St Helena was originally intended as a maritime base, rather than as a colony, and its economy was never geared towards self-sufficiency.  During the proprietorship of the East India Company and during most of the nineteenth century, the island's economy revolved around the provision of supplies for shipping and for the local garrison.  In 1802 a total of 169 ships called at the island, and this figure had risen to 367 ships in 1830 and 1044 ships in 1860.  Partly due to the advent of steam, the number of visiting ships began to decline in the decade prior to the opening of the Suez Canal (850 ships in 1865), which lead to the eventual collapse in shipping by 1910, when a mere 51 ships called at the island.  With this also came the virtual collapse of the island's economy.  The island never played any significant role as a coaling station, nor did the arrival in 1899 of the Eastern Telegraph Company have an important impact on the economy.  However, the establishment of a flax industry, first attempted in 1874, but only started in earnest as late as 1907, went a considerable way towards easing unemployment and increasing local revenue in the early half of the twentieth century.  But this new industry in turn declined and its last mills closed during the 1960s, a period which also witnessed the rise and demise of St Helena's General Workers Union.

Since then the island has had virtually no industry of its own, and is nowadays largely dependent on aid from the United Kingdom.  In 1991/2 this amounted to a grant-in-aid of £3.42 million out of a recurrent expenditure of £7.01 million.  In addition the island received a shipping subsidy (£0.92 million), development aid (£1.39 million), and technical co-operation (£2.18 million), accounting for a total of £7.92 million in aid.  By contrast, the expenditure of the East India Company's civil establishment at St Helena in 1833/4 amounted to £29,192 and that of the military establishment to £60,714 (excluding pensions).  This compared with a local revenue of £ 6,709 for the same period.  It is this lavish expenditure, which supported a society whose standard of living was out of all proportion to the island's resources, other than its value as a victualling port.  While the majority of St Helena's present population are employed by government and by para-statals on the island itself, many islanders also work off-shore on Ascension Island and the Falkland Islands, while a small number are employed in domestic service in England.

The island's economic situation is not improved by the fact that, as in the sixteenth century, St Helena's only transport link with the outside world is still by ship.  The island's London registered RMS St Helena, a purpose built cargo/passenger vessel of 6767 tonnes, travels at regular intervals between the United Kingdom and South Africa, a route serviced by the Union Castle Mail Steamship Company until 1977.  The voyage to St Helena currently takes two weeks from Cardiff, two days from Ascension Island and five days from Cape Town.  Ships of the Royal Navy and cruise liners call very infrequently, although a large number of yachts (106 in 1992) call on their way from the Cape to the Caribbean.  There has never been an airstrip on the island, although one is due to be built by about 2012.  Modern telecommunications are provided by Cable and Wireless.  Difficulty of access and the absence of beaches have prevented the development of a large scale tourist industry.  An unfortunate consequence of this has been limited progress on the conservation of the island's historic and natural heritage.