Economy of Tonga
Encyclopedia
Tonga
's economy is characterized by a large nonmonetary sector and a heavy dependence on remittances from the half of the country's population that lives abroad, chiefly in Australia
, New Zealand
, and the United States
. Much of the monetary sector of the economy is dominated, if not owned, by the royal family and nobles. This is particularly true of the telecommunications and satellite services. Much of small business, particularly retailing on Tongatapu
, is now dominated by recent Chinese
immigrants who arrived under a cash-for-passports scheme that ended in 1998.
The manufacturing sector consists of handicrafts and a few other very smallscale industries, all of which contribute only about 3% of GDP
. Commercial business activities also are inconspicuous and, to a large extent, are dominated by the same large trading companies found throughout the South Pacific
. In September 1974, the country's first commercial trading bank, the Bank of Tonga, opened.
Rural Tongans rely on plantation and subsistence agriculture. Coconut
s, vanilla
beans, and banana
s are the major cash crops. The processing of coconuts into copra
and desiccated coconut is the only significant industry. Pig
s and poultry
are the major types of livestock. Horse
s are kept for draft purposes, primarily by farmers working their api. More cattle are being raised, and beef imports are declining.
Tonga's development plans emphasize a growing private sector
, upgrading agricultural productivity, revitalizing the squash and vanilla bean industries, developing tourism, and improving the island's communications and transportation systems. Substantial progress has been made, but much work remains to be done. A small but growing construction sector is developing in response to the inflow of aid monies and remittances from Tongans abroad. The copra industry is plagued by world prices that have been depressed for years.
Efforts are being made to discover ways to diversify. One hope is seen in fisheries; tests have shown that sufficient skipjack tuna
pass through Tongan waters to support a fishing industry. Another potential development activity is exploitation of forests, which cover 35% of the kingdom's land area but are decreasing as land is cleared. Coconut trees past their prime bearing years also provide a potential source of lumber.
The tourist industry is relatively undeveloped; however, the government recognizes that tourism can play a major role in economic development, and efforts are being made to increase this source of revenue. Cruise ships often stop in Nukualofa
and Vava'u
.
According to the CIA World Factbook,
- production:
53 GW·h (2008)
Electricity - production by source:
Electricity - consumption:
38,13 GW·h (2003)
Electricity - exports:
0 kW·h (2003)
Electricity - imports:
0 kW·h (2003)
Tonga is installing tailor-made policies to power its remote islands in a sustainable way – without turning to expensive grid-extensions. A number of islands within the Kingdom of Tonga are lacking basic electricity supply. In view of the decreasing reliability of fossil-fuel electricity generation, its increasing costs and negative environmental side-effects, renewable energy
solutions have attracted the government’s attention. Together with IRENA
, Tonga has charted out a renewable energy based strategy to power the main and outer islands alike. The strategy focuses on Solar Home Systems that turn individual households into small power plants. In addition, it calls for the involvement of local operators, finance institutions and technicians to provide sustainable business models as well as strategies to ensure the effective operation, management and maintenance once the systems are installed.
squash, coconut
s, copra
, banana
s, vanilla
beans, cocoa, coffee
, ginger
, black pepper
; fish
Currency
:
1 pa'anga (T$) = 100 seniti
Exchange rates:
pa'anga (T$) per US$1 – 1.9716 (2004), 2.142 (2003), 2.1952 (2002), 2.1236 (2001), 1.6250 (November 1999), 1.4921 (1998), 1.2635 (1997), 1.2323 (1996), 1.2709 (1995)
Tonga
Tonga, officially the Kingdom of Tonga , is a state and an archipelago in the South Pacific Ocean, comprising 176 islands scattered over of ocean in the South Pacific...
's economy is characterized by a large nonmonetary sector and a heavy dependence on remittances from the half of the country's population that lives abroad, chiefly in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
, and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Much of the monetary sector of the economy is dominated, if not owned, by the royal family and nobles. This is particularly true of the telecommunications and satellite services. Much of small business, particularly retailing on Tongatapu
Tongatapu
Tongatapu is the main island of the Kingdom of Tonga and the location of its capital Nukualofa. It is located in Tonga's southern island group, to which it gives its name, and is the country's most populous island, with approximately 71,260 residents , 70.5% of the national population...
