (VAGST) was introduced despite popular opposition. The VAGST of 10 percent is imposed on most items of consumption including imports, with exceptions including unprocessed local primary production, financial services, and hospital and educational services. Since this tax's creation, most individuals do not have to pay income tax and trade tariffs have been reduced.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

The 2 main islands of Upolu and Savai'i are quite well serviced by 790 kilometers (491 miles) of roads, of which about 40 percent are paved. Nearly all villages can be accessed by road, and bus services reach most parts of the country. The 2 islands are linked by passenger and car ferries with frequent sailings. The size of the country and the existence of road and ferry services mean that internal air travel is relatively rare. The sole international airport, Faleolo Airport, on the northwest coast of Upolu, provides international air passage to New Zealand, Fiji, Tonga, American Samoa, Australia, and Honolulu, Hawaii. Polynesian Airlines, owned by the Samoan government, and Samoa Air are 2 of the main regional carriers. Samoa also has 2 unpaved airports on Savai'i for domestic travel.

While about 62 percent of Samoa's electricity is generated with the use of imported fuel, the remainder is generated by a local hydroelectric station. Telephone services extend to most parts of the country, although only about 1 in 4 households has a telephone and public telephones are rare. International telephone service is usually good. In 2000 there was at least 1 Internet service provider.

ECONOMIC SECTORS

Calculating the size of different economic sectors is very difficult for Samoa's economy because a large proportion of the population works in the informal subsistence sector. In Samoa, there has been a relative decline in subsistence activities during the 1990s dropping as a percentage of GDP from 29.7 percent in 1992 to 17.7 percent in 1998, according to the Asian Development Bank. Over the same period, agriculture declined slightly from 21.2 percent to 19.3 percent of GDP. On the other hand, industry increased considerably from 15.8 to 23.7 percent as did services from 32 to 38.6 percent of GDP. In the labor force data, much of the agricultural employment is in unpaid village work—either informal or subsistence—so that it is difficult to compare these data with those from other countries. Official counts, however, show about 23,000 workers in the formal sector out of a total labor force of 42,494.

AGRICULTURE

About two-thirds of all households in Samoa depend on a mixture of subsistence agriculture and cash cropping. The non-monetary agricultural production of the country was estimated to comprise 17.7 percent of GDP in 1998, falling from 29.7 percent in 1992. This was partly a result of the growth of other parts of the economy, rather than a contraction of the subsistence economy. In 1998 non-subsistence agriculture and fishing made up 19.3 percent of GDP. Agriculture contributed about 30 percent of all export revenue in 1999. The main export products, in order of importance in the late 1990s were copra (dried coconut flesh), coconut oil, copra meal, coconut cream, and kava (a mildly narcotic drink traditional to the South Pacific). The importance of coconut products is obvious, but unlike many Pacific countries that only export copra, Samoa has added value to these products. For example, coconut cream canned in Samoa is worth several times its equivalent in copra. The vulnerability of dependence on a crop such as coconuts was illustrated when cyclones in 1990 and 1991 caused considerable damage to tree crops.

During the 1980s, Samoa identified an international niche market for taro, a traditional prestige root crop. The taro exported from Samoa was sold mostly to Samoan and other Pacific communities and, in 1992, made up more than one-half of all agricultural exports by value, surpassing the cyclone-depleted coconut products. In 1993, taro blight destroyed the whole crop, however, and by the late 1990s taro production was only beginning to recover.

In recent years, the government and international aid donors have been promoting agricultural diversification. Although there have been small amounts of other food crops exported (such as bananas), the only crop that has generated significant export income is kava, which has recently gained an international reputation as a soothing and therapeutic substance. In 1998, kava exports were valued at WST5.5 million (US__BODY__.8 million), a sum similar to the copra exports in that year. Other agricultural products currently being promoted include cattle and tropical fruits.

FISHING.

The Asian Development Bank estimated that 30 to 40 percent of all households in Samoa fish for their own consumption and that 12 percent of households rely on fishing as their primary source of income. Many subsistence fishers may also sell some of their catch. Larger commercial fishing endeavors have developed, though, mainly resulting from the introduction of long-line tuna boats. Thus, fishing's contribution to GDP rose from 4 percent in 1995 to 8 percent in 1999, with further expansion expected. Most of the catch is processed in the canneries of American Samoa, giving Samoa a competitive advantage because of the proximity of these facilities and because they allow access to the American market.

FORESTRY.

In the past, there was relatively large-scale logging on the island of Savai'i, but logging has become small-scale and limited mostly to customary (village owned) land. Exports of timber are small as most production is for the local market. Large-scale establishment of forest plantations began in the 1970s, but most of these forests were destroyed by the cyclones of 1990 and 1991. Recent planting of high-value hardwood species such as mahogany will take about 25 years to mature, so there are few prospects of timber re-establishing itself as an important export before then.

INDUSTRY

Of the formal labor force, about 17 percent worked in industry, with about half of these working in construction and just over one-quarter in manufacturing in 1991. More recent data show that all industrial sectors together accounted for 23.7 percent of GDP in 1998. This percentage has grown through the 1990s.

