INTRODUCTION


Insular areas of the United States are areas that are not under the jurisdiction territories of the national government of US. Which include the areas that cover waters like and all naval vessels. The United States Gives all its members the freedom to and rights to explore, exploit, take care of the territory and also manage the territory as a whole. Areas that are not under the jurisdiction of the United States laws and regulations are not obliged by the law to enjoy rights as United States residents.


WHAT ARE THE TERRITORIES OF US?


All the territories in the US are fully under the geographical dimensions and are controlled by the federal government of America. These territory areas include certain regions, districts and divisions which the federal government has control over. The extent under which the territory of the United States stretches matches with the all the areas which belong to the United States and controlled by the federal government.

The United States has about five territories whose population is non-military which means that civilians cover these territories and for this reason, they enjoy all the rights and some degree of political autonomy. The United States Congress has made it possible for the civilians within the territories except those who live in the insular areas.


WHAT ARE THE TAXATION POLICIES OF THE INSULAR AREAS OF THE UNITED STATES?


The taxation policy dictates that those people who live in the five major overcrowded or populated insular areas are not obliged by any law to pay taxes to the national government of US, but they are only required to pay the taxes to the federal government for imports or exports they use every day.

On the other hand, residents who live in the other territories of the United States are required to pay taxes in full to the national government. In the US, insular areas include American Samoa, Commonwealth of the Northern Mariana island, Guam and United States Virgin Island.


GEOGRAPHICAL COVERAGE OF THE INSULAR AREAS


Among the above-named insular areas, three Pacific insular areas which go by the name of American Samoa, CNMI and Guam occupy a geographical coverage of between 1400 miles to 6000 miles from the United States mainland. On the other hand, USVI (United States Virgin Islands) covers about 1000 miles in the southern part of the Miami. All the above insular areas face serious economic and fiscal conditions.


FACTS ABOUT THE ECONOMIC STATUS AND FISCAL CONDITIONS OF THE INSULAR AREAS


The insular areas face serious fiscal and economic which are mostly caused by the heavy climatic conditions of this area which cause serious destructions. Some attempts to have the insular areas become financially accountable have faced severe challenges which eventually led to these insular areas continuing to have serious internal controls and problems with financial accountability. These factors have made these areas suffered severe non-ethical issues like corruption, abuse of power and mismanagement of public funds.

The main problematic factors which have hindered the progress of the insular areas for so many years is the lack of diversification, shortage of natural resources, poor infrastructure, lack of skilled personnel, and also the availability of more small domestic markets covering these areas. The limited industries located in these areas emerged during early times when the US government was experiencing favorable supply from taxes.

These industries are also affected by the external factors such as fluctuations which make them to further deteriorate in the number of returns they make. This also contributes to the rise of unskilled personnel in the insular areas because these industries are only able to absorb a small portion as their workforce.

Comparing the economic performance of this insular areas, we can note that CNMI, Guam and USVI areas experience the worst fiscal conditions as well as economic condition compared to American Samoa. The governing authority in these insular areas have had its shortcomings, and for this reason, these areas are faced with serious financial accountability problem some of them being unable to file the financial reports on time.

Lacking qualified persons to carry out a thorough audit in their financial statements and poor management which has to lead to poor internal control of these four insular areas. These factors have results to the federal government of the United States not offering grants to this insular area. Several scholars have conducted extensive researches about the insular areas and how these areas can stand at a better competitive advantage when compared to other areas, and they filed a report on the proper recommendations.

One of the recommendations made which was geared to improving the general economic status and fiscal conditions of the insular areas was that, the internal bodies controlling insular areas such as OIA should join forces with other federal grant agencies to discuss issues facing the insular areas and successfully implement all the plans put forward by OIA to monitor the financial accountability of these areas regularly.


DEMOGRAPHIC CHARACTERISTICS OF THE INSULAR AREAS


According to the data released by the United States census bureau, the number of people who cover the insular areas is about 70,000 in American Samoa and about 180,000 in Guam. This report also revealed that those people who live in the insular areas and were born in Guam, CNMI and USVI are original citizens who originate from the United States. On the other hand, those who were born in American Samoa are United States nationals.


The table below shows the demographic conditions and the economic conditions of the insular areas.

Basis of comparison Guam CNMI American Samoa Virgin Island
Population 155,000 70,000 58,300 129,032
Non-national U.S citizens by percentage 19 60 57 12
Average income per household 39,317 22,898 18,219 24,704
The main economic activity Majors in tourism Tourism Tuna processing Oil refining
Employment percentage by government and industries 28 11,7 29,9 24



THE POLITICAL CHARACTERISTICS OF INSULAR AREAS


INSULAR AREA HOW EACH STATE RELATES TO UNITED STATES PRESENCE OF A CONSTITUTION IDENTITIES OF INDIVIDUALS STATUS THE AREA GORVANANCE
American Samoa Unorganized territory The existence of a Constitution United States national No voting occurs. Representatives are appointed
Guam Organized territory Lacks a Constitution United States citizens Appointment of representatives the area delegates
Virgin Island Organized territory Requires a Constitution United States citizens Appointment of representatives by the area delegates
CNMI Commonwealth Has a Constitution United States citizens Residents representative


EXPLANATIONS OF STATUS OF TERRITORIES IN THE INSULAR AREAS

  • Unorganized territory

This is an unincorporated United States insular area which the federal government of the United States does not have control over. This means that the residents of this areas are not obliged by the law to file taxes to the federal government of the United States.

