The Perils of Unmanaged Export Growth: The Case of Kava in Fiji (original) (raw)
Related papers
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.
SMALL ISLANDS' QUEST FOR ECONOMIC DEVELOPMENT
Asia-Pacific Development Journal, 2003
Using time series data, the paper analyses the economic structure of island countries. The results are illustrated using five case studies. It is demonstrated that countries pursuing strategies based on service industries or exports of light manufactures have been more successful in attaining development objectives. This success has been translated into improved welfare for the populations of these countries. In contrast, a promotion of agriculture and remittances has tended to have a negative effect on development and on levels of welfare of the relevant island countries. Development economists have been mainly preoccupied with trying to explain why large countries with abundant resources (natural, economic, human, diplomatic) nevertheless remain poor. Meanwhile, some researchers have drawn attention to how several small, island States with very limited resources are pursuing their development. It has been seen that a number of small island countries have somehow succeeded in achieving relatively high standards of living, as evidenced by relatively high average per capita incomes, sustained levels of economic growth and a high ranking on the human development index 1. Yet, it is also true that some other small island states-Tuvalu, Kiribati, Cape Verde, Comoros, Samoa, Vanuatu, Solomon Islands, Sao Tome and Principe, and Maldives-are included among the least developed countries (LDCs). It is also the case that small island countries on account of their geographic remoteness are considered unimportant economic actors and have therefore not merited significant attention by economists. This paper is an attempt to an improved understanding of the economic problems of small island development by seeking to explore the varying approaches and mechanics of development pursued by small states and the results achieved. It does so by resorting to a comparative case study approach. The approaches to
Essays on Small Remote Island Economies (SRIES)
2011
This dissertation investigates small remote island economies (SRIEs)-a unique grouping of countries that has not been addressed systematically in the economics literature. The rationale behind this categorisation lies in the interactions of smallness, islandness and remoteness. These interactions might exacerbate the problems face by these economies, and possibly create new opportunities for them. This study consists of four essays which address their most important economic issues. The first essay brings SRIEs into context by drawing from the existing literature. Economists and other social scientists acknowledge the economic challenges of smallness: limited scale economies, limited resource endowments, economic concentration, high economic openness and consequent vulnerability to external shocks. Many small countries are also islands: islandness contributes to economic volatility because it increases the risks associated with environmental hazards, climate change, and man-made and natural disasters. The new category SRIEs highlights a well-documented economic problem-remoteness. However, there is little research on the implications of remoteness for small island economies. This thesis addresses this gap in the literature and seeks to better inform policy. Many SRIEs were affected by the dismantling of the Multifibre Agreement (MFA). MFA quotas guaranteed that the textiles and clothing (T&C) products of SRIEs had accessed to developed markets and protected these small economies from competitive larger developing countries. The second essay adopts a novel methodology-network analysis-to investigate the impacts of the ensuing trade liberalisation in T&C on SRIEs. The MFA altered T&C trade patterns: in the post-quota period, SRIEs preferred to trade with closer partners, thus, supporting the hypothesis that remoteness matters. Network statistics demonstrate that liberalisation led to convergence. SRIEs had a relative comparative advantage in final rather than intermediate products. An analysis of trade specialisation patterns confirms that MFA quotas created artificial comparative advantages. The third essay analyses individual cases of SRIEs through a global value-chain framework. T&C global fragmentation of production was shaped by quotas. A distance effect on trade is revealed as trade with relatively remote partners declined post-MFA. The results of a unit-value analysis support the thesis that those SRIEs that survived moved up the value-chain or upgraded to maintain competitiveness. Upgrading involved shifting to higher-valued products and niche markets but also integrating regionally. The last essay provides an alternative explanation for the notion of remoteness, particularly when viewed from a tourism perspective. Scholars agree that nature attracts tourists. An exploratory analysis shows that SRIEs are well-endowed in nature. Indeed, the econometric results show that remoteness is positively associated with tourism performance. Price acts as a sorting factor signalling the high-value tourist to choose less competitive but remote destinations; destination choices, hence arrivals, are price-dependent. However, price is irrelevant for expenditure per tourist. In sum, the cost of remoteness can be offset by its value. Remote island tourism is proposed as a positional good.
