Download Pacific development in the long run

Pacific Islands Development in
Long-run Perspective
Geoff Bertram
Institute of Policy Studies
February 2011
1
Top-down versus bottom-up
• Seen from above, ‘resilience’ is a set of qualities that aid donors want
island economies and societies to exhibit – outcomes to be purchased.
• Seen from below, ‘resilience’ (including adaptability, flexibility,
opportunism) has always been the fundamental long-run characteristic of
Pacific Island communities, from way back before European contact.
• Quite a few metropolitan policymakers are still preoccupied with
– blocking some of the consequences of bottom-up resilience,
– denying elements of its economic logic, and
– imposing preconceived (top-down) views of what resilience looks like or should
look like
• A recurrent failing of aid agencies and metropolitan governments is to
impose a particular top-down conception of what it means to “develop”,
and to make aid conditional upon a shadow-play of compliance with this
vision by the recipients.
2
To get a sense of how bottom-up resilience works, evidencebased analysis is a good place to start
•
Rather than telling island peoples or states how to “develop sustainably”, or what
to develop, watch what they have actually done within the limits of the external
constraints placed upon them
•
One early casualty would be the degree of emphasis and expectations placed by
large-country analysts on commodity trade and trade agreements. Export-led
growth has had a bad century in the Pacific, and the next century’s prospects
hinge more on regulatory capacity than free-trade treaties
•
Another casualty would be simplistic claims about the benefits of shifting
resources from the public sector to the private sector (getting the public sector
working more effectively is another matter)
•
Another would be several core assumptions in mainstream development thinking
about decolonisation and the virtues of sovereign statehood
•
My own work has tended to focus on gathering comparative numbers and using
them to chart the big trends in islander development – not only in the Pacific but
worldwide.
3
“Sustainable development” is a term badly in need of careful
unpacking.
•
Whenever anyone recommends it or appeals to it they should be asked to explain
what exactly is “developing”, what it means to “develop”, what mechanism is to do
the “sustaining”, whether this mechanism is politically acceptable or not, and
which structural options are being ruled out by use of the term.
•
Unless very specific content is added, the words are mere rhetoric which confuse
and conceal.
•
From my perspective, what is to be developed is the material welfare, life chances
and cultural identity of each people, seen holistically as a people without regard to
national borders unless and until those borders clearly have become effective
dividing lines within the people.
•
Development is sustainable so long as material welfare, life chances and cultural
cohesion are maintained or enhanced through time without running up large
collective balance-sheet liabilities that at some later stage are apt to prove
destructive.
•
This means that certain indicators often appealed to in the name of
“sustainability” are in fact often irrelevant – especially “trade imbalance”, “capital
outflow”, “brain drain”, and that ugly expression, “aid dependence”.
4
Conceptually one ought to be thinking of “viability” and
“sustainability” in terms of socioeconomic units – often
transnational units - rather than “national” ones.
• Much of the ‘modern sector’ of any Pacific island people with
migration outlets will lie offshore, inhabited by the diaspora of
entrepreneurs and wage-workers which controls a large share of
the financial and human capital of the people as a whole.
• Remittances form a direct cashflow link between the diaspora and
the home population, but other links are equally important for
long-run growth – especially patterns of return migration, backand-forth visiting, communication via media channels, and
accumulation of financial assets in metropolitan banks and share
registers.
• National-accounts aggregates prepared for the home-resident
population in isolation not only ignore much of the actual (but
offshore) modern sector; they also miss the degree of success in
preserving non-material wealth in the form of culture and human
capital while raising material welfare.
5
• Living standards need not depend upon production in the same
locality; they can be fully “sustained” from sources that look
“external” to the national-accounts statistician, so long as those
sources are firmly internal to the transnational ethnic unit.
• The home-resident pole’s living standards become unsustainable
only if national borders are used to blockade and divide the people
as a whole. The ethnic unit should be accounted on the same P&L
and balance-sheet basis as any transnational enterprise.
• The most obvious gap in the Stiglitz-Sen report on revising the
traditional national-accounting framework is that they focus on
measuring happiness within geographically-bounded territories
rather than for peoples located across multiple territories.
6
A paradox for Adam Smith and Karl Marx:
“Unproductive” Capital is Productive;
“Productive” Capital is Unproductive
• Infrastructure provided direct use values: schools,
hospitals, roads, reef passages, ports, airports, water
supply, radio links, government buildings …..
