Facts and Information on American Samoa

Information

Introduction: American Samoa - with maps

Settled as early as 1000 B.C., Samoa was "discovered" by European explorers in the 18th century. International rivalries in the latter half of the 19th century were settled by an 1899 treaty in which Germany and the US divided the Samoan archipelago. The US formally occupied its portion - a smaller group of eastern islands with the excellent harbor of Pago Pago - the following year. The eastern islands have since been American Samoa.

Introduction: American Samoa - with maps

People: American Samoa

Nationality:
noun: American Samoan(s) (US nationals)
adjective: American Samoan

Ethnic groups:
native Pacific islander 91.6%, Asian 2.8%, white 1.1%, mixed 4.2%, other 0.3% (2000 census)

People: American Samoa

Government: American Samoa

 
Country name:
conventional long form: Territory of American Samoa
conventional short form: American Samoa
abbreviation: AS
 
Dependency status:
unincorporated and unorganized territory of the US; administered by the Office of Insular Affairs, US Department of the Interior
 
Government type:
NA
 
Capital:
name: Pago Pago
geographic coordinates: 14 16 S, 170 42 W
Government: American Samoa

Economy: American Samoa

Economy - overview:
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 account for 80% of employment. 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 is overseeing 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 restrained by Samoa's remote location, its limited transportation, and its devastating hurricanes. Tourism is a promising developing sector.

Economy: American Samoa

Energy: American Samoa

Electricity - production:
190 million kWh (2009 est.)
country comparison to the world: 185

Electricity - consumption:
176.7 million kWh (2009 est.)
country comparison to the world: 189

Electricity - installed generating capacity:
60,000 kW (2009 est.)
country comparison to the world: 178

Electricity - from fossil fuels:
100% of total installed capacity (2009 est.)
country comparison to the world: 3

Energy: American Samoa

Communications: American Samoa

Note: This section is very outdated and incomplete. Anyone with more information for this section, please contact us via the site contact form.

Telephones - main lines in use:
10,400 (2009)
country comparison to the world: 200

Communications: American Samoa

Transportation: American Samoa

Ports and terminals:
Pago Pago. Among the best deep-water ports in the Pacific.

Airports:
3 (2012)
country comparison to the world: 194

Transportation: American Samoa

Military: American Samoa

 

Manpower fit for military service:
males age 16-49: 14,562
females age 16-49: 14,129 (2010 est.)

Manpower reaching militarily significant age annually:
male: 775
female: 762 (2010 est.)

Military - note:
defense is the responsibility of the US

Military: American Samoa

Transnational Issues: American Samoa

 

Disputes - international:
Tokelau included American Samoa's Swains Island (Olohega) in its 2006 draft independence constitution

Transnational Issues: American Samoa

COMPREHENSIVE ECONOMIC DEVELOPMENT STRATEGY

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American Samoa's Comprehensive Economic Development Strategy, 2012

 REVIEW DRAFTAMERICAN SAMOA’S COMPREHENSIVE ECONOMIC DEVELOPMENT STRATEGY, 2012 Prepared ByTerritorial Planning CommissionandDepartment of Commerce, American Samoa Government August 6, 2012 This Report was Prepared under an Award from the US Department of Commerce Economic Development Administration Note:  The publisher of this website assumes the information in this report to be in the public domain and is using the contents accordingly.  Any additions, corrections or comments on this report are welcome and will be included on the site at the sole discretion of the site administrators.  

Chapter 1: CEDS Planning Organization and Background

 The CEDS Concept The Comprehensive Economic Development Strategy (CEDS) process was established with the passage of the Economic Development Reform Act of 1998. In this act, the CEDS process is a requirement for EDA public works and economic adjustment grants.  The CEDS process is an opportunity for American Samoa to take a fresh look at its economic development goals and futures, economic opportunities and constraints, project priorities and costs, implementation plans and economic development organization conditions. In summary, the CEDS process and periodic up-dates represent a valuable tool for local communities in support of long-term economic development efforts.  This is a most opportune time for American Samoa to assess its economic future as it faces the most challenging economic conditions in its brief modern history. The CEDS Committee - American Samoa’s Territorial Planning Commission (TPC) serves as the Comprehensive Economic Development Strategy Committee for the territory. The TPC was established in 1977 under Public Law 15-64. The TPC consists of nine members, one from each of six planning districts in American Samoa and three from the business community. Because of the TPC’s longstanding responsibility for EDA planning requirements, members are selected with EDA representation requirements in mind.  TPC members are appointed by the Governor and confirmed by the Senate. The TPC is responsible for planning and coordinating economic and business development activities in American Samoa. It is also responsible for reviewing and approving American Samoa’s Comprehensive Economic Development Strategy. American Samoa’s TPC is statutorily responsible for approving the Territorial General Plan, within which the CEDS program functions.  Other elements of the Territorial General Plan include education, social services, housing, utilities and services, transportation, communications, recreation, conservation and cultural services. This is particularly beneficial because, as will become clear in this document, an economic development strategy affects and is affected by all of these components of the Territorial General Plan and its sub-plans. Staff Support - Primary staff support is provided by the Department of Commerce with occasional assistance from outside consultants. Additional and valuable staff support is also available from other ASG agencies. For example, the American Samoa Power Authority, the Port Administration, Public Works and other agencies often provide helpful staff support especially for projects for which they have special expertise or primary responsibility.  

