Economy of the Falkland Islands

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The economy of the Falkland Islands, previously heavily over-dependent on sheep farming (and historically whaling), has become more diversified in the last decades and now also has income from tourism and commercial fishing as well as a service base for the fishing industry.

[edit] Historical development

A squid trawler, and a cruise ship in Port William representing two trends in recent economic development

During the 19th century, the supply and maintenance depot for ships at Stanley developed into a port serving ships rounding Cape Horn, and trade in cow hides from the wild descendants of cattle introduced by French settlers in the late 18th century. Sheep farming was introduced, taking over from the cattle trade in the 1870s and becoming self-supporting by 1885. The islands also provided a base for whaling and sealing, with factories being built on East Falkland and South Georgia, but these industries ended, leaving the wool trade as the mainstay of the islands' economy.

By the 1980s, the economic viability of the islands was in doubt, but in the aftermath of the Falklands War there was a new commitment from the United Kingdom government and in mid-1984 the Falkland Islands Development Corporation was formed. In its annual report at the end of that year, it set out to increase employment opportunities by encouraging diversification of, to increase population levels through selective immigration, to aim for long-term self-sufficiency and to improve community facilities. To achieve this, it identified as areas to tackle agricultural improvements, tourism, self-sufficiency in energy, development of the industrial and service sector, fisheries, and land subdivision.

By April 2002, the Guardian reported, the Falklands' economy was booming, with income from tourism and the sale of squid fishing licences as well as from indigenous fishing companies with locally registered boats. Fishing boats visit the islands from Spain, Korea, Taiwan and Japan, and obtain supplies and services from the islands. An agreement with Argentina set the terms for exploitation of offshore resources, though hopes of oil production have yet to materialise. An islander told the BBC that "we were the luckiest people that was ever mixed up in a war."

Tourist interest was stirred by the publicity given to the islands, and as well as introducing holiday facilities and guided tours, the islands became a regular port of call for the growing market of cruise ships, giving visitors a glimpse of what the islanders had previously thought of as their humdrum existence, as well as tours to see the scenery and wildlife, particularly penguins, seabirds, seals and sealions, and to visit battlefields. However, diplomatic disputes with Argentina caused a slight disruption in 2004, when charter flights from Chile to serve cruise ships were refused permission to fly over Argentina to reach the islands. Large numbers of 19th century shipwrecks around the islands are an attraction for recreational divers, and trout fishing, golf, horse riding and sailing are also on offer.

[edit] Overview from CIA Factbook

One-pound coin of the Falkland Islands pound.

The economy was formerly based on agriculture, mainly sheep farming, but today fishing contributes the bulk of economic activity. In 1987 the government began selling fishing licenses to foreign travelers operating within the Falklands exclusive fishing zone. These license fees total more than $40 million per year, which goes to support the island's health, education, and welfare system. Squid accounts for 75% of the fish taken. Dairy farming supports domestic consumption; crops furnish winter fodder. Exports feature shipments of high-grade wool to the UK and the sale of postage stamps and coins. The islands are now self-financing except for defence. The British Geological Survey announced a 200 nautical mile (370 km) oil exploration zone around the islands in 1993, and early seismic surveys suggest substantial reserves capable of producing 500,000 barrels per day; to date no exploitable site has been identified. An agreement between Argentina and the UK in 1995 seeks to defuse licensing and sovereignty conflicts that would dampen foreign interest in exploiting potential oil reserves. Tourism, especially eco-tourism, is increasing rapidly, with about 30,000 visitors in 2001. Another large source of income is interest paid on money the government has in the bank. The British military presence also provides a sizeable economic boost.

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Industries: fish and wool processing; tourism

Industrial production growth rate: NA%

Electricity - production: 22.23 million kWh (2003)

Electricity - production by source:
fossil fuel: 70%
wind: 30%
hydro: 0%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 20.68 million kWh (2003)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: fodder and vegetable crops; sheep, dairy products

Debt - external: $NA

Economic aid - recipient: $0 (1997 est.)

Exchange rates: Falkland pounds per US dollar - 0.54 (2005), 0.5462 (2004), 0.6125 (2003), 0.6672 (2002), 0.6947 (2001) note: the Falkland pound is at par with the British Pound Sterling

[edit] See also

• Falkland Islands Holdings

[edit] External links

• CIA - The World Factbook -Falkland Islands (Malvinas) (last updated 10 January, 2006)
• Falkland Islands Development Corporation - Annual Report 1984
• A Visitor's View of the Falkland Islands
• Guardian Unlimited - Special Reports - Share the Falklands
• Four Seasons and more than 3,000 Tourists in One Day
• Tax Articles, "Falkland Islands Economy Review"
• "Falklands Experience" tours
• Falklandsinfo: Welcome to our Spectacular Islands!
• Britain sends minister to resolve Falklands air row with Argentina
• Guardian Unlimited - Special Reports - The Falklands' rise to riches

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