• Development-project-related capital was moribund, lossmaking, often idle…
• The large weight of the public sector in onshore economies
is therefore logical, as is the tendency for the private sector
to be located offshore in the diaspora, hence off-the-radar
in traditional national accounts
7
Migration-adjusted national income accounting (bringing
diasporas into the statistics) is in its infancy and is a rich area
for empirical macroeconomic research
• Kenichi Ueda, Kenichi, 2002, Implications of Migration
on Income and Welfare of Nationals, International
Monetary Fund Working Paper No. 02/215
• Roberto Cardarelli and Kenichi Ueda, “Domestic and
Global Perspectives of Migration to the United States”,
in United States: Selected Issues, IMF Country Report
04/228, July 2004, pp.16-29.
• Michael Clemens and Lant Pritchett, “Income per
Natural: Measuring Development for People Rather
than Places”, Population and Development Review
34(3): 395-434, September 2008
8
Outline of the rest of the paper
• How imports are funded (more or less sustainably….)
• Importance of remittances
• How population (including labour, human capital, and entrepreneurship) is
allocated across geographic space => island peoples, their societies and
economies, are transnational in scope
• Sovereignty is like a tax which places a deadweight burden on prosperity
=> some sacrifices of sovereignty can have economic and social payoffs
• Ignoring or downplaying the development experience and performance of
sub-national jurisdictions is a big analytical mistake
• Some long-run charts on New Zealand’s relationships with the Pacific
9
In terms of the traditional national-accounts approach, imports
rule
• The ability to fund imports of goods and services is the key means
to the end of sustaining private and public consumption, and hence
material welfare, within the geographical territory of an island
‘state’ (including SNJs)
• Getting the imports at least cost (in terms of leisure and social
capital) is the strategic game. There are several ways to work on
getting the constraint relaxed in practice. Commodity exports are
way down the list, for good reason
• The place to start is with the relationship of imports to well-being,
and the identification of the components of well-being that are not
sustainable by imports.
• Much of the latter has to do with “the village”, its way of life and
the problem of how important it is to hold young people in the
village economy, and for players in the village to have cash
opportunities for sale of products outside.
10
Imports are fundamental to onshore living standards but have to be paid for:
Imports and GNI per capita
80 small islands worldwide
100,000
GNI/GDP per capita
10,000
US
Virgin
Islands
1,000
100
Asserted
direction of
causality
10
1
1.0
10.0
100.0
1,000.0
10,000.0
Imports of goods and services per capita
100,000.0
11
Back in 1984 Ray Watters and I discovered the
“jaws effect” in some small Pacific islands
Imports had become disconnected from
merchandise exports as the colonial era came
to an end
12
Cook Islands trade balance
Source: Geoff Bertram, ‘Sustainability, Aid, and Material Welfare in Small Pacific Island Economies, 1900-1990’, World Development, 21,2 (February 1993), p.250..
13
Niue trade balance
14
Source: Geoff Bertram, ‘Sustainability, Aid, and Material Welfare in Small Pacific Island Economies, 1900-1990’, World Development, 21,2 (February 1993), p.250..
Tokelau trade balance
15
Source: Geoff Bertram, ‘Sustainability, Aid, and Material Welfare in Small Pacific Island Economies, 1900-1990’, World Development, 21,2 (February 1993), p.250..
Tuvalu trade balance
16
Source: Geoff Bertram, ‘Sustainability, Aid, and Material Welfare in Small Pacific Island Economies, 1900-1990’, World Development, 21,2 (February 1993), p.250..
Kiribati trade balance
17
Source: Geoff Bertram, ‘Sustainability, Aid, and Material Welfare in Small Pacific Island Economies, 1900-1990’, World Development, 21,2 (February 1993), p.250..
For us the question this raised was: how was the observed gap
being funded
• Not by overseas borrowing – the Pacific has not been a debtcrisis-prone region (the Cook Islands 1988-1996 was the
exception to prove the rule)
• Only in a few cases did services exports pick up the funding
burden
• In the Pacific, a strong “commercial balance” signals either
extreme poverty (PNG, Vanuatu) or special cases (Fiji,
American Samoa)
18
How could the trade “jaws” be sustainable without borrowing to
fill the gaps?