Historical Background

 American Samoa is one of five main insular areas (possessions or territories) of the United States. The other four are Puerto Rico, Guam, the US Virgin Islands, and the Commonwealth of the Northern Mariana Islands. There are other smaller often more remote insular areas. They are primarily wildlife refuges and are uninhabited, although a few in the Pacific host some military installations.  These areas of the US differ culturally, politically and economically from the average US state. Each has a distinct culture and a unique historical and legal relationship with the United States. However, many quite rightly regard themselves as much a part of the US as any state. In many respects it is only size, geography, or unusual political circumstances that have prevented them from becoming states.  The islands of American Samoa became part of the U.S. in 1900 and 1904. It is made up of seven islands with a total land area of 76 square miles. Located in the tropics, it is 14 degrees south of the equator and 160-173 degrees west longitude. This group of islands is some 2,300 miles southwest of Hawaii. Sydney, Australia is about 2,700 miles further to the southwest, while Auckland, New Zealand is only 1,600 miles southwest. American Samoa is the only United States territory south of the equator. It is the eastern part of a 290-mile long island chain, and shares the same heritage, traditions, and culture with Samoa (formerly Western Samoa), an independent nation.  Tutuila, American Samoa's largest island is the center of government and business. Its famous Pago Pago Harbor is one of the Pacific's deepest and most sheltered harbors. Tutuila has an estimated 90 percent of the 55,519 (2010) total population of American Samoa. The other islands include Ofu, Olosega, and Ta'u in the Manu'a group located 60 miles east of Tutuila. Aunu'u is a small island one-quarter mile off the eastern shore of Tutuila. Rose Atoll is a wildlife refuge 60 miles east of Manu'a. Swain's Island, a member of the Tokelau island group, is 200 miles north of Tutuila.  The islands experience Southeast trade winds that result in frequent rains and a pleasant, warm tropical climate. The year round temperature ranges from 70 to 90 degrees, depending on the warmth of the surrounding ocean. The humidity averages about 80 percent during most of the year. The average rainfall at Pago Pago International Airport is 130 inches per year, while Pago Pago Harbor, only four and one-half miles away, averages 200 inches per year.  Early History - About 1500 B.C., people (probably from Southeast Asia) arrived in the Samoan Islands, after having navigated the Pacific Ocean in rafts. This astonishing achievement occurred at approximately the time of the Trojan War or the Exodus in Western history. Little is known about these people who were or were to become the Polynesians and who would populate the islands of the Central and Eastern Pacific from Hawaii to New Zealand and Samoa to Easter Island. It was not until 1973 that Samoan prehistory was dated back this far. In that year some pieces of clay pottery were discovered during a dredging project near Mulifanua in Western Samoa. These pottery shards were made from clay found in the same area. Radiocarbon dating revealed that the pottery was made in about 1200 B.C.  This Lapita form of pottery is found throughout the Western Pacific, from New Guinea to Samoa. It is named after an area in New Caledonia where the pottery was first discovered. Some scientists believe that one group of people who made this type of pottery moved into the Pacific area about 4,000 years ago. Where they originated is not known, except that the pottery is similar to that found in Southeast Asia. By A.D. 400 the Lapita culture had evolved into a more recognizable Polynesian culture (Bellwood, 1978). However, the greatest feats of navigation ever undertaken by early man were yet to come. The Polynesians would now undertake expeditions to Eastern Polynesian (Tahiti, Hawaii, the Marquesas, Easter Island, and others). Early settlements in Eastern Polynesia begin to appear between A.D. 300 and 700. They were probably settled initially from Samoa or Tonga. This migration to Hawaii, Tahiti and other eastern islands was probably completed by A.D. 1100, after which isolation gave rise to different Polynesian cultures as they are known today. (Recent DNA evidence) Samoa was first sighted by European explorers in 1722 and was visited again in 1768 and 1787. However, it was not until 1831 that Westerners took up residence in the Samoan Islands, the beginning of modern or recorded history in Samoa.  

Samoan Society

 No real justice can be done to the description of a people's culture. In many ways it is not possible to capture in language the standards, complexities and nuances of different cultures. For many reasons, however, the effort is worthwhile. This is especially the case where distinct cultures come together. There is a need to encourage understanding, tolerance and, in general, promote a useful and productive accommodation of cultural diversity in our society.  Samoans have adhered to the fundamental elements of their language and culture to an extent unprecedented in most parts of the world. This adherence to Samoan language and culture is not just ceremonial. The Samoan people, particularly in their own lands, strive to retain as much of their communal or aiga (family) land and matai (chief) systems as possible. In this report the term "matai system" shall refer to American Samoa's extended family and land tenure systems as well.  The basic unit of Samoan society, the aiga or extended family group, is a group of people related by blood, marriage or adoption, varying in number from a few to several hundred who acknowledge a common allegiance to a particular matai. The matai possesses authority over the members of his family and regulates their activities. Family resources are under the authority of the matai. Traditionally, the matai consults the aiga before exercising his authority. Consultation and discussion are highly developed practices at every level of Samoan society.  Samoa's land and matai systems are ancient and complex. Each contains nuances that are not well understood by outsiders. In modern Samoa, special courts that rely substantially on Samoan oral history, tradition and custom adjudicate disputes concerning family lands and titles.  It is the matai system that is at the core of Samoan society and which gives meaning to other Samoan institutions including the economy. Again and again, from the deeds of session to more recent deliberations on political status, Samoans express a very strong preference for and commitment to the preservation of the matai, extended family and communal land system. The matai system contains a sense of social continuity, structure and order. To some extent the title is independent of the holder. In addition, the rank of the title tends to order members of different descent groups. Most important however is that the system ties Samoans, their families, villages and other political subdivisions to Samoan society itself.  Cultural diversity was once thought of in the U.S. as a temporary condition that would ultimately be replaced with full assimilation. There is some reason to believe that this is wrong or at least a serious oversimplification. What seems to be emerging is some cultural assimilation and continued cultural diversity, something more akin to a cultural mosaic than a cultural melting pot. This distinction is becoming more accepted, and it has important implications. With the assimilation concept, it was the responsibility of minorities to master the majority culture andadopt it. With the cultural diversity model, there is a responsibility on the part of the majority to understand the cultures of its minorities in order to develop tolerance and an appreciation for diversity.

The U.S. and American Samoa

 The United States had had an interest in Samoa from these early settlements in the 1830's. The U.S. government had a very strong interest in eastern Samoa, now American Samoa, primarily for its excellent harbor. US transport companies and land development interests were very active in Western Samoa, now an independent nation.  The period between 1830 and 1900 was a difficult one for Samoa. Europeans and Americans never really fathomed the complex and sophisticated Samoan political process. Samoan civil wars were ignited or exacerbated by foreign influences in the political process and the introduction of modern weapons. These weapons were often exchanged for Samoan lands. In fact by 1890 Germany, England, America and France had claims to Samoan lands that were twice the entire land area of the Samoan Islands. At final adjudication they received about 20 percent of Samoa's total land area.  The U.S. entered into its first treaty with Samoa for the use of the excellent Pago Pago Harbor. This agreement was made in 1872, but the U.S. Senate never ratified it. In the 1870s the Samoans were under a duel state of siege from their own civil wars and the competitive disruptions of the Western powers.  In 1877, the Secretary of State of Samoa, Le Mamea, visited President Hayes in Washington D.C. for the express purpose of offering Samoa to the U.S. through annexation or as a protectorate. Hayes was sympathetic to the plight of the Samoan people. He asked the Congress in his first annual message to consider the proposal. While Congress was in no mood for annexation, Hayes was able to obtain Senate ratification of a treaty under which the U.S. would obtain Pago Pago Harbor in return for U.S. peace and friendship.  This first treaty between Samoa and a major power increased the pressure on the part of England and Germany for treaties of their own. Increasing conflict led to the partitioning of Samoa in 1899. The U.S. obtained the islands of eastern Samoa. Germany assumed control of Western Samoa. England renounced their claims in Samoa for German concessions in Tonga, the Solomon Islands and West Africa. In 1900 the U.S. Secretary of the Navy established a naval station at Pago Pago. The leading chiefs of Tutuila ceded their lands to the U.S. in 1900. The Manu'a Islands ceded in 1904.  These deeds of cession speak of the promotion of the peace and welfare of the Samoan people, the establishment of a good and sound government, and the preservation of Samoan rights, lands, and culture. The deeds of cession, however, make no direct reference to the economy for the good reason that at the time there was only what could be described as a subsistence economy. This has changed, and the people of Samoa quite understand that modern economic development has a very direct bearing on their ability to preserve their rights, lands and culture.  In accepting the deeds of cession in 1929 the U.S. Congress placed responsibility for civil administration of the territory with the Executive Office. The U.S. Navy had this responsibility from 1900 to 1951. Since 1951 the U.S. Department of the Interior has administered the territory. However, American Samoa is substantially self governing today. It has its own constitution, itsown legislature, its own elected governor and a non-voting representative in the U.S. House of Representatives. American Samoa has made very rapid progress in political self-determination. However, all of this local authority is at the pleasure of the US Congress. In 1830 there were no schools in Samoa. Children acquired necessary skills by working alongside adults performing traditional tasks. The first schools in American Samoa were pastors' schools and secular English language schools. The first English language school in American Samoa was established in 1904. The first high school was not established in American Samoa until 1947. Education in American Samoa languished until the 1960's when, after considerable criticism, the U.S. undertook a crash program to improve conditions in American Samoa. Not surprisingly, much of the focus of these improvements was to be in education on the quite reasonable grounds that education was the key to advancement of any form. The first post secondary educational institution, a community college, was not established until 1970.  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.  It was these circumstances that induced the US Navy to begin considering commercial development in the late 1940’s. 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.  Cannery operations represented entry into the modern economic world for American Samoa, but there was a great deal missing. 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.  

