Sparta Report

Here’s a US Territory That is Actually Doing Well Economically

When I wrote a long article a year and a half ago about the Northern Mariana Islands (CNMI), I highlighted how the islands were having economic problems due to mismanagement from Washington.

The islands once had a thriving garment manufacturing industry, but repeated minimum wage hikes by the US federal government crippled the islands’ ability to compete internationally and gave Chinese manufacturers a huge advantage. The entire garment manufacturing industry disappeared from the CNMI, and sent the island into a steep recession. In this respect, the CNMI are very similar to Puerto Rico and the US Virgin Islands, which also suffered from significant US mismanagement.

The difference between Pacific territory and its Caribbean counterparts, however, is that the Northern Marianas may have just found a way out of their economic predicament:

The estimates of GDP for the CNMI show that real GDP–GDP adjusted to remove price changes– increased 28.6 percent in 2016 after increasing 3.8 percent in 2015 (see Table 1.3). For comparison, real GDP for the United States (excluding the territories) increased 1.5 percent in 2016 after increasing 2.9 percent in 2015.

Exports of services was the largest contributor to economic growth in 2016, reflecting significant growth in visitor spending, particularly on casino gambling (see Table 1.4). The number of visitors to the CNMI grew over 10 percent, primarily reflecting an increase in visitor arrivals from Korea and China.


Private fixed investment increased over 60 percent in 2016, reflecting construction of the casino resort in Garapan and other hotel construction on Saipan.

The estimates of GDP by industry for the CNMI show that the private sector was the primary source of the increase in real GDP in 2015 (see Table 2.5). The largest contributor to growth was the accommodations and amusement sector, reflecting growth in spending by tourists, including on casino gambling.

Yes, that number in the first paragraph is correct, I didn’t make any copy and paste errors; the GDP of the Northern Marianas really managed to grow by 28.6% in 2016!

The CNMI has always had a thriving tourist industry, but they managed to expand its muscle by working to make it more attractive to Chinese and South Korean tourists by building gambling resorts on the island.

The creation of new casinos has clearly had a huge impact, with more tourists coming to gamble, more construction work to build resorts to accommodate them backed by private investor money, and more sales of other goods and services to visiting tourists. All of this is resulting in stellar economic growth.

This is the kind of “pull yourself up by your bootstraps” story that is classically American, and in direct contrast to Puerto Rico and the US Virgin Islands, who are becoming welfare cases, and are mired in debt and facing another decade of recession. The CNMI have not suddenly become perfect “paradise islands,” but this growth is a huge improvement compared to where they were a decade ago, and significantly cheers me up as to the prospects for the future of the US territories.

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