As pointed out in this article, small island economies are diverse in their nature and in the challenges they face. A taxonomy of these economies is provided. The overview takes account of small island economies that are satellites of large countries as well as those which are independent nation states. Nevertheless, the emphasis here is on small island economies that are remote from central economies or disadvantaged in other ways. These include many island nations in the Pacific and elsewhere. Such economies suffer from diseconomies of scale in economic activity, are prone to imperfect market competition, and experience high transport and trading costs for a variety of reasons which are outlined. The gravitational pull of stronger central economies and central places favours net out migration from these economies, particularly a brain drain, as well as net private capital outflows. These tendencies often stifle local economic development. Such economies frequently depend on aid from foreign or overseas places for maintaining the levels of income of their inhabitants; income levels which in many cases are relatively low. Income levels may be precarious in such economies because they are vulnerable to variations in economic, natural and political forces. They usually lack diversity in their natural resources and in their exports. A natural disaster can devastate their whole island economy so that little resilience remains to deal with the disaster by relying on the island’s own resources. Whether or not such economies are particularly prone to political disturbances is unclear, but when such disturbances occur they tend to impoverish those areas because net migration and net capital outflows increase and inbound tourism (which is often an important source of income for such economies) dwindles. The environmental situation facing small island economies varies. Some have undergone rapid urbanisation and centralization of their populations and this has caused significant pollution problems and water availability problems. Furthermore, some are at considerable risk from climate change. Using mathematical relationships, it is demonstrated that small island nations will lose (on average) proportionately more of their land mass as a result of sea-level rises than larger nations. Increased urbanisation of such economies usually increases their economic vulnerability because it is normally associated with greater dependence on international market exchange and results in increasing urban-bias in politics.
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.
The other way round: manufacturing as an extension of services in small island states
Asia Pacific Viewpoint, 1998
Try valiantly though they might, small (often island) territories cannot possibly follow the hard-and-fast logic of industrialisation marked out for them by larger economies. Instead, they have worked out for themselves an alternative resort to manufacturing industry; they have done so on the basis of a pragmatism in part derived from the handicaps imposed by the architecture of global capitalism and colonialism. This`hands on' approach involves: (1) the exploitation of the rentier status of a microstate as a base or platform for`merchandise'; (2) the provision of goods (apart from services) for privileged export purposes, particularly aimed at captured markets (such as tourists and small state diasporas); (3) the expansion into small, knowledge-based industries; and (4) the parallel preservation of part-time small scale, cottage industry, often in relation to self employment. In all four cases, the common denominator and main argument proposed is that manufacturing in micro-states is best seen as an extension of services, rather than the other way round as is generally proposed.
GLOBALIZATION CHALLENGES FOR SMALL ISLAND DEVELOPING STATES
2007
This thesis is dedicated to Paolo Benassi, who spent one inspiring year with me on the islands of Fiji. He always helped me to view the world from a variety of perspectives and enlarged my spirit of adventure. Furthermore, I want to thank my mother Brigitte Augustin and my sister Christina who always supported and helped me to find my own way.
Lessons from the Unfinished Agenda of a Small Developing Economy Under Trade and Structural Reforms
Journal of International Development, 2011
This article examines the issue of trade reforms confronting many African Caribbean and Pacific countries such as Fiji, which are set to lose their European Union sugar price subsidy at the end of 2007. It was found that attempts to offset the adverse impacts of the subsidy removal by targeting to improve the performance of any particular sector are counterproductive. Although the optimal policy for Fiji is a broad-based diversification of exports, it is further argued that small developing economies need to address supply-side constraints so that structural reforms can effectively sustain the economy's competitiveness in an increasingly globalised world economy.