Economic Conditions and Trends in American Samoa

 An analysis of American Samoa’s economy in 2007-2008 considered its future development prospects considering changing tuna cannery industry location conditions.1 The work was primarily concerned with what the economic effects would be if there were serious reductions in or closure of cannery industry operations in American Samoa. 1 American Samoa Government, Department of Commerce. Malcolm D. McPhee & Associates with Dick Conway and Lewis Wolman, American Samoa’s Economic Future and the Cannery Industry, prepared for the under a grant award from the U.S. Department of the Interior, Office of Insular Affairs (February 2008).   American Samoa now considers what it must do to recover from the employment losses unleashed by these events and what the future holds for its economy under the new order of economic conditions.  The economic history outlined in this report is summarized below: 1. In the thirty years prior to 2007, the American Samoa economy expanded at a fairly healthy rate, just above the US rate, at least as measured by employment. Despite the growth of the economy over that period, its structure had remained essentially the same. The cannery industry and government were then and remain the two basic forces driving American Samoa’s economy.  2. The American Samoa economy virtually doubled in size over the thirty years. Led by canned tuna exports and federal financial aid, basic employment grew at a 2.6 percent annual rate. But job growth in the tuna canneries (4.3 percent) was much faster than job growth in local government supported by federal grants and expenditures (1.4 percent).  3. The tuna canneries and federal financial aid accounted for virtually all of the basic economic growth in American Samoa during this period. No other basic activity played a significant role in the economy’s growth during the thirty year period. Basic economic activity is that which results in new income to an area from such activities as exports, tourist expenditures, remittances, etc.  4. Import substitution played no significant role in American Samoa’s economic growth during this period. Import substitution is the process by which an economy increasingly produces goods or services that were previously imported.  5. The only notable change in the structure of American Samoa’s economy was the increased importance of the tuna canneries. The addition of 3,246 workers over the thirty-year period raised the fish processing’s share of total employment in the territory from 16.5 percent to 26.2 percent, not counting the multiplier effect. Although federally-supported jobs in local government increased 1,103, their share of total employment fell from 27.7 percent to 18.9 percent.  6. This 30 year economic growth period was more than just the numbers. 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 that did not exist in the 1970s. In summary, relying almost exclusively on the tuna canneries and federal financial aid, the American Samoa economy expanded steadily over the thirty year period. Employment doubled, the unemployment rate fell, and real per capita income has rose at about a 2 percent annual rate. Perhaps because of its past success, the territory had not broadened its economic base. Since the 1970s there has 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.  Concerns remained that American Samoa’s cannery industry was vulnerable to rising US imports of canned tuna from such lower labor cost areas as Thailand, the Philippines and elsewhere. American Samoa canneries were known to be examining lower cost processing areas at least for some segments of their canning process.  In particular, if the recent legislated increases in the minimum wage were to cause a complete shutdown of the tuna canneries, American Samoa could lose forty percent of its jobs. Such a calamity would prompt efforts to create employment opportunities in other economic activities, such as call centers and tourism. But even if these initiatives were successful, it would take years before the American Samoa economy could fully recover. During the course of that analysis two stunning events occurred. First, by act of Congress, the US minimum wage was to be phased into American Samoa, virtually doubling it over an eight year period. Second, one of American Samoa’s two major tuna canneries announced its intention to shut down in 2009, in part as a result of the minimum wage increase. American Samoa’s worst economic fears began to materialize in 2007. In 2007, the US Congress decided to apply the US minimum wage to American Samoa through provisions in the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act.  Previously, American Samoa’s minimum wage had been determined by US Department of Labor “Special Industry Committees,” and they were substantially lower, by approximately one-half, than the US rate. Under the new law, minimum wages in American Samoa would increase in $.50 increments per year until they reached the federal minimum wage. After the U.S. minimum wage was reached, any additional increase in the U.S. minimum wage would apply to American Samoa on the same schedule as for the 50 U.S. states.       The 2007 law required minimum wage increases in May of 2008 and in May each year thereafter, until the American Samoa minimum wages reached the US level in 2016. However, the Consolidated Appropriations Act of 2010 included a provision delaying the minimum wage increases until September 30th of each year, beginning in 2010. However, Congress did suspend the $.50 per hour minimum wage increases in American Samoa for 2010 and 2011. These increases will resume in September 2012 absent legislation to continue the suspension. The second shoe dropped in 2009 with the announcement that one of American Samoa’s two canneries would be closed in 2009, taking down with it approximately 2000 jobs. This closure was attributed in part to the rising minimum wage. The referenced American Samoa, Department of Commerce economic report then goes on to project the possible economic and population effects of different economic scenarios for the future.  Unfortunately, it appears now that American Samoa will suffer some form of the worst case scenario in which by 2015 employment will fall to 12,200 and population to 56,000. Obviously, even before the completion of this study, minimum wage and cannery developments on the ground indicated that some form of the worst case scenario would prevail. All of this assured that American Samoa would indeed face a serious economic setback with no clear path to economic recovery in sight, especially with the prospect of serious wage inflation. 

