The potential for a tourist industry exists, but the remoteness of the location and a lack of adequate facilities hinder development.

Under the terms of the Compact of Free Association, the United States provided FSM with around $2 billion in grants and services from 1986 to 2001.

In addition, the advent of music startups using .fm domain names has provided a new, albeit fairly small, stream of revenue to the government.

Foreign commercial fishing fleets pay over $20 million annually for the right to operate in FSM territorial waters.

Visitor attractions include scuba diving in each state, World War II battle sites, and the ancient ruined city of Nan Madol on Pohnpei.

Manufacturing activity is modest, consisting mainly of the export of betel nut in Yap and production of buttons from trochus shells.

The government also borrowed against future Compact disbursements in the early 1990s, yielding an external debt of $111 million in 1997 (over 50% of GDP).

Economic aid - recipient: $64 million (2010); note - under terms of the Compact of Free Association, the US will provide $1.3 billion in grant aid during the period 1986-2001 Currency: 1 United States dollar (US$) = 100 cents Exchange rates: US currency is used Fiscal year: 1 October - 30 September This article incorporates public domain material from The World Factbook.