Palau - World Geography

Map of Palau After three decades as part of the UN Trust Territory of the Pacific under US administration, this westernmost cluster of the Caroline Islands opted for independence in 1978 rather than join the Federated States of Micronesia.

A Compact of Free Association with the US was approved in 1986, but not ratified until 1993. It entered into force the following year, when the islands gained independence.

The economy consists primarily of tourism, subsistence agriculture, and fishing. The government is the major employer of the work force relying heavily on financial assistance from the US.

The Compact of Free Association with the US, entered into after the end of the UN trusteeship on 1 October 1994, provided Palau with up to $700 million in US aid for the following 15 years in return for furnishing military facilities. Business and tourist arrivals numbered 63,000 in 2003. The population enjoys a per capita income roughly 50% higher than that of the Philippines and much of Micronesia. Long-run prospects for the key tourist sector have been greatly bolstered by the expansion of air travel in the Pacific, the rising prosperity of leading East Asian countries, and the willingness of foreigners to finance infrastructure development.

Source: The World Factbook, CIA.