American Samoa’s Economy Turns Down in 2007

 That American Samoa was headed for some form of the worst case economic scenario was soon confirmed. 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.2   2 US Government Accountability Office, American Samoa and the Commonwealth of the Northern Marian Islands: Employment, earnings, and Status of Key Industries Since Minimum Wage Increases Began, GAO-11-427 (June 2011). GAO, using Social Security Administration employment data, found that employment in American Samoa had declined from 19,171 in 2008 to 15,434 in 2009, a 19 percent decline (Table 1). GAO did point out that the lost cannery jobs were counted in that 2009 employment figure because those cannery workers had cannery earnings during the year 2009. The American Samoa Government (ASG) preferred to remove the 2000 cannery workers from the 2009 employment total because they were in fact no longer cannery employees by the end of the year. As a result ASG regarded the employment loss in 2009 as 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. This was deduced from the fact that workers who had been employed at the closed cannery were still counted as employed in the 2009 GAO employment estimate. The remaining cannery did reduce employment by a few hundred in 2009. Hence, the 3737 employment decline estimated by GAO in 2009 was not substantially from the cannery industry. Further, only about one-third of the 2009 job loss could have been attributable to cannery multiplier effects because the multiplier for the canneries was only 1.5, or not more than 1000 of the GAO 3737 estimated jobs lost. Therefore, much of the 3737 employment decline in 2009 had to be in industries other than the canneries or industries heavily dependent upon the canneries.  As noted above the loss of 5737 jobs in 2009 brought the estimate of 2009 employment to 13,434 within 10 percent of the employment estimate of the worst case scenario (12,222) mentioned previously. Table 1 GAO and American Samoa Total Employment Loss Estimates 20082009Jobs ChangePercent ChangeGAO total  employment estimates 19,17115,4343737-19ASG adjustment to above estimates*19,17113,4345737-30 *Including cannery closure effectsSource: GAO-11-427 American Samoa and Commonwealth of the Northern Mariana Islands (Pages 63-65) http://www.gao.gov/new.items/d11427.pdf and American Samoa Government, Department of Commerce. As previously noted, the employment data GAO used were from the Social Security Administration (SSA). It is a byproduct of information it collects pertaining to administration of the Social Security system and is not designed to track employment trends. This SSA employment data was used because highly reliable and timely employment, labor force and population data is not available for American Samoa or, for that matter, for other smaller US territories. The 50 states have reasonably good such information primarily because the US Department of Labor requires the collection of employment, wages and salaries and household survey data for unemployment and labor force information.  It is unrealistic to think that American Samoa could generate quality information in this area on its own when the states cannot do it. A model for achieving this might be the work creating a system of income and product accounts (GDP) for American Samoa. This was a joint effort of the territories, the Department of the Interior, and the US Department of Commerce. GDP estimates are now available for American Samoa (2002-2009) and will be discussed below. A similar effort could be initiated with American Samoa involving the US Department of Labor to generate more reliable and timely employment and labor force information. This lack of this employment, unemployment, labor force and population information causes American Samoa serious difficulties. For example, the US Department of Labor itself could not effectively respond to Congress’s request for economic impact information on raising the minimum wage in American Samoa.3 In fact they relied upon the impact estimates of the American Samoa Department of Commerce Cannery study previously referenced. Even the GAO has had difficulty with employment data in its minimum wage impact analyses. 3 US Department of Labor, Office of Assistant Secretary for Policy, Impact of Increased Minimum Wage on the Economies of American Samoa and the Commonwealth of the Northern Marian Islands: US Department of Labor, January 2008. In addition, the  US Census 2010 population count for American Samoa (55,591)  caused some consternation  because it was below the 2000 count (57,291) and well below what had been estimated locally for  2009 (69,000).  All that can be concluded from this is that the discrepancy is attributable to some combination of the inadequate local population estimating procedures and US Census undercounting. It seems evident now that the local population estimating procedures did not have the net-migration data or employment data necessary to estimate the net out-migration component of population estimates. Net outmigration almost certainly occurred between 2008 and 2010 based on the employment data examined above.  In addition, the 2010 US Census population count of 55,591 for American Samoa is 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. So far this report has focused on employment as a measure of economic activity mainly out of necessity as income and product account data has only recently become available as noted above. Fortunately, in 2011 Gross Domestic Product data became available for American Samoa for 2002 through 2009. GDP is a system of economic accounts which measures gross income and production for a state or a region, taking into account public and private consumption, investment, and net exports. It is almost universally regarded as the most comprehensive measure of an economy. Per capita GDP or personal income is regarded as the most comprehensive measure of the economic wellbeing of the resident population. Employment data gives no indication of the income levels of those employed. Table 2 is generally consistent with the above employment analysis, but it sheds more light on actual conditions. American Samoa’s GDP indeed began its slide in 2008 declining 2.0 percent that year and 4.7 percent in 2009. While employment took a very high percentage decline in 2009 much of it occurred late in the year with the cannery closure. GDP measures production for the entire year.  Table 2 also shows that American Samoa’s economy was growing steadily between 2002 and 2005, but it began to weaken in 2006 prior to the announcements concerning the minimum wage increases and the cannery closure. This may have been a factor concerning local population estimates between 2000 and 2010. For reasons cited above, local employment and migration data was not reliable and timely enough to produce reasonable population estimates.   This undoubtedly had serious effects on American Samoa’s per capita GDP estimate for 2009. The reason is that the 2010 US Census count came in at 55,519, far below 2009 local population estimate. This represented a decrease of 3.1 percent from the 2000 Census population count of 57,291. The difficulty is that the local 2009 population estimate in Table 3 is 70,100. For example, in Table 2, per capita GDP declines from $8,865 in 2002 to 7,190 in 2009, an annual decline of 2.9 percent. If we assume that the population is closer to 57,000 in 2009, more consistent with the 2010 US Census count, per capita GDP in 2009 would have been $8,842 almost identical with 2002. Declining or low growing per capita income is not surprising given American Samoa’s heavy dependence upon the low wage, labor intensive cannery industry. In addition, US per capita income has remained at four to five times as high as per capita income in American Samoa over the past thirty years or more.  These economic accounts tell us something else about American Samoa’s economic future. In order to reduce this 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. Increases in productivity allow for increased earnings without forcing up inflation.  Table 2 American Samoa Real Gross Domestic Product, 2005 Chained Dollars   2002 2003 2004 2005 2006 2007 2008 2009 GDP539542545548531540529504Personal Consumption341350367365363359358357Private fixed Investment1414182120202017Change in Private Inventories63113-6-3-7-23-10Net Exports-91-130-112-81-88-61-68-106Exports590577485507474479475375Goods560547456480448456453352 Source: US Department of Commerce, Bureau of Economic Analysis http://www.doi.gov/oia/press/2011/BEA_GDP_Data_AS_May_31.pdf  

Infusion of Federal Funds Averts Economic Disaster in American Samoa

 This bleak employment and GDP analysis notwithstanding, there is a prevailing sentiment in American Samoa that things are not as bad as described above. There is considerable information to support this view. This optimism that things are not yet as bad as feared is very likely based upon the following. In 2008, the US entered into its most serious financial crisis and economic recession since the 1930s. This caused the Congress to pass a $787 billion economic stimulus package in February 2009.  There is evidence that American Samoa’s economic free fall was slowed by its participation in this US economic recovery program and other federal spending programs. There were in fact massive and extraordinary federal expenditure increases in American Samoa in 2009 and 2010. Between 2005 and 2008 federal expenditures in American Samoa averaged about $250 million annually. However, federal expenditures in American Samoa rose from $257 million in 2008 to$381 million in 2009, an increase of 48.2 percent. In 2010 they rose to $515 million an increase of 35.2 percent. These are enormous increases, virtually doubling federal expenditures in two years. In fact between 2005 and 2010 federal expenditures in American Samoa advanced at an annual average rate of 16 percent, double the rate of any other US territory and the US overall (Table 3).  Note:  A series of tables have been omitted from this online report.  Please see the full Review Draft (pdf) for more information.  

