Exploring the oil price and real GDP nexus for a small island economy, the Fiji Islands

The goal of this paper is to examine the relationship between real GDP and oil prices using time series data for the period 1970–2005. Our main finding is that an increase in oil has a positive, albeit inelastic, impact on real GDP, inconsistent with the bulk of the literature. We argue that this is not a surprising result for the Fiji Islands. Our central argument focuses on two aspects of the Fijian economy: (1) the fact that actual output in Fiji has been around 50 per cent less than potential output; thus, Fiji's actual output has not reached a threshold level at which oil prices can negatively impact output; and (2) a rise in oil prices filters through to value added, which in turn is reflected in a larger actual output.

Macroeconomic impact of natural disasters on a small island economy : evidence from a CGE model

Natural disasters are common in the Pacific Island countries. Fiji has been affected by many of these disasters. The most recent cyclone exerted substantial damage to infrastructure, agricultural and industrial activity in Fiji. The aim of this article is to incorporate these damages into Fiji's computable general equilibrium model and examine the short-run macroeconomic impact. Among the key results, it is found that cyclones negatively impact private income, consumption, savings, real GDP and real national welfare.

Aid and growth in small island developing states

Aid flows to small island developing states (SIDS) are enormous by international standards when compared to the size of their economies. Yet these countries face many severe economic challenges and many have experienced declines in the living standards of their citizens. This paper looks at the impact of aid on what is treated as a necessary precondition for improvements in living standards, typically defined. Specifically, it examines the impact of foreign aid on real per capita income growth in SIDS by econometrically analysing cross-country data for the period 1980 to 2004. A variety of econometric techniques and measures of aid are used. Results suggest that foreign aid is effective at spurring economic growth but with diminishing returns.

Vulnerability, trade, financial flows and state failure in small island developing states

Small Island Developing States (SIDS) are very different to other developing countries. Relative to GDP they have the highest levels of foreign trade and aid receipts of all developing countries. Remittances from abroad are a far more important source of income for SIDS, and some depend very heavily on export revenues. The quality of governance varies tremendously among SIDS, they are over-represented among countries classified as fragile states and many are prone to state failure. These and other factors combine to make SIDS highly vulnerable to external economic shocks. Achieving development in SIDS is as a consequence an especially complex task that requires an understanding of the roles played by aid, trade, remittances and governance in these countries. This paper looks at these issues, along with providing various stylised facts about SIDS. In so doing it serves as a background and broad contextual setting for the papers that follow in this Special Issue on 'Fragility and Development in Small Island Developing States'.

Tourism, congestion, taxation, and strategic interaction

This paper examines the strategic interaction between firms and governments in two Small Island Tourism Economies (SITEs). In a situation where congestion can threaten the viability of tourism industries in SITEs, we highlight the role of two factors that determine the distribution of tourists across SITEs: whether the tourism market is vertically or horizontally differentiated, and the extent to which tourists care about congestion. Under these circumstances, counterintuitive results are possible: congestion in a SITE may rise in response to tourists caring more about congestion in the SITE. Moreover, maximising tourism tax revenue emerges as a dominant strategy for governments.