  • Commonwealth territory

This is an organized, United States insular areas which have good connections with the federal government of the U.S. the close relationship between this area and the United States was established by a law which was enacted through a mutual writing agreement.


FACTORS THAT LIMIT THE INSULAR AREAS FROM PROGRESSING ECONOMICALLY

There are several common factors which affect the insular areas which end up limiting the potentiality of these areas to grow economically. Some of these common factors include poor infrastructure, shortage of skilled labor, lack of diversification and lack of enough natural resources.


1. AMERICAN SAMOA
The American Samoa majors in the tuna canning industry. This industry is the main source of income to the residents of this insular area and also to the governing body of the area. This industry also offers employment to the people of this areas, but only a small number get absorbed for employment hence limiting the number of skilled workers in the area.

  • Laws governing trade

This area has benefited since the year 1950 exporting and importing goods to the united states of America. However, some changes in the trade laws are about to take effect because of the new government's policies expected to be imposed by the current government.

  • Tax law changes

This area has for a long time been in the profiting end because of the existing laws under section 936 which encourage the corporations of the united states to consider investing in the insular areas. This act reduces the federal taxes on the amount of income earned by this corporations and also create job opportunities for the insular areas.


2. CNMI (Northern Mariana Islands)
The CNMI greatly depends on two industries for its economic development. These industries are the garment manufacturing industry and the tourism industry. Residents of this insular area greatly depend on these two industries for employment which later translates to economic growth from the capital generated by these industries.

  • Laws governing the trading sector

While manufacturing the garments, raw materials required in this industry are shipped from China. Later after the garments are fully manufactured, they are exported to the United States, and this is where the CNMI insular area accrues its benefits.

While the United States charge huge amounts tax duties to other countries which export their products in America, the United States permits the CNMI to export its products at duty-free and quota-free. This greatly helps the CNMI to successfully market its products in the United States and earn good amounts of money at the end of the day.

When shifting our focus to the tourism sector industry in the CNMI area, we notice that there are some factors which have contributed to the decline of this sector in the past. One of these factors is the decrease in visitors or tourists from countries like Asia.

For instance, if we trace back the records of financial performance of Asia from way back in the early 90s, we get to learn that Asia faced a financial crisis which led to the economy of Asia deteriorating. This factor had a great impact on the economy of CNMI because the number of Asian tourists reduced drastically which later influenced the economic status of the CNMI area.


3. GUAM AREA
Guam insular area greatly depends on two economic sectors which are the tourism sector and the government sector. Statistics show that the tourism sector plays a huge role in contributing to the economic development of this area. Currently, the tourism sector is considered to be stable but tracing our record back in the 1990s; we get to know that some external factors greatly affected the performance of this sector.

  • Financial crisis in Asia

Some of the external factors affecting the tourism sector included the financial crisis experienced in Asia. Back in the 1990s, Asia was one of the major countries where most tourists came from to visit the insular areas. Immediately this country was hit by financial crises; the economic status declined which translated to most Asian families being unable to cater for their tourism expenses.

  • Destructive climatic conditions

Another factor which hit the tourism sector in the Guam area was the destructive climatic conditions caused by the typhoon which further lead to decrease of the visitations by the tourists.

  • Decisions made by the military

The military personnel deployed in the Guam area is relatively stable by now, but between the year 1992 to 2002, the number of military personnel deployed in the area began to take a downward trend. This action was majorly caused by the declining economy experienced in this insular area. This factor further leads to the economy of Guam deteriorating because investors were afraid of investing in Guam as their security was not guaranteed.


CONCLUSION

All the insular areas have in having in the past faced serious negative economic and fiscal conditions which have led to this area being underdeveloped when compared to other areas in the United States of America.

Most of these areas have in the past experienced good trading relations while trading with the United States which led to their economic growth. Most of these insular areas have some of their residents as the United States national while other insular areas have been United States citizens.

The underdeveloped insular areas face a serious financial crisis which can only be resolved by having real conversations between the OIA and the federal government. Private sectors can also improve the economic conditions of the insular areas by increasing the local revenues they generate to this area. The governing bodies in the insular areas should also look into it that the taxpayers hard earned money is put into effective development sectors to help the growth of these areas.


On Wikipedia you can read more about insular areas of the United States


And here are more to read about Insular Areas:
Insular Area Law and Legal Definition
Commonwealth (U.S. insular area)
Puerto Rico, an unincorporated territory of the United States