Tuvalu's Unconventional Way of Making Money

Tuvalu is a tiny remote Polynesian island nation with a population of around 10,000 people.

The main sources of revenue for the government is fishing and Tuvalu Trust Fund (set up by UK, Australia, and New Zealand). The earnings from tourism are almost negligible. After gaining independence from the British, the island nation depended heavily on foreign aid.

Then came the internet. Tuvalu hit the jackpot when it received the .tv domain name. This is one of the most recognised internet domain name. In 2000 Tuvalu signed up with a Canadian businessman, Jason Chapnik, and formed a new company DotTV. The island has a 20% stake in DotTV and received $50 million for the lucrative deal, payable in quarterly payments of $1 million each over a 10-year period. It then received its first payment of $18 million, thereby doubling its GDP. VeriSign acquired DotTV in 2002. The agreement to manage the .tv domain runs through 2021.

This source of income made Tuvalu financially independent, thus enabling it to become a UN member, as it could not afford its $20,000 membership fee earlier. This revenue makes up to more than 10% of Tuvalu's GDP. They also started upgrading their infrastructure: roads, electricity, schools, airport. Also, Tuvalu could now export food! Tuvalu is now among the best performing countries in the Pacific.

This graph shows Tuavulu has been performing better (per capita) than most of the countries in the Pacific (except Fiji) since 2000.