Levy grant training scheme evolution : focus on Fiji and Singapore

This thesis examines the evolution of national training policy in Fiji since 1973 with a particular emphasis on the national levy-grant scheme that was introduced in Fiji in that same year. Developments in the Fiji National Training Council (FNTC) levy-grants scheme since its inception, including substantive amendments to the legislation in late 2002, form part of the scholarship. The thesis will provide an analytical narration of the training policy objectives and their transformation over a time span of almost three decades in the context of a small island nation. To inform this study, it was considered essential to compare the Fiji experience of levy grants schemes with other levy grants scheme. The author decided to use as the focal comparative benchmark the case of the Skills Development Fund (SDF) in Singapore. The SDF has been increasingly portrayed, by the World Bank, the International Labour Organisation and other influential agencies, as the best practice case when it comes to managing a training levy grants scheme. The thesis adopted a qualitative approach that utilized elements of case study, historical research, and key person interviews. The challenges of doing 'insider* research were explored because of its pertinence to the study. Because the study also involved the comparison of the policy experiences of two distinct countries, it was imperative to consider the issues and challenges of undertaking comparative research with particular reference to training matters- Given that training is often enmeshed with other human resources management issues, cognisance was taken of some of the broader debates in this regard. Following consideration of the methodological issues, the research paper explores the objectives of national training strategies and, in particular, issues relating to national competitiveness and skills development. The purpose is to situate the issue of training and skills development within the broader discourse of national development. Alternative approaches to the strategic role of training are considered both at the national and organisational level and some of the classic and current debates surrounding human capital investment are visited. The thesis then proceeds to examine the forms of, and rationale for government interventions in the area of training. One of the challenges both in practice and theoretically is to arrive at a consensual definition of training because of the constantly evolving context and boundaries in which training policies are fashioned. This provides the setting to examine the role that governments can and do play in skills development and how levy-grant schemes, in particular, contribute to the process. Three forms of levy grants schemes are identified and examined: levy-generating; levy-exemption; and levy-grant and reimbursement schemes. The levy-grant and reimbursement variant is the basic thrust of this thesis. In this regard, the UK experience with the levy-grant system from 1964 to 1981 is also reviewed. Some of the issues in relation to training levies are scrutinized including the levy as a sheltered source of training finance, levy rates, duration of levy, impact of levy on the quality and quantity of training, benefits to small businesses, links between training and strategic business objectives, repackaging of training to qualify for grants, and the process by which training levy policies are devised. In looking at the policy formulation, it was necessary to unpack the processes involved and explore the role of the state further. In relation to policy development and implementation, the consultation processes, role of bureaucrats, the policy context, and approaches to policy transfer are examined. In looking at the role of the state in policy development, the alternative roles of government are explored and the concepts of the 'developmental state' and the 'corporatist state* evaluated. The notion of the developmental state has particular relevance to this study given the emphasis placed by the Singaporean government on human resource development policies. This sets the scene for a detailed examination of the role of levy-grant training schemes in Fiji and Singapore. The Skills Development Fund in Singapore was developed as an integral component of national economic policy when the Singaporean government decided to break out of the 'low-skills' trap and move the economy towards a higher value adding structure. The levy-grant system was designed to complement the strategy by focusing on upgrading the skills of employees on lower incomes, the assumption being that employees on lower remuneration were more likely to need skills upgrading. The study notes that the early objectives of the SDF were displaced when it was revealed that the bulk of SDF expenditure was directed at higher level supervisory and management training. As a result, the SDF had to refocus its activities on small and medium enterprises and the workers who were likely to miss out on formal training opportunities. The Singaporean context also shows trade unions playing a significant role in worker education and literacy programmes financed under the SDF. To understand this requires some understanding of the historical linkages between the present Singaporean government and trade union leadership. Another aspect of the development of the SDF has been the constant shifting of the institutional responsibility for the scheme. As late as September 2003, the SDF was again moved, this time to the newly created Singapore Workforce Development Agency, with the focus turning to lifelong learning and assisting Singaporeans who are unemployed or made redundant as a result of the economic restructuring. The Fiji experience with the FNTC scheme is different. It evolved in the context of perceived skills shortages but there was a degree of ambiguity over its objectives. There were no specific linkages with economic policy. Relationships with other public training institutions and more recently, private training providers, have been fraught with difficulties. The study examines the origins of the policy, the early difficulties including perceived employer grievances, and the numerous external assessments of the Fiji levy-grant scheme noting that some of them were highly critical. The thesis also examines an attempted reform of the scheme in 1992-93 that proved unsuccessful and the more recent legislative reforms to the scheme in 2002 that have expanded the role of the scheme to encompass, inter alia, national occupational standards and accreditation activities. The thesis concludes by comparing the two schemes noting that the SDF is well entrenched as a policy instrument in Singapore whilst the FNTC is facing a struggle to assert its legitimacy in Fiji.