, is now dominated by recent Chinese
Overseas Chinese
Overseas Chinese are people of Chinese birth or descent who live outside the Greater China Area . People of partial Chinese ancestry living outside the Greater China Area may also consider themselves Overseas Chinese....
immigrants who arrived under a cash-for-passports scheme that ended in 1998.
The manufacturing sector consists of handicrafts and a few other very smallscale industries, all of which contribute only about 3% of GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
. Commercial business activities also are inconspicuous and, to a large extent, are dominated by the same large trading companies found throughout the South Pacific
Oceania
Oceania is a region centered on the islands of the tropical Pacific Ocean. Conceptions of what constitutes Oceania range from the coral atolls and volcanic islands of the South Pacific to the entire insular region between Asia and the Americas, including Australasia and the Malay Archipelago...
. In September 1974, the country's first commercial trading bank, the Bank of Tonga, opened.
Rural Tongans rely on plantation and subsistence agriculture. Coconut
Coconut
The coconut palm, Cocos nucifera, is a member of the family Arecaceae . It is the only accepted species in the genus Cocos. The term coconut can refer to the entire coconut palm, the seed, or the fruit, which is not a botanical nut. The spelling cocoanut is an old-fashioned form of the word...
s, vanilla
Vanilla
Vanilla is a flavoring derived from orchids of the genus Vanilla, primarily from the Mexican species, Flat-leaved Vanilla . The word vanilla derives from the Spanish word "", little pod...
beans, and banana
Banana
Banana is the common name for herbaceous plants of the genus Musa and for the fruit they produce. Bananas come in a variety of sizes and colors when ripe, including yellow, purple, and red....
s are the major cash crops. The processing of coconuts into copra
Copra
Copra is the dried meat, or kernel, of the coconut. Coconut oil extracted from it has made copra an important agricultural commodity for many coconut-producing countries. It also yields coconut cake which is mainly used as feed for livestock.-Production:...
and desiccated coconut is the only significant industry. Pig
Pig
A pig is any of the animals in the genus Sus, within the Suidae family of even-toed ungulates. Pigs include the domestic pig, its ancestor the wild boar, and several other wild relatives...
s and poultry
Poultry
Poultry are domesticated birds kept by humans for the purpose of producing eggs, meat, and/or feathers. These most typically are members of the superorder Galloanserae , especially the order Galliformes and the family Anatidae , commonly known as "waterfowl"...
are the major types of livestock. Horse
Horse
The horse is one of two extant subspecies of Equus ferus, or the wild horse. It is a single-hooved mammal belonging to the taxonomic family Equidae. The horse has evolved over the past 45 to 55 million years from a small multi-toed creature into the large, single-toed animal of today...
s are kept for draft purposes, primarily by farmers working their api. More cattle are being raised, and beef imports are declining.
Tonga's development plans emphasize a growing private sector
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
, upgrading agricultural productivity, revitalizing the squash and vanilla bean industries, developing tourism, and improving the island's communications and transportation systems. Substantial progress has been made, but much work remains to be done. A small but growing construction sector is developing in response to the inflow of aid monies and remittances from Tongans abroad. The copra industry is plagued by world prices that have been depressed for years.
Efforts are being made to discover ways to diversify. One hope is seen in fisheries; tests have shown that sufficient skipjack tuna
Skipjack tuna
The skipjack tuna, Katsuwonus pelamis, is a medium-sized perciform fish in the tuna family, Scombridae. It is otherwise known as the aku, arctic bonito, mushmouth, oceanic bonito, striped tuna, or victor fish...
pass through Tongan waters to support a fishing industry. Another potential development activity is exploitation of forests, which cover 35% of the kingdom's land area but are decreasing as land is cleared. Coconut trees past their prime bearing years also provide a potential source of lumber.