Summary - Economic Conditions and Trends in American Samoa

 This analysis has important implications for American Samoa’s economic future. It suggests a form the Comprehensive Economic Development Strategy to best serve American Samoa’s economic interests in the years ahead. That CEDS would take into account the following findings. 1. American Samoa is nearing the conclusion of an important economic period in its history. During that period American Samoa’s economy matured considerably. It established most of the elements of a modern economy with a range of improvements in industrial and consumer support industries, higher education, a modern legal system, public facilities and services and much else that characterizes modern economies. This growth period, based primarily on low wage, labor intensive industries and federal expenditures, is rapidly nearing an end. American Samoa must seek a new economic direction for the future.  2. This three to four decade period of steady economic growth is coming to an end for several reasons. First, American Samoa is finding it increasingly difficult to offer the tax incentives and relatively low wages that were available earlier in the period. Second, trends in world trade are reducing tariffs and non-tariff barriers to an extent that American Samoa’s conditional duty free access to the US and exemptions from federal maritime laws are now much less advantageous than they were earlier. 3. American Samoa, as the US, is losing jobs due in part to rising competitive conditions in larger, low wage areas of the world that have benefited so greatly from the rise of freer trade world-wide.  4. 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.   5. 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. There is no return. The world has changed. 6. All regions have their characteristic locational givens, most of which cannot be easily altered or removed. In American Samoa’s case, these are severe distances from major markets and sources of supply, population and labor force size and capability deficiencies, and others. On the plus side are the natural beauty and abundant marine resources.  7. It is within this complex of given conditions that communities must forge economic development programs and policies focusing on conditions they can reasonably influence. These are of two general forms. One is the demand side, the identification of goods or services that might reasonably be produced in American Samoa especially for external markets. The impetus for such opportunity identification is the private sector which also is responsible for the execution of such opportunities. The other is the supply side, the identification of local conditions which bear on the cost/supply practicability of theseopportunities (land, labor, transportation, utility, taxes and other costs, community receptiveness, permits and regulations, etc.).  8. Hence, it is the purpose of this CEDS to determine (a) what inhibits the proper identification of future development opportunities and (b) what local conditions prevent full realization of those opportunities. This CEDS will then recommend actions to remove these impediments to economic development in American Samoa. 9. This is an extremely complex combination of issues and interests; however, some areas deal with them more effectively than others. It is the primary purpose of this CEDS effort to improve upon these economic conditions for a more prosperous future for American Samoa. No single institution on its own can advance an economy, but the failure of only one can greatly inhibit or halt economic development. Energizing and guiding these institutions is the key to economic advancement. This CEDS work will involve the public and private sectors to help identify the best organization, plans, programs and policies to improve the efficacy of American Samoa’s future economic development efforts. 10. There is not a great deal of time. Things would be a great deal worse in American Samoa today but for the massive increase in federal expenditures made in American Samoa as a result of the US Recovery act since 2009. When those funds begin to dry up, the full impacts of the rising minimum wage and the cannery industry’s precarious position could deal a lethal blow to American Samoa’s economy.   

Chapter 2: Analysis of Economic Development Opportunities and Constraints

 This Chapter is based upon the findings of previous studies and extensive interviews with public and private sector leaders in American Samoa.  An effective economic development strategy must identify the economic opportunities that are the most likely to be successful. The most promising opportunities can be found in industries or economic activities in which American Samoa enjoys some comparative advantage. They are economic activities that can be undertaken more efficiently than other economic activities in American Samoa. Traditionally, these comparative advantage industries in American Samoa have been fish processing and tourism. Some advantages derive from American Samoa’s location and natural resources while others derive from the territory’s relationship with the United States. Still others derive from the development of advantage through incisive development improvements. In other words, given the totality of conditions in American Samoa, these are the industries in which it performs most economically compared with other industries in which it might engage. Evidence of this is in the rapidity with which Tri-marine occupied the fish processing facilities vacated by COS or the salvageable portion of the Rainmaker Hotel was restored for business.  After this, American Samoa must decide what support or supply industry linkages make sense for these industries (packaging, sports fishing tours, etc.) Import substitution offers some opportunities. Then there is the most difficult matter of discerning the industries in which American Samoa might compete with other states in the region or elsewhere. Governments or committees have attempted to come up with lists of such industries over the years to little avail. This is primarily because identifying such opportunities is essentially the role of the entrepreneur.  It is important that government and the private sector work closely and cooperatively to identify which economic activities are considered the most promising and the most realistic, and which constraints are the most inhibiting. That effort will result in a set of priorities, which should be advanced through strategic action plans.  