• Our answer in 1984 was MIRAB
• Two stock-flow relationships were the locomotives of these
economies:
– MIR: Stock of overseas migrants => flow of remittances
– AB: Flow of aid => stock of public sector employees
(“bureaucrats”)
19
60
40
PNG
PNG
PNG
Goods and
20
Services
0
Balances of
Pacific Island
Economies
1975-2004
American SamoaFiji
PNG
Fiji
Vanuatu
Fiji
-20
% of imports
Seventeen
Cook Islands
Solomons
-40
Solomons
Vanuatu
Fiji
Fiji
Solomons
Vanuatu
Hawaii
Hawaii
American
Samoa
PNG
Kiribati
Vanuatu Samoa
American
Fiji
American Samoa
American
Kiribati Samoa
Cook Islands Palau
Vanuatu
PNG
Kiribati
Solomons
Kiribati
-60
T onga
Solomons
Samoa
-80
Samoa
Cook Islands
T
onga
Samoa
Cook Islands
Guam
Fr Polynesia
T uvalu
-100
Samoa
Palau
Marshall Islands
Samoa
FSM
Solomons
T
onga Islands FSM
Marshall
T
uvalu
T
onga Islands Fr Polynesia
Marshall
T
uvalu
ongaIslands
Guam
Cook
Fr
Polynesia
Marshall Islands Guam
Samoa
Fr Polynesia
Cook
FSM Islands
FSM
Fr Polynesia
T onga
Guam
-120
T uvalu
-140
T uvalu
-160
1975-79
1980-84
1985-89
1990-94
1995-99
2000-04
20
Source: Geoff Bertram, “Economy”, in Rapaport, M. (ed) The Pacific Islands: Environment and Society, 2nd ed 2011.
• Rule 1: don’t get hypnotised by the trade balance (this
is the mistake most outside analysts instantly fall into).
• Commercial trade deficits are common and sustained,
therefore (to date at least) sustainable.
• None of the countries in that diagram has run up
unsustainable international debt – instead, they have
sustained their import capacity by means other than
conventional exports.
• But it’s true there is a funding constraint driving the
market solutions we observe
21
There’s a solid number of MIRAB cases identified
in the literature now
• Cook and Kirkpatrick (1998): FSM
• Poirine (1998): French Polynesia, US Virgin Is,
Guadeloupe, Martinique, St Perre et Miquelon,
Mayotte
• Bertram (1999): Samoa, Tonga, Easter Island, Palau,
Marianas
• Royle (2001): St Helena, St Kitts, and the Marshall
Islands
• McElroy & Morris (2002): Cape Verde, Comoros, Sao
Tome & Principe
22
But MIRAB is on;y one of a rich menu of strategic
options: sustainable, but optimal in only a few cases
• Two dramatic success stories of transition out
of MIRAB status are the Cayman Islands and
the Cook Islands
• Consider the Cook Islands case by extending
my earlier jaws chart:
23
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
1908
1904
1900
1896
1892
NZD million deflated to 2000 prices
Cook Islands merchandise trade, real values at 2000 NZ prices
250.0
200.0
150.0
Merchandise imports
100.0
Merchandise exports
50.0
0.0
24
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
1908
1904
1900
1896
1892
NZD million deflated to 2000 prices
Cook Islands: Financing of imports
250.0
200.0
150.0
Tourism
Remittances
Aid
100.0
Merchandise imports
Merchandise exports
50.0
0.0
25
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
1908
1904
1900
1896
1892
NZD million deflated to 2000 prices
Cook Islands: Financing of imports
250.0
200.0
150.0
Tourism
Remittances
Aid
100.0
Merchandise imports
Merchandise exports
50.0
0.0
26
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
1908
1904
1900
1896
1892
NZD million deflated to 2000 prices
Cook Islands: Financing of imports
250.0
200.0
150.0
Tourism
Remittances
Aid
100.0
Merchandise imports
Merchandise exports
50.0
0.0
27
Looking around the world there are numerous case studies of
island economies which do not exhibit MIRAB characteristics.
• Baldacchino (2004) and PROFIT. Five dimensions of local jurisdictional
autonomy:
– P (people considerations): powers over movement of persons
(including issues of citizenship, residence and employment rights);
– R (Resource management): powers over environmental policy,
especially regarding natural resources;
– O (overseas engagement and ultra-national recognition):the exercise
of “para-diplomacy” by sub-national governments acting as though
they are sovereign states
– FI : finance, insurance and taxation;
– T (transportation): powers over access by air and sea.
• McElroy (2004) and SITEs: “small, tourist-dependent islands represent
[an analytically] useful cluster or special case of island development.”
28
By 2009 Godfrey Baldacchino and I had the
following map of the world’s islands in terms of
how they paid their way*:
* From G. Baldacchino and G. Bertram, ‘The beak of the finch:
insights into the economic development of small economies’,
The Round Table, 98, 401 (April 2009), pp.141–160.
