The British and French who settled the New Hebrides in the 19th century, agreed in 1906 to an Anglo-French Condominium, which administered the islands until independence in 1980. Fishing, offshore financial services, and tourism, with about 50,000 visitors in 1997, are other mainstays of the economy. A small light industry sector caters to the local market.
Tax revenues come mainly from import duties.
Economic development is hindered by dependence on relatively few commodity exports, vulnerability to natural disasters, and long distances from main markets and between constituent islands. The most recent natural disaster, a severe earthquake in November 1999 followed by a tsunami, caused extensive damage to the northern island of Pentecote and left thousands homeless.