Economic Opportunities

 Since the first American Samoa CEDS was written in 2000, there have been three noteworthy efforts to identify promising opportunities for economic development for American Samoa.5 6 7  5 The American Samoa Economic Advisory Commission: Transforming the Economy of American Samoa: 2002.  6 American Samoa Government: American Samoa’s Economic Future and the Cannery Industry:, 2007.7 The Governor’s Economic Advisory Council: A Focused Collaborative Approach to Economic Development: 2008 Those reports reveal the different methods utilized by the different groups, but it is noteworthy that they have all identified approximately the same areas of opportunity. As earlier suggested, not all economic opportunities can be readily identified. Economic opportunities are infinite in the sense that they are based on ideas and knowledge and emerge and disappear with changing conditions in technology, trade, law and other circumstances. Free market capitalism8 seems to do the best job at identifying the best opportunities at any given time. Yet, in a place as small and remote as American Samoa, it behooves the government and the private sector to work especially hard to attract and channel desired investments. The reason for this is that available resources would be severely diluted by pursuing all possible opportunities at the same time. This is especially the case for American Samoa, with its limited resources, size and workforce. 8 Capitalism is a free market system relying substantially on private ownership, enterprise, profit and a role for government to ensure that markets are kept free and the right to private property and enterprise is secured.  Therefore, it is important to identify and prioritize opportunities that are most readily achievable, that deliver the most income or jobs, as well as those that help create a more diversified and stable economy.Some opportunities are dependent on an excellent Harbor and one or more of its related assets: the existence of an up-and-running tuna cannery industry, proximity to fishing grounds, good shipping services and port infrastructure. Others are dependent on the fiber optic submarine cable, which can help neutralize the handicap of our physical remoteness for activities that can be accomplished digitally regardless of distance. Tourism is dependent on the natural beauty of American Samoan islands, waters and culture.Some opportunities arise from or are enhanced by federal laws and rules that provide an effective economic advantage. These opportunities can be combined in various ways to create competitive advantages that can be exploited to create viable opportunities for private investment. The following section lists the conditions upon which American Samoa’s economic opportunities, strategies and plans are based. Essentially, they define American Samoa’s comparative advantage or its production of that which it produces most economically. They also define those competitive advantages that might be formulated in some combination to identify and exploit niche or specialty industry opportunities. Fishing Industry  Proximity to fishing groundsExisting infrastructure, including human resourcesHarbor and port infrastructure for canneries and the boats they rely uponFuel dock with competitive pricesContainer yardUnloading docksProtected harborWater and power availabilityFish can be directly offloaded by domestic and foreign vessels  Experienced workforce Headnote 3(a) (conditional duty free access to US)Special US corporate tax incentivesLocal tax incentives  American Samoa Fishing Industry Support  Shipyard repair and maintenance Machine shops Net repair Stevedoring, provisioning, and others  American Samoa Visitor/Tourism Industry  Cruise ship calls increasing  Proximity to Samoa, Tonga, Fiji, Cook Islands Frequent air connections to Apia, SamoaNatural beauty National Park and National Marine Sanctuary Natural and cultural tourism resources are very attractiveRegulations help preserve our environmentGood SCUBA and great sports fishingHyperbaric chamber18-hole golf courseAttractive shopping to islanders, Aussies, KiwisPristine Manu’a islandsIntact and robust Polynesian culture as tourist draw Growing private sector cooperation with Samoa in visitor industry development   American Samoa as US Territory Federal support for infrastructure projects (e.g., airport, roads, water/sewer, etc.) and technical assistanceUS postal system services Federal support for disaster preparedness, mitigation, recoveryPolitical stabilityMilitary opportunities for young peopleVeteran benefits and services for retired military, including PX, medical clinic, social services, education grants, business grants, housing financingsArmy Reserve centerUnconstrained access to US citizenshipMade in USA label available for goods produced in American SamoaObserver status at South Pacific Forum  American Samoa’s Physical Infrastructure  Excellent protected harbor with shipping and fueling docks Airport runways that can take wide body and heavy aircraftIndustrial park with roads and utilitiesFiber optic connection (with Honolulu/World and Samoa)Industrial secondary support economy (shipping, machine shops etc.) Good water system and abundant water resourcesWastewater treatment plantsSolid waste pick-up and disposal in sanitary landfillAdvanced wireless telecom systemsAdvanced telephone servicesDevelopable land in Manu’a  American Samoa’s Labor Force  Two-year college with some four-year programsLarge number of capable people with local and outside training and education, including returned veteransLower wages than the USLocal control over immigrationVarious workforce and training programsTrade school offerings at high school and college levelIn-depth recent labor pool studyEnglish language strongly establishedVery high literacy  American Samoa’s Financial Institutions  Local Development BankTwo full-service commercial banksFederal business finance programs  American Samoa’s Athletic Prowess  Local youth have recognized athletic prowessAthletics infrastructure in place for hosting regional competitionFull member of the International Olympic Committee, and full membership in such international sporting bodies as IRB, FIFA, and other international and regional institutions   American Samoa’s Commercial Conditions  Experience with modern manufacturing (e.g., StarKist Samoa)No sales, value added or property taxesLocal tax incentives availablePrime Rainmaker hotel site is availablePotential to serve as a regional trade hub American Samoa Code provides for an Economic Development AuthorityEnglish is the unofficial commercial language Active Chamber of CommerceRelatively low crime, corruption  American Samoa’s Other Qualities  Exclusive Zone reserved for local fishermenLocal and overseas market for fresh and frozen fishIntact Polynesian cultureLarge amount of developable land in Manu’aDevelopment plans in place for port, airport, and tourismLow level of present activity means good potential for various forms of import substitution (e.g., food, web development, etc.)  In addition to fisheries and visitor industry opportunities based upon American Samoa’s location and resource advantage, there are other areas of opportunity that are not so easily discerned. The American Samoa Economic Advisory Commission report cited industries based upon agriculture, telecommunications, information technology, and selected areas of light manufacturing. These opportunities could be based upon support linkages to the basic fisheries or visitor industries. They could be tied to some regional market or regional cooperation with another country in the region. They could be an import substitution opportunity. In 2008 the Governor’s Economic Advisory Council avoided the temptation to identify highly specific opportunities except those related to fisheries and tourism. In fact it maintained that the cannery industry is a cornerstone of the American Samoan economy and that its wage and tax issues must be addressed. At the same time it recommended actions to bolster the visitor industry which would open the door to increased local tourism support business opportunities.  In agriculture it recommended specific strategies for increased local production through collaboration with the farming community, ASCC Land Grant, and the American Samoa Department of Agriculture.In fisheries, it recommended strategies to develop the local fishing industry through increased finance, infrastructure (onshore support facilities), and increased capacity to market fish locally.It recommended priorities and directions for manufacturing and ship repair for local and export markets through joint ventures, the attraction of foreign capital and technology and related infrastructure.   There were two important points demonstrated by this Governor’s Economic Advisory Council report. One is that the private sector is in a strong position to identify economic opportunities that tend to arise in the normal course of business. The other is that this normal course of business is an excellent vantage to identify constraints to fulfilling those opportunities. That brings us to economic constraints. 

Economic Development Constraints

 The matter of identifying economic development constraints is not so difficult, but evaluating and remedying them is very difficult. The constraints we are concerned about are those which can be remedied by human initiative, as opposed to those that are fixed in some fashion by nature (distance, climate, hazards, etc.). In rough order of importance the factors that lend themselves to local initiative are transportation, labor, markets, industrial sites, utilities, government attitudes, tax structure, business climate, and community.  Where these issues constrain economic development, government or the community can act to remove or ameliorate them. In general then it is the role of the private sector to identify and pursue opportunities. It is the role of the public sector to lessen or remove constraints to attaining those opportunities.  American Samoa has many economic assets, but it also has many constraints that hinder economic development and private investment. Obviously, the territory’s small size and remote location pose severe natural constraints about which little can be done. However, many factors influencing American Samoa’s economic development can be influenced by human initiative. It is these that will be focused upon here.