29
MIRAB:
MIRAB/SITE:
SITE:
French Polynesia, Guadeloupe, Martinique,
Palau, Pitcairn, Reunion
S
AB
M
IR
ES
PROFITs
MIRAB/PROFIT:
Greenland
Nauru
New Caledonia
Solomon Islands
St Helena
Bali, Bonaire, Canary Islands,
Cook Islands, Curacao, Guam,
Hawaii, St Maarten,
Turks & Caicos
SITE/PROFIT
T
SI
Cape Verde
Comoros
Dominica
Haiti
Kiribati
Marshall Islands
Mayotte
Micronesia
Montserrat
Samoa
Sao Tome & Principe
St Pierre et Miquelon
Tokelau
Tonga
Tuvalu
Wallis & Futuna
PROFIT
American Samoa, Bahrain, Falkland Islands,
Faroe Islands, Guernsey, Iceland, Isle of Man,
Jersey, Mauritius
Anguilla
Antigua & Barbuda
Aruba
Bahamas
Barbados
Bermuda
British Virgin Islands
Cayman Islands
Cyprus
Fiji
Grenada
Maldives
Malta
Marianas
Seychelles
St Kitts & Nevis
St Lucia
St Vincent & Grenadines
US Virgin Islands30
Vanuatu
• What’s special about small-island speciation is that islands
make evolutionary switches around the diagram
• Niches are partly exogenous and partly endogenous (created
by strategic behaviour)
• Selection is partly by chance, but largely by collective
response to incentives
31
Sustaining imports requires some source of funding, but not
necessarily “trade balance” with exports ramped up to equal
imports.
• Balance-of-payments current account equilibrium
and reasonable living standards can be sustained
with very low commodity exports, as Tuvalu
dramatically illustrates.
• Diagnosis requires that the funding flows be
identified, quantified, and viewed from a dynamic
long-run perspective. A recent attempt at doing
this is Bertram and Poirine (2007)
32
Bernard Poirine and I did a number-crunching
exercise for 71 island economies to produce a more
detailed story*
Conclusion: there are many ways to play the game
depending what hand has been dealt….
(arrows in each diagram identify Pacific economies)
‘Island Political Economy’, Chapter 10 in Baldacchino, G. (ed.) A World of
Islands, Institute of Island Studies, University of Prince Edward Island,
2007, pp.325-377.
33
% of total imports
300
250
200
150
100
50
0
-50
-100
-150
-200
Northern Marianas
Bahrain
US Virgin Islands
Malta
Aruba
Falkland Islands (Islas
Nauru
Faroe Islands
Solomon Islands
Iceland
American Samoa
Small Island Export Economies at 2000
Residual
Aid
Remittances
Tourism
Merchandise exports
34
-300
Maldives
Palau
Anguilla
British Virgin Islands
Antigua and Barbuda
Bahamas, The
Saint Lucia
Cayman Islands
Mayotte
Guam
Cook Islands
Turks and Caicos Islands
% of total imports
Small-island SITEs at 2000
400
300
200
Residual
100
Aid
0
-100
Remittances
-200
Merchandise
exports
Tourism
35
Fully evolved MIRABs at 2000
120
80
Residual
60
Merchandise exports
Tourism
40
Aid
Remittances
20
Cape Verde
Tuvalu
Comoros
-20
Samoa
0
Tonga
% of total imports
100
36
-800
Tokelau
Niue
Timor L'Este
Sao Tome & Principe
Marshall Islands
Wallis and Futuna
Montserrat
Greenland
Micronesia
Dominica
Saint Pierre & Miquelon
Reunion
French Polynesia
Martinique
Guadeloupe
% of total imports
Small Aid-led island economies at 2000
800
600
400
Residual
200
Remittances
0
Tourism
-200
Merchandise exports
-400
Aid
-600
37
‘Residual-led” (= offshore finance) cases at 2000
140
120
Remittances
80
Merchandise exports
60
Aid
40
Tourism
20
Residual
0
Vanuatu
Cyprus
Saint Kitts and
Nevis
-40
Kiribati
-20
Bermuda
% of total imports
100
38
Nine strategic orientations: welfare outcomes
2.00
ICE
SIN
ARU
NZL
USV
MLT
PUE
Index of income and life expectancy
1.80
1.60
NMI
1.40
1.20
1.00
0.80
SRI
DMR
ST H
MDG
SOL
0.60
MON
CUB
SEY
MAU
JAM
FIJ
CAN
NCA
BAH
GRN
REU
NIU
ST P
DOM
T UV
RMI
FSM
WAL
T OK
MAY
ST L
PAL
CKI
GUM
T UR
BAR
CYP
NT A
ANG
ANT
ST K
ST V
BAH
T RI
GRE
BER
CAY
BVI
NAU
MAL
TUV
VAN
SAM
T GA
KIR
0.40
0.20
HAI
MAR
FRP
GUA
SPM
FAR
FAL
HAW
AMS
COM
0.00
Primary
exports
with aid
and/or
remittance
support
Nongeostrategic
MIRABs
T ourism
plus
exports
Geostrategic Moderateaid
impact
tourism
Geostrategic
rent with
exports
Highvalue
exports
Highimpact
tourism
Offshore
finance
plus
tourism
Bertram and Poirine 2007:39361
Remittances are not everything, but they’re fundamental to
some Pacific economies
•
Samoa:
– the flow of remittances captured by the official statistical agencies is currently around US$50
million (NZ$80 million) a year.
