• Military Menu                       

• Introduction
• Systems
• Facilities
• Agencies
• Industry
• Operations
• Countries
• Hot Documents
• News
• Reports
• Policy
• Budget
• Congress
• Links

• WMD
• Intelligence
• Homeland Security
• Space

American Samoa - Economy

American Samoa has a traditional Polynesian economy in which more than 90% of the land is communally owned. Economic activity is strongly linked to the US with which American Samoa conducts most of its commerce. Tuna fishing and tuna processing plants are the backbone of the private sector with canned tuna the primary export. The two tuna canneries accounted for 13.1% of employment in 2013.

In late September 2009, an earthquake and the resulting tsunami devastated American Samoa and nearby Samoa, disrupting transportation and power generation, and resulting in about 200 deaths. The US Federal Emergency Management Agency oversaw a relief program of nearly $25 million. Transfers from the US Government add substantially to American Samoa's economic well-being.

Attempts by the government to develop a larger and broader economy are contrained by Samoa's remote location, its limited transportation, and its devastating hurricanes. Tourism is a promising developing sector. In 2015, a new fish processing company completed refurbishing the processing facilities left behind by one of the two canneries that closed in 2009 and opened a new cannery. With two operating canneries once again, fish processing and exports will rise in the coming years.

American Samoa’s economy is driven by US aid and one of the largest tuna canneries in the world. At least two-thirds of the workforce is directly employed at the canneries and government, while most of the remaining workforce is employed in ancillary services for the two major employers.

It is generally known that American Samoa needs to reduce its dependency on canneries and government by diversifying into new export businesses. The remote location of the islands makes export of traditional manufactured or agricultural items difficult and cost prohibitive. There has been increased interest in developing high-tech industries and tourism, both of which are export businesses without the need for traditional shipping.

Tuna fishing and tuna processing are the primary economic activity in American Samoa. Canned tuna export is the backbone of the private sector, with the United States as the main trading partner. Two tuna canneries accounted for 80% of employment until one cannery closed in September 2009 following a nearby undersea earthquake and resulting tsunami. This tsunami devastated American Samoa, disrupting transportation and power generation. The U.S. Federal Emergency Management Agency currently oversees relief programs in American Samoa totaling more than $100 million. When trying to develop a broader economy, the government is limited by the islands' remote location, limited transportation, and hurricanes.

American Samoa is nearly 100% dependent on imported fossil fuels, including diesel fuel for electric power generation. Electricity prices in American Samoa vary with world petroleum prices; in early 2016, they were 2.5 times the U.S. average, and comparable to Hawaii's rates. A significant amount of American Samoa's electricity is used to pump and treat drinking water. In 2015, American Samoa Power Authority obtained 2.4% of its electricity from solar, including a 1.75-megawatt utility facility and more than 700 kilowatts of customer-owned solar panels. Two solar arrays totaling 1.2 megawatts are under construction. The American Samoa Power Authority has identified sites with wind power potential on Tutuila and is constructing its first two 100-kilowatt wind turbines.

As of August 2013, the cost of electricity delivered to the consumer on the main island of Tutuila is approximately $0.32/kWh but is billed to the consumer at $0.42/kWh. Smaller island populations such as Ofu, Olosega, Ta’u and Aunu’u, usually have a higher electricity generation and distribution cost because they are primarily reliant on small diesel engines. For example, In Manu’a (Ta’u, Ofu, and Olosega), the true cost of delivered energy is $0.48/kWh but it is sold to the consumer at the same price as on Tutuila ($0.42/kWh). ASPA runs at a loss in this area, and Tutuila subsidizes Manu’a at a rate of $400,000 per year. Based on this data, deploying sustainable and renewable power options to the small island populations is a strong step toward economically viable solutions that benefit both the small islands and the main island of Tutuila that subsidizes them.

It was not until the Second World War that American Samoa was transformed from a subsistence economy to a cash, or commercial, economy. Unprecedented amounts of money were injected into the local economy during the war years of the 1940’s in the form of wages and other federal expenditures. Local commercial activities expanded accordingly. This new economic prosperity was short lived. The end of the war and the withdrawal of the US Navy caused severe economic distress in the late 1940’s and early 1950’s. In the early 1950’s a large part of American Samoa’s limited work force left for Hawaii on vessels provided by the US Navy.

In 1948 the Secretary of the Navy ordered the governor of American Samoa to authorize the entry of commercial enterprise into American Samoa. A cannery was built on Navy property in Atu’u. The Rockefeller Foundation financed it. This operation closed in 1950, but the facilities became part of the base of cannery production that remains in American Samoa to this day.

