Pacific Island Countries; In Search of a Trade Strategy (original) (raw)
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Tourism and economic growth in the Pacific region: evidence from five small island economies
Journal of the Asia Pacific Economy
We present a country-specific analysis on the effect of tourism on the economic growth of five small Pacific Island Countries (PICs)-Fiji, Samoa, Solomon Islands, Tonga and Vanuatu. The results show tourism development is growth-enhancing for all five countries. Foreign direct investment (FDI) is growth-enhancing for Fiji, Samoa, Solomon Islands and Vanuatu, and in the short run, a delayed negative association for Fiji and Vanuatu is found. Remittances are growth-retarding for Fiji, Samoa and Tonga, with a short-run delayed positive association for Fiji, Tonga and Samoa. Financial development is growth-retarding for Solomon Islands and Tonga, with a short-run positive association for Fiji and Samoa. While the results underscore the huge importance of tourism in generating growth and FDI in the Pacific, given the ongoing adverse effects of Coronavirus disease 2019 (COVID-19) pandemic, PICs will have to focus on alternative sectors to progress economic activities. Policy suggestions are discussed along these lines.
Tourism and Economic Growth: A Panel Data Analysis for Pacific Island Countries
Tourism Economics, 2010
The contribution of tourism to the economic growth of Pacific Island countries (PICs) has achieved significance in the past decade. The shift in the economic policies of the PICs from the late 1980s has been decisively away from import substitution and agriculture to urban-based manufacturing and services sectors. Tourism is the main component of the services sector in the PICs. The contribution of tourism to economic growth in Fiji, Tonga, the Solomon Islands and Papua New Guinea is expected to grow. The authors use panel data for the four PICs to test the long-run relationship between real GDP and real tourism exports. They find support for panel cointegration and the results suggest that a 1% increase in tourism exports increases GDP by 0.72% in the long run and by 0.24% in the short run.
After pointing out that small island economies are diverse in their economic situations and in their ability to benefit from globalisation, this article examines the actual situation of South Pacific island countries. It takes into account their size and its diversity; variations in their involvement in international trade; their geographic, ethnic and cultural differences; their international political associations; and differences in their degree of economic development. All of these factors, as well as their common attributes, influence the prospects of small Pacific Island countries for benefiting from economic globalisation. The question of whether the MIRAB characterisation of South Pacific Island Economies continues to be relevant is explored given that there has been increasing global support for the notion that nations should mainly rely on economic liberalisation, privatisation and globalisation for their economic development and become less aid dependent. Furthermore, the extent to which economic globalisation can be embraced to further the sustainable development of Pacific island countries is discussed.
Pacific island nations : how viable are their economies?
2012
In an earlier issue of Pacific Islands Policy, Francis X. Hezel, SJ, examined the economic performance of the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands before and after independence. Despite abundant start-up funds from the United States and advice from consultants on how to create future prosperity, self-sustainability for these island nations remains as elusive as ever. This report is an attempt to answer the question: Are FSM and the Marshall Islands unusual in this respect or are all small Pacific Island nations waging a losing battle in their attempts to create more selfsupporting economies? Development economists frequently argue that with the right policies in place and necessary reforms implemented, any nation, whatever its limitations, can develop a successful economy. In this report, Hezel looks at the record to find out how the Pacific Island nations have fared in this respect since independence. Having abundant exports doesn’t always t...
Globalization and the island economies of the South Pacific
Routledge Studies in Development Economics, 2002
This study has been prepared within the UNU/WIDER project on Globalization and the Obstacles to the Successful Integration of Small Vulnerable Economies which is co-directed by Dr Mansoob Murshed. UNU/WIDER gratefully acknowledges the financial contribution to the project by the Ministry for Foreign Affairs of Finland.
Small countries, such as Pacific islands countries (PICs), vary considerably in the extent and in the ways in which they are linked to the global economy. Particularly within PICs, households and families, and different social groups also differ in their dependence on markets, cash and foreign exchange incomes for their economic welfare. A dualistic economic model is inadequate as a means for specifying the distribution of this dependence. There is a need to analyse the distribution of such dependencies more precisely using, amongst other things, relative frequency distributions. It is hypothesised that increased integration of PICs into the global economy combined with global economic reforms can be expected to result in reduced private investment in many PICs, mainly because of outflows of investible funds from PICs to take advantage of higher economic returns elsewhere. In turn, this is liable to reduce real wages and employment in these countries. At the same time, there are likely to be increasing pressures for emigration from PICs as income differentials between them and higher income countries, such as Pacific Rim countries, grow, and political demands to allow freer international movements of labour are likely to magnify as PICs demand full commitment to the globalisation concept and as various employer groups in higher income countries seek to cope with growing international economic competition brought about by increasing globalisation by importing labour. The possible implications of these trends for the economic development/future of PICs are considered.
ASSESSING THE DYNAMIC ECONOMIC IMPACT OF TOURISM FOR ISLAND ECONOMIES
Using a panel data of 19 island economies for the years that span from 1990 to 2007, this study explores the potential contribution of tourism to economic growth and development within the conventional augmented Solow growth model. Since economic growth is argued to be essentially a dynamic phenomenon we employ GMM method to account for these issues. The results show that tourism significantly contributes to the economic growth of island economies. Moreover, the tourist-growth nexus is observed to be a dynamic phenomenon and granger causality analysis reveals a bi-causal relationship between tourist and growth. Comparative analysis with samples of developing and developed countries shows that tourism development on island economies may have comparatively higher growth effects. Keywords: economic growth, island economies, dynamic panel data.