New Caledonia supplies France with raw materials while providing a market for finished French goods. France supplies 40 percent of the territory's imports and takes 32 percent of its exports. Japan is another major customer for New Caledonia's mineral wealth. Despite a booming mining industry, exports still exceed imports by a wide margin.
Economic power is centered in Greater Nouméa, with all of the industry except mining, 70 percent of the retail trading space, and most tourism and government services. Each year the French state transfers over a billion U.S. dollars to New Caledonia, but much of it is used to pay the salaries of French civil servants and military personnel. Infrastructure expenditures profit mostly French contractors.
Economic development plans have granted tax write-offs to French businesses, and encouraged metropolitan French immigrants to purchase existing small companies. The subsidies have made the territory a consumer colony with a transfer economy, which explains why most non-Melanesians are so devoted to France.
The territory's taxation system is based on high indirect taxes on imports and exports (thereby inflating the cost of living), plus a 5 percent taxe de solidarité sur les services (TSS). Direct company and income taxes (which would fall most heavily on Europeans) remain extremely low. The per capita gross domestic product is over 15 times that of neighboring Vanuatu, but the income of the average Kanak family is only a third that of a Caledonian French family. A few powerful French families—Ballande, Barrau, Daly, de Rouvray, Frogier, Lafleur, Leroux, and Pentecost—control the local economy and politics. They profit most from colonial rule and are firmly committed to continuing it.
Continue to Economy: Mining »