Federal Government Constraints

 American Samoa as a US territory is part of the US federal system as explained in Chapter 1. It was also explained that American Samoa is unincorporated (not subject to all US Constitutional provisions) and unorganized (does not have a government approved by Congress). Because no political status has been established for American Samoa, the US Congress has the Constitutional authority to apply US law to American Samoa at will. American Samoa is very different from the US in economically, culturally, geographically and in many other respects. This has led to constraints emanating from federal laws and regulations. In truth, American Samoa has benefited from exemptions from or special provisions in federal laws. Among them were an exemption from federal corporate taxes on repatriated profits from territorial operations (repealed), territorial duty free access to the US, special minimum wage level procedures (repealed), special marine transport law exemptions, and others.  Unfortunately, these US related economic development benefits have been eroding for decades. As indicated some have been repealed; some have been weakened. At the same time, some especially onerous US laws are applicable to American Samoa including the minimum wage law, commercial air service restrictions, and others.  There is concern that local immigration and customs control in American Samoa could be federalized. This too could have very severely adverse effects on the local labor market.  It was noted previously that the imposition of the US minimum wage was particularly damaging to American Samoa because the two economies were so different in size and character. In the US, the minimum wage applied to less than three percent of the work force. In American Samoa it applied to 70 percent of the work force causing serious wage inflation and unemployment. In fact, the US minimum wage would have to approach $20 per hour in the US to affect 70 percent of the US work force. Further, American Samoa’s economy is only one-fifth as productive as the US economy on a per capita income or product basis. In American Samoa, labor costs represent about 15 percent of total production costs. That is the highest cost category except for the cost of whole fish purchased by the tuna canneries.  These were undoubtedly the critical factors in the devastating economic impacts of the application of the US minimum wage to American Samoa. The imposition of the US minimum wage rate on American Samoa is largely, although not exclusively, responsible for American Samoa’s serious economic condition as noted in Chapter 1. This includes the loss of one of its two canneries, the precarious position of the remaining cannery, the viability of other economic opportunities, and the dimming of prospects for full economic recovery when federal spending eventually returns to more normal levels.   The federal government has the authority and the ability to impose devastating constraints on American Samoa’s economy. Furthermore, this is not just the opinion of the territories. It is the view of Allen Stayman, former deputy assistant secretary of the Department of the Interior forTerritorial and International Affairs (now the Office of Insular Affairs).9 He argues that for the unincorporated territories, there is no political status goal, and therefore no policy-guiding principle. These islands remain in a “status limbo, neither fully domestic nor foreign – a condition that complicates the development of solutions.”  He states that trends in national tax, trade and wage policies (toward the territories are maturing into crises with the CNMI likely to lose at least half of  its 2005 economy by 2010, and American Samoa at serious risk of losing as much as 90 percent of its economy over the next five years.” (Mr. Stayman was likely referring to 90 percent of American Samoa’s private sector economic base, the canneries, and not 90 percent of the entire economy.)9 Allen P. Stayman, US Territorial Policy, Trends and Current Challenges: (East-West Center, 2009)Mr. Stayman concludes:  “Unless Island leaders can join with the Obama administration to develop targeted economic revitalization plans… and obtain needed Congressional support … there will probably be significant economic contraction in the CNMI and American Samoa…. Under normal economic conditions, I (Stayman) would be confident that federal and Island policymakers, even without policy-guiding principles, would develop effective policies and muddle through. I am more concerned that federal officials may be unable either to find the necessary financial resources or focus their scarce time on creatively responding to the challenges of these territories.” Mr. Stayman very accurately describes current US policy toward its territories. That is, muddling through is good enough. Muddle is no acceptable substitute for effective policy. It is for these reasons that federal government actions are regarded as the most constraining to American Samoa’s future economic development. The federal economic constraints, existing or potential, of greatest concern to American Samoa are outlined below.  Federal Constraints 1. The American Samoa minimum wage issue remains unresolved. Fortunately, Congress has deferred it twice for two year periods. It has been studied for five years by ASG, GAO, and the US Department of Labor. Its deleterious effects on American Samoa’s economy vary but are virtually unanimous.2. American Samoa and other territories have no formal access to US international trade policy formulation or negotiations.3. US corporate tax policies pertaining to American Samoa have not been resolved but continued with periodic and partial extensions.4. American Samoa’s air transport service to and from the US is severely restricted by US cabotage laws that prohibit foreign carriers from transporting passengers between American Samoa and other parts of the US.5. Local control of immigration is only one controversy from becoming a target for federalization.6. The US has no political status goal, and therefore no policy-guiding principle for American Samoa to avoid the economic disasters that have befallen unincorporated territories.7. A general federal policy on the territories would include not just economic development. It would also include education, health care, the environment, political status and other policy areas affecting economic development.8. American Samoa is at the mercy of Congress’s absolute Constitutional authority over US territories without a congressionally approved formal political status. There is no political status quo for American Samoa. American Samoa’s political status is what the US Congress says it is whenever it passes a law that applies to American Samoa. 9. Applicable U.S. environmental regulations can be difficult and expensive to comply with, especially compared to other locales lacking such regulations, and are often considered inappropriate for American Samoa. However, despite the predominance of federal constraints, there are many other categories that could constrain American Samoa’s future development.   

Constraints Affecting Visitor Industry

High cost of air travel (made more difficult to relieve by US commercial air carrier regulations) Rainmaker hotel site is a blight on the Harbor area and prevents realization of the full economic potential. No mooring or convenience facilities for yachters. Restrictions on entry into American Samoa by citizens of Samoa reduce visitors and shoppers from our neighbors. Danger posed by stray dogs  Limited budget for American Samoa Visitor Board. 

Constraints from Uncertainty and Instability

Suppresses planning for investments and investments themselves The minimum wage issue may not be appropriately resolved.  There is continuing concern about the canneries, further population decline, unemployment, decreased shipping and smaller customer base for utilities. Federal funding levels may decline in the future.  Political status (unorganized, unincorporated US territory) limits American Samoa’s ability to control its own destiny.  The drop in population from 2000 to 2010, a US Census finding questioned in many quarters, is a problem for existing businesses and has implications for economic growth and new enterprises. 

Workforce Constraints

Wage levels are much higher than other states in the region and many of our global competitors, especially after three years (2007-2009) of $.50/hour increases in the minimum wage, roughly a 50 percent increase in three years.  Once educated off-island, many young people do not return (“Brain Drain”) because wages in American Samoa are low compared to the US.  Reliance on immigrants for low-level jobs and specialized or skilled positions Private sector employment is generally less desirable than public sector employment. American Samoa Government generally offers better pay, benefits, security, prestige, flexibility, retirement, etc. Limited alignment of local workforce needs with vocational education, specialized training and scholarships  

Land Constraints

Limited quantity of developable land.Limited land suited for agriculture or aquaculture. Local farmers have difficulty competing against imported products from nearby Samoa, which has a lower cost of production and a much larger agricultural sector.Land tenure laws prevent highest uses, assembly into usable parcels, use as collateral, etc.Limited application of zoning as a land use management tool exacerbates optimal land use.Industrial Park is not always productively used, or is being used for activities that do not require the special qualities of an industrial park.Inability of foreigners to own land discourages investment.Limited ability to use land as collateral limits access to capital.Land matters frequently end up in litigation. Suitable private commercial land is hard to identify and negotiate, for a variety of reasons, including vacant matai titles, uncertain boundaries, etc.  

