Country Economic Report: The Republic of Palau

Abstract

Palau is successful at this early stage of development as an independent nation, compared to other developing countries in the region. It is relatively well governed, with very few corruption cases; it has a functioning judiciary system and a relatively transparent financial and economic management process. The Government and the community will be faced with some difficult choices and decisions in the next few years if Palauans are to continue to enjoy the relatively high standards of health, education, and other public utilities which have been provided mostly free or heavily subsidized by the Government. Ongoing foreign assistance from Japan and Taipei,China, the opening up of the island of Babeldaob, and the prospect of offshore oil development in the north island of Kayangel represent a unique opportunity for development and growth. It will be a challenge to balance the competing interests of all stakeholders and the result will determine whether a more open and growth-orientated economy will be pursued or if development is likely to slow or even reverse.