In the early 1960’s, concerns were rising about general conditions in American Samoa. There were public reports of appalling conditions in education, infrastructure, health and other public services. The US responded with accelerated programs to improve conditions at all levels. By the early 1970’s rapidly rising federal expenditures financed education and training, roads, utilities, and health care. Private sector development activities were undertaken. The ASG owned bank was sold to a US commercial bank. The American Samoa Development Corporation was formed to foster small business and operate the first 100-room hotel (the Rainmaker). At the same time American Samoa began to seek other federal grants in addition to Congressional appropriations. By 1980, these other federal grants rose to 49 percent of federal expenditures, up from 12 percent in 1971. American Samoa had embarked upon a path of modern economic development.

Since the 1970s there had been virtually no increase in American Samoa exports other than canned tuna. It is also apparent that, with the exception of some recent hotel construction, the visitor industry had not experienced any significant growth. The inability of the American Samoa economy to diversify left it vulnerable to severe economic shocks to its economic base, the canneries and federal expenditures.

American Samoa, as the US, is losing jobs due in part to rising competitive conditions in larger, lower wage areas of the world that have benefited so greatly from the rise of free trade world-wide. World economic conditions are now as unstable as they have been in 70 years, but there is little consideration of any broad rollback in liberalized trade. If there were, it would likely be temporary.

The answer for American Samoa, as with the US, is to recognize that the economic future is not in trying to recapture old low productivity, low wage jobs. The economic future is in marshaling all of the community’s development energy to build an economy that is capable of supporting the higher productivity industries and jobs of the future. In order to reduce the per capita production and income disparity with the US, American Samoa workers are going to require economic opportunities (business and jobs) that are more productive. It is generally recognized that this is achieved by improvements in the application of capital and in education and training. At the same time, it is important to retain existing industries as long as possible to provide for a less painful transition.

In the thirty years prior to 2007, the American Samoa economy virtually doubled in size. The two basic driving economic forces of that economic growth were then and remain today the cannery industry and government. Basic economic activity is that which results in new income to an area from such activities as exports, tourist expenditures, remittances or other external sources.

This was more than a period of sustained economic growth. It was a period during which American Samoa’s economy matured into one that was capable of supporting a considerable industrial base with a greater range of consumer and business products and services than existed in the early 1970s.

This continued lack of economic diversity left American Samoa vulnerable to severe economic shocks to its economic base, the canneries and federal expenditures. There were concerns that American Samoa’s cannery industry was vulnerable to rising US imports of canned tuna from other lower cost countries. American Samoa canneries were known to be examining lower cost processing areas at least for some segments of their canning process.

In 2007 the US Congress applied the US minimum wage to American Samoa. This would virtually double American Samoa’s minimum wage over an eight year period. The US minimum wage level simply is grossly out of line for American Samoa’s economy. First, 75 percent of American Samoa’s workforce is subject to the minimum wage compared to less than 3 percent of the US workforce. This means that the US minimum wage would have to approach $20 per hour to reach 75 percent of the US workforce. Furthermore, American Samoa’s economy is only one fifth as productive as the US economy on an output or income per capita basis. This is the reason that the US minimum wage causes such serious unemployment in American Samoa compared with the US.

Second, in 2009 it was announced that one of American Samoa’s two canneries would be closed that year, taking down with it approximately 2000 jobs. This closure was attributed in considerable part, but not exclusively, to the rising minimum wage. In the same year, American Samoa suffered a very serious earthquake and resulting tsunami.

These minimum wage and cannery developments indicated that some form of serious economic scenario was imminent. Furthermore, this serious economic setback had no clear path to economic recovery, especially with the prospect of rampant wage inflation.

In 2011 the US Government Accountability Office (GAO) released its report on the performance of the American Samoa and CNMI economies after imposition of the US minimum wage in those two US territories. GAO found that employment in American Samoa had declined from 19,171 in 2008 to 15,434 in 2009, a 3737 or 19 percent decline. However, that estimate did not count the 2000 cannery jobs lost in 2009. Including those cannery closure job loses, the employment loss in 2009 was closer to 5737, a 30 percent decline in a single year. More alarming was the fact that the rising minimum wage was having adverse employment effects on industries other than the canneries.

In addition, the 2010 US Census of population count for American Samoa (55,591) caused some alarm because it was below the 2000 count (57,291) and well below what had been estimated locally for 2009 (69,000). In addition, the 2010 US Census of population count of 55,591 for American Samoa was more consistent with the historical relationship between employment and population than the other population estimates. Employment has held at about 26 percent of population in American Samoa since at least 1975.

American Samoa’s GDP began its slide in 2008 declining 2.0 percent that year and 4.7 percent in 2009. While GDP per capita continued to grow, it remained only about one-fifth of US per capita GDP.