The tourist industry is relatively undeveloped; however, the government recognizes that tourism can play a major role in economic development, and efforts are being made to increase this source of revenue. Cruise ships often stop in Nukualofa
Nukuʻalofa
Nukualofa is the capital of the Kingdom of Tonga. It is located on the north coast of the island of Tongatapu, in the southern most island group of Tonga.-Mythological origins:...
and Vava'u
Vava'u
Vavau is an island chain of one large island and 40 smaller ones in Tonga. According to tradition Maui fished both Tongatapu and Vavau but put a little more effort into the former. Vavau rises 204 meters above sea level...
.
According to the CIA World Factbook,
Energy
ElectricityElectricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...
- production:
53 GW·h (2008)
Electricity - production by source:
- foclear:
- fossil fuelFossil fuelFossil fuels are fuels formed by natural processes such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years...
: 92% - nuclear: 1%
- fossil fuel
- hydro: 0%
- renewableRenewable energyRenewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
s: 7% (2009)
Electricity - consumption:
38,13 GW·h (2003)
Electricity - exports:
0 kW·h (2003)
Electricity - imports:
0 kW·h (2003)
Tonga is installing tailor-made policies to power its remote islands in a sustainable way – without turning to expensive grid-extensions. A number of islands within the Kingdom of Tonga are lacking basic electricity supply. In view of the decreasing reliability of fossil-fuel electricity generation, its increasing costs and negative environmental side-effects, renewable energy
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
solutions have attracted the government’s attention. Together with IRENA
Irena
-Other languages:*Irene in English*Irène in French*Eirini or Irini in Greek-People:*Irena Degutienė, Prime Minister in Lithuania*Irena Fleissnerová , Czech breaststroke swimmer...
, Tonga has charted out a renewable energy based strategy to power the main and outer islands alike. The strategy focuses on Solar Home Systems that turn individual households into small power plants. In addition, it calls for the involvement of local operators, finance institutions and technicians to provide sustainable business models as well as strategies to ensure the effective operation, management and maintenance once the systems are installed.
Other data
Agriculture - products:squash, coconut
Coconut
The coconut palm, Cocos nucifera, is a member of the family Arecaceae . It is the only accepted species in the genus Cocos. The term coconut can refer to the entire coconut palm, the seed, or the fruit, which is not a botanical nut. The spelling cocoanut is an old-fashioned form of the word...
s, copra
Copra
Copra is the dried meat, or kernel, of the coconut. Coconut oil extracted from it has made copra an important agricultural commodity for many coconut-producing countries. It also yields coconut cake which is mainly used as feed for livestock.-Production:...
, banana
Banana
Banana is the common name for herbaceous plants of the genus Musa and for the fruit they produce. Bananas come in a variety of sizes and colors when ripe, including yellow, purple, and red....
s, vanilla
Vanilla
Vanilla is a flavoring derived from orchids of the genus Vanilla, primarily from the Mexican species, Flat-leaved Vanilla . The word vanilla derives from the Spanish word "", little pod...
beans, cocoa, coffee
Coffee
Coffee is a brewed beverage with a dark,init brooo acidic flavor prepared from the roasted seeds of the coffee plant, colloquially called coffee beans. The beans are found in coffee cherries, which grow on trees cultivated in over 70 countries, primarily in equatorial Latin America, Southeast Asia,...
, ginger
Ginger
Ginger is the rhizome of the plant Zingiber officinale, consumed as a delicacy, medicine, or spice. It lends its name to its genus and family . Other notable members of this plant family are turmeric, cardamom, and galangal....
, black pepper
Black pepper
Black pepper is a flowering vine in the family Piperaceae, cultivated for its fruit, which is usually dried and used as a spice and seasoning. The fruit, known as a peppercorn when dried, is approximately in diameter, dark red when fully mature, and, like all drupes, contains a single seed...
; fish
Fish
Fish are a paraphyletic group of organisms that consist of all gill-bearing aquatic vertebrate animals that lack limbs with digits. Included in this definition are the living hagfish, lampreys, and cartilaginous and bony fish, as well as various extinct related groups...
Currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
:
1 pa'anga (T$) = 100 seniti
Exchange rates:
pa'anga (T$) per US$1 – 1.9716 (2004), 2.142 (2003), 2.1952 (2002), 2.1236 (2001), 1.6250 (November 1999), 1.4921 (1998), 1.2635 (1997), 1.2323 (1996), 1.2709 (1995)