MANUFACTURING.

Much of the manufacturing sector, mostly located in Apia, serves the purpose of import substitution. Thus, the most important industries include food processing, beer production, furniture, and construction materials. There are, however, some export-oriented industries. Notable is the production of canned coconut cream, mainly for export. Beer and cigarette factories export some of their product. A small industries center has been established at Vaitele, near Apia. The most uncommon of the new endeavors, in a Pacific sense, is the Yazaki automobile electrical wiring assembly plant, which was transferred from Melbourne in 1991. This plant exports about US$50 million in automotive parts to Australia each year, however, the benefit to Samoa may be low since wages are low and the company pays no taxes or duties.

SERVICES

Services accounted for 51 percent of all formal sector employment in 1991, and this proportion has probably risen since then. In 1998 all services accounted for 38.6 percent of GDP, up from 32 percent in 1992. The largest subsector of employment was social and personal services, which accounted for just over half of all employment in the services sector, with many of these being government employees.

TOURISM.

Through the 1990s there has been a steady increase in the number of visitors to Samoa, from just over 48,000 in 1990 to about 78,000 in 1998. Only about one-third of these can be considered as tourists, however, since another third are Samoan expatriates visiting friends and relatives while another third are traveling on business. Still, tourism contributed an estimated 15.4 percent of GDP in 1997.

Samoa has considerable potential as a tourist destination. It has a strong and visible culture and many Samoans consider their country Hawai'iki (the original home of all Polynesians). On this basis the Samoa Visitors Bureau presents Samoa as "The Cradle of Polynesia" in its international promotions. The visibility of Samoan culture—epitomized by traditional open-sided houses—the many beautiful beaches, waterfalls, and other features of a "tropical paradise" and the scale and architectural variety of Samoan churches exceed normal tourist expectations of a country its size. There are several international standard hotels, mostly in Apia and elsewhere on Upolu. Smaller hotels and guesthouses have seen growing competition from village-based tourist operations. Most local accommodations include fales (leaf houses), usually on a beach, with locally cooked food on offer. These are relatively low impact ventures, though, in which most of the profits stay in the village.

FINANCIAL SERVICES.

Following the example of Vanuatu and Cook Islands, Samoa established an offshore banking center in 1988. About 500 banks and other companies have established themselves in Samoa, although information is not available to identify the costs and benefits of this operation to the Samoan economy. Domestic financial services are provided by Bank of Samoa (owned by ANZ Bank), Pacific Commercial Bank (a joint venture between Bank of Hawaii and Westpac) and National Bank.

RETAIL.

The retail sector is similar to that in other Pacific countries of similar size. Apia has a number of medium-sized shops and small supermarkets that sell food imported from New Zealand and manufactures from Asia as well as local produce. Elsewhere in the country, shops stock mainly basic items necessary for everyday life. The largest market is in Apia, selling fruit, vegetables, fish, basic manufactured goods, and handicrafts. Smaller markets are found in other towns where the range of products is related to the size of the local population.

INTERNATIONAL TRADE

The difference between the level of Samoa's exports and imports is considerable. In the years shown in the table, the trade imbalance ranges from just over 3 to 1 in 1985 to more than 10 to 1 in 1995, and the general trend is an increasing imbalance. The value of exports has not kept pace with the expansion of the economy, which requires increased imports. Also, 2 cyclones in 1990 and

1991 and the taro blight in 1993 had a severe impact on the level of exports in the mid 1990s.

Australia has been the most important destination for exports in recent years, ranging between 50 and 85 percent of all exports between 1995 and 1999. New Zealand is the most important source of imports, but Australia, Japan, Fiji, and the United States are also significant.

The large negative balance of trade is possible because of other international transfers. Tourism contributes some international income. At the household level the most important source of income is remittances from relatives living overseas, particularly in New Zealand, the United States, and Australia. At the government level, international aid helps to counterbalance the trade deficit.

MONEY

The Samoan tala has depreciated against the U.S. dollar since 1982. This may be partly attributed to the vulnerable export base of the country, but a range of other factors in the international economy are less easy to identify. In the late 1990s a strong U.S. dollar devalued most currencies of the Pacific region that most influence the Samoan tala, including the New Zealand and Australian dollars.

POVERTY AND WEALTH

A total of 174 countries are ranked in the United Nations Development Program 's (UNDP) Human Development Report 2000 according to the Human Development Indicator (HDI), which measures a country's state of well-being using income, education, and health measures. The HDI rank for Samoa was 95 which puts it in the middle range of countries, similar to other countries in Polynesia but higher than Melanesian countries. GDP per capita in 1998 was US$998, about one-thirtieth that of the United States.

There is no adequate information on income distribution in Samoa, but this may be inferred from other

information. Another indicator developed by the UNDP is the Human Poverty Index (HPI). It measures conditions for those worst off in a country, such as their educational level, health status, access to health services, access to safe water, and incidence of malnutrition in children. Of 15 Pacific countries measured by the HPI, Samoa falls in the middle, meaning that the people worst off in Samoa are comparatively better off than the worst off in most Melanesian countries. On indicators of education, Samoa boasts 96 percent literacy and a high participation rate in education. School attendance is mandatory up to age 14 and there are no central government fees, although local communities may levy them to cover maintenance of buildings.

