Opinion & Commentary
Pacific states stagnate
Nearly all the Southwest Pacific islands have recorded another year of per
capita income decline in 2003. The exceptions are Samoa, and modest growth in
Fiji and Tuvalu.
And for the majority of Pacific islanders living standards continued to slide
for the ninth consecutive year in the first half of 2004.
The hard work of women in gardens and orchards, and fishing, has maintained food
supplies, but at the margin nutrition is becoming a problem.
Villagers are being denied decent houses, education and health, and above all
the incomes that would make 21st century standards of living possible.
Many adult men have never had a job or an income.
Increasing crime and violence is the inevitable outcome. For many emigration is
the only escape.
The Pacific's weak export performance is central to its failure to grow. Papua
New Guinea's merchandise exports in 2000 were $555 a head; Botswana's were
$5076. While Botswana's per capita income was half of Papua New Guinea's in
1970, it is now more than three times the Pacific nation's.
Fiji's merchandise exports per head were $1030 in 2002 while those of Mauritius
were more than $1580. In 1970, Mauritius was much poorer than Fiji _ now it has more than double Fiji's per capita income.
Merchandise exports per head were only $476 for the Solomons, $190 for Vanuatu,
$119 for Samoa, $143 for Tonga, $159 for Kiribati, $300 for the Federated States
of Micronesia, and $715 for the Marshalls.
Thailand's exports were more than $1580 and Malaysia's more than $6830 per head.
More recent figures show widening per capita export and income disparities.
Samoa has seen the benefit of one large export-oriented manufacturing plant.
Together with remittances, it has enabled a modestly reforming economy to post
positive per capita income growth for five years.
In most other Pacific states, notably in Papua New Guinea, exports have
stagnated and declined and so has per capita income.
The Southwest Pacific is rich in mineral, agricultural, timber and fish
resources. It is well located close to the fastest growing markets of Asia.
Freight and communication costs have plummeted in the past 20 years, giving the
Pacific unparalleled access to potential customers.
The Pacific needs economic reforms and the rule of law to enable its exports to
grow. Mineral exploration and investment depend on security. Mineral taxes could
pay for roads, ports, schools and medical centres if they weren't wasted and
stolen.
Farmers have to be able to get produce to markets on safe roads. Ripping out
timber illegally, without replanting and reinvesting, leaves behind barren
wastes and defrauds future generations.
But not only do the Pacific states have to tackle fundamental reforms to reverse
their downward economic slide _ they have to deal with streams of extremely bad
advice.
Marxists have apparently learnt nothing from the collapse of communist countries
that not only repressed their citizens unconscionably, but also forced them to
live in material and social misery. Communist economies were closed. They
decried international trade and investment, missing out on the trade creation
that led to booming development for the Asian `tigers' and now for China and
India.
Marxists now fear `globalisation' because it enables the poorest villages to see
how well they could be living, it enables people to judge how effective their
governments are in delivering growth and it shows how much better off people are
in liberal economies than in regulated ones that are closed to trade.
The European Union is spending $23.8 million (of so-called `aid') to encourage
men in suits to create a Pacific Islands Countries Trade Agreement (Picta) to
follow a `fortress Europe' model. This will be of no benefit to villagers.
`Aid' is once again going to fund meetings of the wealthy and influential. The
industrial countries that formed the European Union were able to increase their
manufacturing economies of scale to significant levels; more importantly they
gained from simultaneously liberalising trade with the rest of the world.
Developing country trade regional arrangements such as Caricom (Caribbean
community), have imposed high costs on their members through trade diversion.
They have all failed or, like Mercosur (Latin American southern common market)
are now failing.
Creating protected manufacturing industries for a small regional market has
proved costly worldwide. Picta is wasting resources that could be used by those
island states that want to end 30 years of stagnation to open to trade, increase
their exports and raise living standards.
* National Australia University Emeritus Professor Helen Hughes is a Senior
Fellow of the Sydney-based Centre for Independent Studies.
