Are Island Economies Viable?

Conference of Pacific delegates in the 1960s.

We all know that the Micronesian island nations are having problems building their economies.? Palau might be doing better then FSM and the Marshalls, but they all seem to be heavily dependant on Compact funds from the US.? Are the US-related island nations north of the equator doing worse than the rest of the Pacific Island nations?? Perhaps because?they’ve?become fat and lazy due to the Compact funds?

Last year, working with two Fordham graduate students, I gathered as much economic data about the island nations as possible so that we could compare the Micronesian nations with the rest.? When looked at this way, the Micronesian nations don?t appear to be doing any worse than their neighbors to the south.

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. But these limitations?scant resources, small population, distance from markets?may be more than just incidental bumps in the road.? When we look at the record, we find that none of the island nations with the exception of Fiji has been very successful in developing a self-reliant economy. Having abundant exports doesn’t always translate into a strong economy either, since the two most richly endowed countries in the region (Papua New Guinea and the Solomon Islands) are among the poorest in per capita income.

Most of the nations in the region, though, are resource?poor and so have had to turn to other strategies for economic development. They include tourism, rentals, exported services and remittances from migrants to other countries. While these have provided a steady stream of income for some of the Pacific Island nations, they have not been able to turn these economies around.

Only one of the Pacific Island nations (Fiji)? is close to full economic self?reliance at present, while one or two others may be within striking distance. The rest?and they are the majority?seem to have no real prospects for full self?reliance.? To become fully self-sustaining, Palau would have to increase its national income by nearly 150%, FSM by 200%, and the Marshall Islands by 250%.? But even this is easy compared to some nations. Tuvalu, Kiribati and Nauru would need to multiply their economies by factors of at least five to become self-reliant. Even the Cook Islands and Samoa would need to double their present economies, and the other nations would need to grow their economies between 33% and 70% to pay their own way.

What does all this mean?? Perhaps the larger nations with a stake in the Pacific, such as Australia, Japan, the United States and China, will have to accept the fact that economic dependence is more than a temporary condition for most of the island nations. Foreign aid may not be just a stopgap to achieve economic self?sufficiency, but a permanent requirement for those nations that will always come up short of this goal.

To read the entire article?Pacific Island Nations: How Viable Are Their Economies??go to this link:?

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About the author

Francis X. Hezel, SJ
Francis X. Hezel, SJ

Francis X. Hezel, SJ, is a Jesuit priest who has lived and worked in Micronesia since 1963. At different times he has served as high school teacher, school administrator, pastor, and regional superior to the Jesuits of Micronesia. He spent thirty years directing the Micronesian Seminar, a non-profit, non-governmental organization based in Pohnpei, Micronesia. He has written and spoken widely about social change and its impact on island societies. He has also written several books on Micronesian history, including The First Taint of Civilization, Strangers in Their Own Land, and The New Shape of Old Island Cultures. His most recent book, Making Sense of Micronesia: The Logic of Pacific Island Culture, is available through University of Hawaii Press.