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The Cook Islands' real gross domestic product (GDP) grew by 4.5 percent per annum during 1982-1994, while the real GDP per capita growth rate was 3.6 percent. During 1995- 1998, as the population declined from 19,500 to 17,400 with the migration of Cook Islanders to New Zealand, real GDP declined at an average annual rate of 2.8 percent, and real GDP per capita stagnated. The recession largely reflected public service downsizing under the Economic Reform Program. In 1999, real GDP is estimated to grow by 2.7 percent as a result of a resurgence in tourism, growth in black pearl production, construction projects, and a recovery in commercial agricultural production.

During the current Compact of Free Association with the United States (US) that dates from 1987, economic growth in the Federated States of Micronesia (FSM) has averaged a 1.9 percent rate of annual increase in gross domestic product (GDP). Taking into account the population growth of 2.0 percent, GDP per capita declined during this period. At the beginning of the Compact, the FSM was endowed with a weak policy environment, which was inward looking, not conducive for private sector development, and supported a large Government. Supported by large external transfers, the economy initially boomed and grew by over 4 percent annually between fiscal year (FY)1987-FY1995, with the private sector growing by 7.1 percent as a modern cash economy established itself in nontraded activities. However, this period was not to be long-lived.

Some economic and social progress has been made since Papua New Guinea's independence in 1975, but the people remain poor by regional and international standards. Thirty one percent of the population lives below the international poverty line of $1 per capita per day. Most of the poor are in rural areas, especially the north coast and highlands provinces. Women are worse off than men, even having a lower life expectancy. The fundamental development challenge is still to translate natural resource richness into broad-based, sustainable economic growth and social development.