In ancient times the Maldives were renowned for cowries, coir rope, dried tuna fish (Maldive Fish), ambergris (Maavaharu) and Coco de mer (Tavakkaashi). Local and foreign trading ships used to load these products in the Maldives and bring them abroad.
Nowadays, the mixed economy of the Maldives is based on the principal activities of tourism, fishing and shipping.
Tourism is the largest industry in the Maldives, accounting for 20% of GDP and more than 60% of the Maldives' foreign exchange receipts. It powered the current GDP per capita to expand 265% in the 1980s and a further 115% in the 1990s. Over 90% of government tax revenue flows in from import duties and tourism-related taxes.
Fishing is the second leading sector in the Maldives. The economic reform program by the government in 1989 lifted import quotas and opened some exports to the private sector. Subsequently, it has liberalized regulations to allow more foreign investment.
Agriculture and manufacturing play a minor role in the economy, constrained by the limited availability of cultivable land and shortage of domestic labour. Most staple foods are imported.
Industry in the Maldives consists mainly of garment production, boat building, and handicrafts. It accounts for about 18% of GDP. Maldivian authorities are concerned about the impact of erosion and possible global warming in the low-lying country.
Among the 1,900 islands in the Maldives, only 198 are uninhabited. The population is scattered throughout the country, and the greatest concentration is on the capital island, Malé. Limitations on potable water and arable land, plus the added difficulty of congestion are some of the problems faced by households in Malé.
Development of the infrastructure is mainly dependent on the tourism industry and its complementary tertiary sectors, transport, distribution, real estate, construction, and government. Taxes on the tourist industry have been plowed into infrastructure and it is used to improve technology in the agricultural sector.
As of 2007, the Maldives has successfully promoted its natural assets for tourism. The beautiful, unpolluted beaches on small coral islands, blue waters and sunsets attract tourists worldwide, bringing in about $325 million a year. Tourism and other services in the tertiary sector contributed 33% to the GDP in 2000.
Since the establishment of the first resort in 1972, over 84 islands have been developed as tourist resorts, with a total capacity of some 16,000 beds. The number of tourists (mainly from Europe) visiting the Maldives increased from 1,100 in 1972 to 280,000 in 1994. In 2000, tourist arrivals exceeded 466,000. The average occupancy rate is 68%, with the average number of tourists staying for 8 days and spending about $755.
It is recorded that over 500,000 tourists visited the islands in 2003.
This sector employs about 20% of the labour force and contributes 10% of GDP. All fishing is done by line as the use of nets is illegal. Production in the fishing sector, was approximately 119,000 metric tons in 2000, most of which were skipjack tuna. About 50% of fish is exported, especially to Sri Lanka, Germany, UK, Thailand, Japan, and Singapore. Almost 42% of fish exports consist of dried or canned fish, and another 31% is frozen and the remaining 10% is exported as fresh fish. Total exports of fish reached about $40 million in 2000. The fishing fleet consists of some 1,140 small, flat-bottomed boats (dhonis). Since the dhonis have shifted from sailing boats to outboard motors, the annual tuna catch per fisherman has risen from 1.4 metric tons in 1983 to 5.6 in 1999.
Due to the availability of poor soil and scarceness of arable land in the islands, agriculture is limited to only a few subsistence crops, such as coconut, banana, breadfruit, papayas, mangoes, taro, betel, chilies, sweet potatoes, and onions. Agriculture contributes about 6% of GDP.
The industrial sector provides only about 7% of GDP. Traditional industry consists of boat building and handicrafts, while modern industry is limited to a few tuna canneries, five garment factories, a bottling plant, and a few enterprises in the capital producing PVC pipe, soap, furniture, and food products. There are no Patent Laws in the Maldives.
Traditional economic activities such as mat weaving, jewelry making and lacquer work are also found in the Maldives.