In health, the indicators are generally high, with universal access to health services and with most households having access to safe water. Health service is free and available through clinics as well as at 5 public hospitals. There is not a system of universal pensions, but those who have worked in formal employment are likely to have provided for a pension through the National Provident Fund. Most other older people depend on their nuclear or extended families, in Samoa and overseas. Since 1999, migrants returning from working in New Zealand are able to bring their New Zealand pensions with them, and this is expected to be an increasing source of income in Samoa as the number of these migrants increases.

WORKING CONDITIONS

There is a minimum wage in the private sector of WST1.40 per hour, which has been readjusted to the cost of living over the last 20 years. This rate makes living in town problematic, although many households will have some people working for wages as well as others undertaking subsistence production. The minimum wage is about 10 percent of the salary that a new senior manager might get in the private sector.

Men make up an estimated 78 percent of the formal workforce. In almost all sectors they predominate. In public service men comprise only 47 percent of the full-time salaried workers but two-thirds of the temporary government workers. The unemployment rate of 13 percent is quite high, but it would be even higher if all those in the rural sector who wanted paid employment were counted. There is no unemployment benefit. Unionization is relatively strong with the Teacher's Association being formed in the 1950s and the Western Samoa Public Service Association starting in 1969. In the private sector, unions have been a recent development with the formation of the Western Samoa National Union of Workers in 1994.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1721. The first European "explorer" visits Samoa. Metal tools and weapons are introduced.

1830s-1890s. A series of governments under Samoan chieftainship and foreign support come and go. German coconut plantations are founded.

1899. Treaties are signed between Britain, Germany, and the United States giving Western Samoa to Germany and American (Eastern) Samoa to the United States.

1914. New Zealand takes control of Western Samoa during World War I.

1920s. The nonviolent Mau movement, formed to oppose taxes and support independence, is suppressed by force; 11 Samoans, including a matai, are killed.

1962. Western Samoa becomes the first independent nation in the Pacific Islands.

1982. Samoa experiences a constitutional crisis with 3 governments in 1 year. Tension continues between parliamentary and traditional matai systems.

1991. Universal voting franchise is introduced for all citizens over age 21; previously only matai could vote.

1997. The country's name changes from Western Samoa to Samoa.

FUTURE TRENDS

During the 1990s Samoa's economy experienced several blows related to natural disaster, but at the turn of the century, there is optimism about future development. The fishing industry has grown rapidly in recent years with further potential apparent. Tourism has grown slowly but steadily, and to some extent the degree to which this expands may depend not only on the government's promotion of it but also on the public's attitude to the desirable scale of the industry. The agricultural sector is likely to continue to be affected by weather, disease, and fluctuating world prices, but probably will continue as an important source of export income, even if the product mix changes. For many years there have been predictions that migrant remittances will eventually slow down as expatriates become more settled in their countries of residence, but so far this does not seem be the case. Though international aid payments are being reduced in some cases, most small Pacific countries—such as Samoa—have managed to attract high per capita levels of aid, and this ought to continue into the foreseeable future.

DEPENDENCIES

Samoa has no territories or colonies.

BIBLIOGRAPHY

Economist Intelligence Unit. Country Profile: Samoa. London: Economist Intelligence Unit, 2001.

"Key Indicators for Developing Asian and Pacific Countries." Asian Development Bank. <http://www.adb.org/Samoa>. Accessed February 2001

"Samoa 2000: Building on Recent Reforms." Asian Development Bank. Manila: ADB, 2000.

Lal, Brij V., and Kate Fortune. The Pacific Islands: An Encyclopedia. Honolulu: University of Hawai'i Press, 2000.

U.S. Central Intelligence Agency. World Factbook 2001. <http:// www.odci.gov/cia/publications/factbook/index.html>. Accessed August 2001.

United Nations Development Programme. Pacific Human Development Report 1999: Creating Opportunities. Suva: UNDP, 1999.

Vaai, Kolone. "Recent Economic Development in WesternSamoa." Pacific Economic Bulletin. Vol. 11, No. 2, 1996.

—Wardlow Friesen

CAPITAL:

Apia.

MONETARY UNIT:

Tala (WST). One tala equals 100 sene. Coins are 1, 2, 5, 10, 20, and 50 sene and 1 tala. Notes are 2, 5, 10, 20, 50 and 100 talas.

CHIEF EXPORTS:

Copra, coconut oil, coconut cream, taro, fish, and kava.

CHIEF IMPORTS:

Food, machines and transport equipment, manufactures, and fuels.

GROSS DOMESTIC PRODUCT:

US$571 million (purchasing power parity, 2000 est.).

BALANCE OF TRADE:

Exports: US$17 million (f.o.b., 2000). Imports: US$90 million (f.o.b., 2000).