An empirical analysis of sugarcane production in Fiji, 1970-2000

Fiji is a small island country in the South Pacific. Sugar is its oldest industry, being in the vanguard of economic growth and development for over a century. Today the oldest industry, not only in Fiji but also in the South Pacific Island countries, is shrivelling and is poised on the precipice of collapse. The literature to date has singled out expiring land leases and the inability of the government to resolve this issue as the key to the current calamity. This paper aims to estimate a sugarcane production model for Fiji, delineating the short-run and long-run determinants. It expands the Cobb-Douglas production function in specifying the sugarcane production model and uses time series data (1970-2000) in estimating it. The major findings are that area harvested and fertiliser (capital), labour force and prices paid to sugarcane farmers have made positive contributions to sugarcane production in both the short- and long-run. The finding on the statistical significance of area harvested has direct relevance to the current land problems in Fiji. It is envisaged that the results will appeal to Fijian policy makers and that a speedy solution to the problem of expiring and non-productive use of sugarcane land will be achieved.

Achieving growth in the Pacific islands : an introduction

The Small Island Developing States (SIDS)1 in the Pacific, spread out over an area of 30 million square kilometres of ocean, and home to over 9 million people, face a complex and unique set of development challenges. As small, highly open economies they are particularly susceptible to external shocks, including fluctuations in import prices and export earnings in particular. Remoteness from major ports and export markets, low levels of connectivity with the outside world and susceptibility to natural hazards further complicate matters and have resulted in the Pacific islands being amongst the most vulnerable economies in the world. In spite of their increasing integration into global markets, most face further challenges owing to very limited absorptive capacities, limited resources, inadequate technology, lack of infrastructure and poor economic management and institutional capabilities. As a consequence, economic growth and related outcomes in most remain heavily reliant on external resources, typically including at least one of aid, migrant remittances, and foreign direct investment (FDI) (AusAID 2008 and McGillivray et al. 2008). The particular constraints and growth challenges of Pacific SIDS are too often overlooked in the development research literature. Moreover, the policy debate on how to promote and achieve growth in the Pacific islands can benefit from a deeper understanding of the nature and consequences of these often unique, combination of constraints. This Focus is devoted to development challenges facing these islands, specifically relating to the achievement of economic growth, and draws on five papers that were presented or tabled at the World Institute for Development Economics Research (WIDER) ‘Fragility and Development’ research project meeting held in Fiji in December 2006.

Climate change and heritage : responding to the crisis

Climate change poses a major threat to heritage of all kinds. Yet much of the work so far on climate change and heritage replicates aspects of the global heritage system, tending to emphasise a European perspective and focusing on the preservation of tangible heritage. We call for a broader understanding of climate change, particularly as it affects heritage in the developing world, especially that of indigenous peoples and small Island states. This is also a call for political engagement by heritage practitioners. We argue that in the struggle against climate change heritage practitioners can make a worthwhile contribution by arguing for a de-commodified form of heritage practice emphasizing the involvement of local communities and recognition of their cultural resources; that resists being coopted into economic growth strategies unless they supplant other forms of unsustainable development; that focuses on heritage as an alternative way of viewing resources and their use.

Principals' perceptions of the use of total quality management concepts for school improvement in Mauritius : leading or misleading?

As a small island country, Mauritius is relying on its human capital and innovative hi-tech industry to ensure future economic viability in the global market. As such, Mauritian education authorities are seeking ways to raise educational standards. One idea being canvassed is that Total Quality Management (TQM) could provide the framework for Mauritian school leaders to deliver imperatives for change and improvement and to achieve the aim of ‘world- class quality education.’ This paper reports the findings of a research into Mauritian principals’ current practices in line with TQM tenets and their perceptions about the usefulness or otherwise of ideas implicit in TQM. The findings indicate that whilst principals agree with current progressive notions and thinking compatible with the TQM philosophy, they have not fully translated them into their practice. The paper identifies challenges and opportunities worthy of discussion for school improvement in twenty-first century Mauritius with its high-tech, world-class ambitions.

Remittances and economic growth: larger impacts in smaller countries?

This paper examines the impact of remittances on economic growth in Small Island Developing States (SIDS). Results from variants of an empirical model suggest that while, on average, there is at best no association between remittances and growth in developing countries, there is a positive association between these variables in SIDS. This finding holds for SIDS in sub-Saharan Africa and the Pacific but not for those in Latin America and the Caribbean. Relationships between remittances, economic volatility, and household labour supply are offered as reasons for these findings.