The Economy

The Tuvaluan economy is perhaps one of the most interesting. Firstly its the smallest economy in the world, purely held afloat by foreign aid.

The Tuvaluan nation consists of nine scattered coral atolls, eight which are densely populated, with idealistic conditions for a strong agricultural sector. It is one of the most smallest countries in the world, with its highest point standing only at 4.6 meters above sea level. An isolated country, to a high extent reliant on imports, and prone to climate ramifications prompted by climate change, which poses significant challenges to development, the economic ability of the nation is beyond weak.

Economic activity is dominated by the public sector. As aforementioned the nation has few natural resources, primarily due to its poor agricultural conditions, however fisheries do stimulate economic growth. Earnings from fish exports and fishing licenses for Tuvalu’s territorial waters remain a significant source of government revenue. In 2013, revenue from fishing licenses doubled and totaled more than 45% of GDP.

Reliant to a high extent of foreign aid, development partners has increased throughout the years. The Tuvalu Trust Fund, (TTF) an international trust fund established in 1987 by development partners, has grown to $172.3 million, as at 30 September 2017, and the Government of Tuvalu is committed to reaching a maintained value of $200 million by the year 2020 however, the pandemic has likely obstructed that original goal. The TTF remains a reinforcement for meeting shortfalls in the government's annual budget. There are a  multitude of other foriegn aid contributors, including NGO’s and NFP’s globally. The paramount concern of the nation however is the financial impact of climate change and the cost of climate related adaptation projects

Held Afloat By Its .TV Domain

The nations unique domain name “.tv”, attracts interest from many individuals, entities and television companies around the world. In 1995, Stephen Boland, the macroeconomic planner for the Pacific microstate of Tuvalu was informed via tax machine that Tuvalu had been assigned a country code top-level domain — the string of characters at the end of a URL, like .com or .org — for its Internet addresses. The domain for Tuvalu happened to be “.tv,” the worldwide metonym for broadcast entertainment. This naturally drew interests from media organisations. In 1998 an American start-up known as DotTV paid Tuvalu $US 50 million ($67 million) over 12 years for the right to sell .tv to other companies. With some of the funds made from the deal, Tuvalu finally had the monetary capability to afford the $100,000 it cost to join the United Nations. 22 years later the power of the internet remains relatively unknown to the nations citizens, but the evolution of live streamed programming and competitive video gaming, has made Tuvalu’s .tv domain one of its most valuable resources.

“[.tv] has provided a certain, sure income. It enables the government to provide essential services to its people through providing schooling and education for the kids, providing medical services to our people, and also in terms of improving the basic economic infrastructure and service delivery to our communities.” - Seve Paeniu, Tuvalu’s 2019 Minister of Finance


It is said that a nation is only as powerful as its gross domestic product. This statement directly relates to Tuvalu's predicament. Tuvalu is the world's smallest national economy, with a GDP of about $47 million, due to its very small population, heavy reliance on foreign aid, negligible capital investment, demographic problems, a lack of natural resources, poor employment and educational opportunities and low average net incomes.

GDP - By Composition

GDP composition is the economic model that shows who does the spending in an economy between the five sectors to total GDP of household consumption, government consumption, investment in fixed capital, investment in inventories, exports of goods and services, and imports of goods and services. As evident by the corresponding figure, the Tuvaluan economy is mostly spent on imports (an economic leakage), this is due to the economic ability of the nation to produced domestic wants and needs. Household consumption is minimal, perhaps due to the diversity of consumer wants and needs but also the small population level and its distribution. Government consumption is by far the largest economic stimulant, due to a myriad of factors but primarily due to foreign aid and leasing of Government assets.


Tuvalu significantly relies on imports due to the economic capability of the nation and minimal free landmass dedicated for domestic production. Tuvalu's significant imports are white goods, fishing utilities and refined petroleum. The graph to the right displays Tuvalu's import partners.


As aforementioned Tuvalu imports to larger extent than they export. In regards to their exports, Tuvalu exports what their nation and its economy specialises in, its primarily agricultural products tropical fruit along with the utilisation of their fishing industry. Along with its fishing industry the nation does well with production of ships and fishing vessels, along with electrical power accessories. Tuvalu's major export destinations is of diverse nature, displayed by the graph to the left, mainly exporting to its neighbouring countries whilst also trading with other continents.


The Tuvaluan economy is the most diverse in the world, held afloat by foriegn aid and media acquisition, it struggles to supply sufficient basic collective wants and provide consumer preferences. Through this, the Tuvaluan nation, however optimistic, is on the road for recovery, crucial if the Government wants to continue taking sufficient measures to combat the infringing climate ramifications. A nation is only as powerful as its gross domestic product.