Department of Resources and Economic Affairs
Kosrae's economy is fueled mostly by financial assistance from the United States Government through the Compact of Free Association. In 2003, such assistance including other external grants represents over 67% of the state Gross Domestic Product (GDP). Although the economy is still heavily dependent on external support, such level of support relative to GDP has progressively declined since 1986.
In the private sector the main occupations are: retail outlets, restaurants and bars, resorts and diving, farming, fishing and some service businesses, such as auto and machine repair. Traditional subsistence economy remains very important and almost every family catches fish and has gardens as well as live stock for food production.
Eco tourism is a mainstay of Kosrae's private sector economy.
Compact of Free Association
The financial assistance by the United States to the Federated States of Micronesia under the amended compact is set to expire in 2023, at which point a trust fund will maintain government functions in perpetuity. The role of domestic and foreign invesment is therefore critical to support Kosrae's long term economic viability. Since domestic investment is limited by capital and skilled labor, Kosrae State Government is working diligently to support interested foreign parties for investment opportunities in order to support well balanced future growth, particularly in export industries.
Kosrae State Government owns and operates most infrastructrue facilities, all health and most education services, extensive commercial activities in fisheries, marketing, and other small enterprises.