Legal Infrastructure Constraints

Tax rates in American Samoa are higher than US and the region discouraging potential  off-island investors   The process by which tax incentives are extended is considered overly political and opaque, and there is a sense that tax incentives are not used to promote the purposes of the tax incentive statute.   Corporate formation can be difficult, uncertain and lengthy (especially for foreign companies), and may require expensive legal counsel. There is no enabling legislation providing for Limited Liability Corporations or Limited Liability Partnerships, increasingly popular corporate forms.  The lack of a Universal Commercial Code reduces confidence of potential investors and makes transacting business more difficult, leading to higher transaction costs (e.g., banks charge higher interest to cover the increased risk and cost of local operations). Laws governing financial transactions require updating (e.g., acceptance of electronic signatures).  The government land-use permit system (PNRS) is considered time consuming, rigid and sometimes arbitrary.     

Commercial Finance Constraints

 It has become more difficult to borrow money in American Samoa as economic conditions have made banks more wary. Moreover, interest rates at the commercial banks are higher than those charged in the U.S., due to higher cost of lending, including higher transaction costs (due in part to our unique land laws and inadequate legal infrastructure) and the inability to sell loans to other financial institutions. The Development Bank has limited funds for business development.   

Physical Infrastructure Constraints

There is deteriorating or inadequate infrastructure which there are insufficient funds to resolve (e.g., roads, water/wastewater, port, airport). Corrosive climate makes for expensive maintenance and short life cycles. Low levels of technological adoption.  Infrequent and unreliable Manu’a transportation hinders stability in the outer island group, which is a contributing factor to the 33 percent population decrease in the past 20 years. A boat only calls in Manu’a every two weeks and two of the three islands are not served by scheduled or commercial air service. Limited land in harbor area is evidenced by inability to come up with a good solution to StarKist Samoa’s high priority need for a new cold storage site. The American Samoa health care system is over-stressed and increasingly expensive. The health care system’s shortcomings are sometimes a significant factor in the decision of some residents to move off-island, and might be a reason for investors to not pursue American Samoa opportunities (e.g., it makes recruiting top-level personnel much more difficult).                                                                             

Territorial Government Constraints

  There was considerable opinion in the private sector interviews conducted for this project that local government was a serious detriment to economic development. The concerns of local business people are described in the previously referenced GAO reports (2010 and 2011), a Business Climate study (2006),10 a 2007 Cannery impact study and a Samoa News public opinion poll.  10 Jocelyn L.M. Doane and Sara Gray, US Department of the Interior, Office of Insular Affairs, A private Sector Assessment for American Samoa, August 2006.11 Masood A. Badri, Dimensions of Industrial Location Factors: Review and Exploration, (United Arab Emirates University, Journal of Business and Public Affairs, Volume 1, Issue 2, 2007.) These studies present no clear view of the effects of local government on economic development in American Samoa. None of these studies demonstrated that the local business climate was substantially responsible for the current condition of American Samoa’s economy. Nor did they indicate that the business climate was a high priority determinant of economic activity levels in American Samoa. In addition, it was noted in Chapter 1 that American Samoa’s economy grew at a fairly healthy and steady rate in the 30 year period prior to 2007. However, business climate conditions, especially where severe, can almost certainly influence investment decisions. Investors in the US, for example, typically have many location options available to them depending upon the industry.  Such major cost considerations as transportation, labor, raw materials, markets, industrial sites, utilities, and others may be comparable in total over many locations. In such cases, the receptivity of government and the community becomes a factor as do such things as the local tax structure, schools, health care, amenities and other qualities that appeal to their management and workers.11  Therefore, the issue will be addressed here since private sector members reiterated these concerns during the outreach/interview phase of this CEDS preparation effort. The truth is that American Samoa’s development effort would certainly benefit from a closer working relationship between the government and the business community as well as traditional leaders and community organizations. There is a need to leave no stone unturned in strengthening American Samoa’s position in an increasingly difficult economic development process and rising competition. Unfortunately, this issue must be examined in a highly contentious atmosphere in which often baseless and irresponsible political rhetoric abounds concerning the respective responsibilities of government and business for the nation’s and American Samoa’s economic woes. Under such conditions, there is unlikely to be any real improvement without some higher level of mutual understanding and respect. The following is an effort to analyze the influence of local government on development in an effort to design effective programs, policies or actions.   

Local Government Policy Constraints

It is often difficult for the private sector to compete with the pay and benefits of government employment. Efforts to privatize activities that might be performed more efficiently by the private sector have had questionable results (e.g., Shipyard, ASPA fuel, ASTCA /iPTV, Manua sea and air transportation). It might be an opportune time to revisit this.   Worsening economic conditions might be better addressed by increased cooperation among agencies and branches of government. This could have favorable effects on the quality of education, health care, public utilities, and other characteristics that can come into play for attracting investors and creating a favorable business climate. The lack of a path to naturalization in American Samoa could also inhibit investment by the many local business people that are not US nationals or citizens. Such businesspeople cannot be assured of a permanent home in American Samoa and are prohibited from owning land. In some cases, they are restricted from owning their own businesses, and operate through American Samoan “front” agents. There is a concern that a considerable underground economy in American Samoa, meaning that workers are paid in cash without proper records, reporting or tax withholding. This has potentially serious implications for illegal activities of many kinds including violations of wage, tax, immigration, human trafficking and other laws which could threaten federalization of American Samoa’s immigration and customs system.  It is an expensive and timely process for a company to bring in needed labor, and the private sector considers the immigration process to be difficult, time-consuming, arbitrary, mysterious and susceptible to corruption. There seems to be general agreement within the community and the government about the need for economic development and the most promising areas for economic development. Yet there does not seem to be a sense of urgency under the circumstances to become more aggressive about economic development.  

Information Sidebar

The section of this page titled “Information - Based on CIA Factbook” contains a wealth of information.  Most of the information is accurate but, the CIA information needs a lot of work.  The CIA claims “The online Factbook is updated weekly”, but much of the information is based on data collected 4-6 years ago.  I have made some notes, in italic font, where corrections are needed. 

Among the areas that need the most updating are Education, Energy and Communications.  The information in these areas reflect a lack of research. 

The 2010 Census information is not yet available online although it was scheduled to be available last year. The print version of the basic preliminary census data was scheduled for release in 2011. One reason for the delay is that the Island Areas questionnaires contained 75 questions, as compared to the stateside questionnaire containing 10 questions.  Many of the 75 questions were difficult for the census takers to understand and even more difficult to collect answers for.

We plan to add much more information in this section.

Please help: If you have information that will help correct or clarify any item in this section or if you would like to contribute new information, please use the comments section, the sitewide contact form or email us.