2017 Index of Economic Freedom

Solomon Islands

overall score55.0
world rank126
Rule of Law

Property Rights39.3

Government Integrity33.9

Judicial Effectiveness41.9

Government Size

Government Spending34.4

Tax Burden62.8

Fiscal Health99.8

Regulatory Efficiency

Business Freedom68.5

Labor Freedom70.5

Monetary Freedom81.0

Open Markets

Trade Freedom83.0

Investment Freedom15.0

Financial Freedom30.0

Embed This Data

Create a Comparison Chart

See how Solomon Islands compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 0.6 million
  • GDP (PPP):
    • $1.1 billion
    • 3.3% growth
    • 5.2% 5-year compound annual growth
    • $1,950 per capita
  • Unemployment:
    • 34.8%
  • Inflation (CPI):
    • -0.4%
  • FDI Inflow:
    • $21.1 million
Embed This Data

Economic dynamism and development in the Solomon Islands remain stifled by a number of serious deficiencies that include poor governance and an inefficient public sector. Underdeveloped legal and physical infrastructure, combined with political instability, continues to undermine the emergence of a vibrant private sector. Private-sector development is also undercut by the government’s outsized role in the economy. The Solomon Islands’ limited protection of property rights is a further drag on entrepreneurial activity.

These structural weaknesses limit dynamic business activity, and the agriculture sector remains the primary source of employment. Despite attempts at reform, widespread corruption increases the cost of doing business and deters investment.

Close

Background

The Solomon Islands is a parliamentary democracy and one of Asia’s poorest nations. Danny Philip’s election as prime minister in 2010 seemingly stabilized a chaotic political environment, but allegations of corruption forced Philip to resign in 2011. Prime Minister Manasseh Sogavare has been in office since 2014. In recent years, Australia has had to intervene several times to defuse ethnic conflict. Australia, the European Union, Japan, New Zealand, and Taiwan provide significant financial aid. Most of the population lives in rural communities, and three-fourths of the workforce is engaged in subsistence farming and fishing. Economic growth depends largely on logging and exports of timber.

Rule of LawView Methodology

Property Rights 39.3 Create a Graph using this measurement

Government Integrity 33.9 Create a Graph using this measurement

Judicial Effectiveness 41.9 Create a Graph using this measurement

Land ownership is reserved for Solomon Islanders, and conflicts over land tenure have been a major source of civil unrest. The judiciary’s lack of resources hinders the conduct of timely trials. Residents of rural areas have limited access to the formal justice system. Threats against judges and prosecutors have weakened the judicial system’s independence and rigor. Government corruption is a pervasive problem, especially in the forestry and fishing sectors.

Government SizeView Methodology

The top personal income tax rate is 40 percent, and the top corporate tax rate is 30 percent. Other taxes include a property tax and a sales tax. The overall tax burden equals 35.0 percent of total domestic income. Government spending has amounted to 46.8 percent of total output (GDP) over the past three years, and budget surpluses have averaged 1.9 percent of GDP. Public debt is equivalent to 10.4 percent of GDP.

Regulatory EfficiencyView Methodology

The regulatory infrastructure continues to be undermined by bureaucratic bottlenecks. Despite the recognized need for business law reforms, policy action toward greater business freedom has been marginal. The formal labor market is not fully developed, and enforcement of the labor code is not effective. About one-third of total public spending subsidizes infrastructure development projects, many of which are funded by international donors.

Open MarketsView Methodology

Trade is important to the Solomon Islands’ economy; the value of exports and imports taken together equals 98 percent of GDP. The average applied tariff rate is 8.5 percent. Foreign investment is screened by the government. Four state-owned enterprises have been privatized since 2008. The financial sector is underdeveloped and dominated by banking, and limited access to credit constrains business development.

Country's Score Over Time

View Chart of Scores over Time

Regional Ranking

rank country overall change
1Hong Kong89.81.2
2Singapore88.60.8
3New Zealand83.72.1
4Australia810.7
5Taiwan76.51.8
6South Korea74.32.6
7Malaysia 73.82.3
8Macau70.70.6
9Brunei Darussalam69.82.5
10Japan69.6-3.5
11Kazakhstan695.4
12Vanuatu67.46.6
13Thailand 66.22.3
14Philippines65.62.5
15Azerbaijan63.63.4
16Fiji63.44.6
17Tonga633.4
18Indonesia61.92.5
19Kyrgyz Republic 61.11.5
20Cambodia59.51.6
21Bhutan58.4-1.1
22Samoa58.4-5.1
23Tajikistan58.26.9
24China57.45.4
25Sri Lanka57.4-2.5
26Nepal55.14.2
27Solomon Islands558.0
28Bangladesh 551.7
29Mongolia54.8-4.6
30Micronesia54.12.3
31Laos544.2
32Pakistan 52.8-3.1
33India52.6-3.6
34Burma52.53.8
35Vietnam52.4-1.6
36Uzbekistan52.36.3
37Papua New Guinea50.9-2.3
38Kiribati50.94.7
39Maldives50.3-3.6
40Afghanistan48.9N/A
41Turkmenistan47.45.5
42Timor-Leste46.30.5
43North Korea4.92.6
See Entire Region List ›

View all countries ›

Back to Top