– Allowing for informal remittances not appearing in the statistics, the true total flow from New
Zealand to Samoa probably lies between $100 million and $150 million a year
– Compare this with New Zealand imports from Samoa of $3-4 million and bilateral aid of $8-9
million a year. Trade and aid, in other words, play only a trivial role in economic relationships
between New Zealand and Samoa, while Samoans themselves operate the really important
linkage.
•
Tonga:
– Estimated formal remittances from Tongans in New Zealand are over US$30 million (NZ$50
million), suggesting that the total (including unrecorded transfers) is likely to be in the range
$80-100 million a year,
– Compare this with New Zealand’s imports from Tonga of around $2 million and aid of $17
million in 2008. Like Samoa, Tonga’s main economic link with New Zealand currently is via
remittances.
•
New Zealand’s balance of payments statistics provide no estimates of remittance
flows! (The Asian Development Bank has called attention to the gap.)
40
How population (including labour, human capital, and
entrepreneurship) is allocated across geographic space
•
Island peoples form unified entities spanning transnational space
•
Diasporas are integral parts of many island economies - hence “modern sectors”,
“private sectors”, “skilled employment”, etc, occur within the community-defined
economy but outside the territorially-delimited “nation”.
•
The geographic allocation of resources represents a dynamic equilibrium
•
In the labour market, a fundamental piece of information is the income level of the
diaspora relative to the income level of the home population. Once corrections
have been made for frictional variables, age, level of education and so on, the
income relativity between the diaspora and the home labour force should exhibit a
threshold differential at which migration accelerates/decelerates.
•
In a migratory equilibrium, the income relativity sits exactly on this threshold. So
we should be in a position to estimate income levels of people from a uniform
ethnic group across transnational space, and hence to characterise the
equilibrium. [For methodological pointers see the work of George Borjas – e.g.
Imperfect Substitution between Immigrants and Natives: A Reappraisal George J.
Borjas, Jeffrey Grogger, and Gordon H. Hanson NBER Working Paper No. 13887,
March 2008]
41
• In the labour market, a fundamental piece of information is the
income level of the diaspora relative to the income level of the
home population.
• Once corrections have been made for frictional variables, age, level
of education and so on, the income relativity between the diaspora
and the home labour force should exhibit a threshold differential at
which migration accelerates/decelerates.
• In a migratory equilibrium, the income relativity sits exactly on this
threshold. We should now be in a position to estimate income
levels of people from a uniform ethnic group across transnational
space, and hence to characterise the equilibrium.
• For some methodological pointers see the work of Borjas - e.g.
Imperfect Substitution between Immigrants and Natives: A
Reappraisal George J. Borjas, Jeffrey Grogger, and Gordon H.
Hanson NBER Working Paper No. 13887, March 2008
42
Figure 1 Samoan Community by Place of Residence
600,000
Samoans resident elsewhere in
the world
500,000
400,000
Other/no detailed data, making
up the New Zealand-resident
total
300,000
EthnicSamoan residents of New
Zealand born in New Zealand
200,000
Ethnic Samoan residents of
New Zealand born in Pacific
Islands
100,000
Resident population in Samoa
1906
1911
1916
1921
1926
1936
1941
1945
1951
1956
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
0
43
Figure 2 Cook Islands Maori Community by Place of Residence
100,000
Cook Islands migrants
elsewhere in the world
90,000
80,000
Other/no detailed data, making
up the New Zealand-resident
total
70,000
60,000
Ethnic Cook Island Maori
residents of New Zealand born
in New Zealand
50,000
40,000
Ethnic Cook Island Maori
residents of New Zealand born
in Pacific Islands
30,000
20,000
Resident population in the Cook
Islands
10,000
1906
1911
1916
1921
1926
1936
1941
1945
1951
1956
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
0
44
Figure 3: Tongan Community by Place of Residence
250,000
Tongan migrants elsewhere in
the world
200,000
Hypothesised
“missing migrants”
150,000
Other/no detailed data, making
up the New Zealand-resident
total
Ethnic Tongan residents of
New Zealand born in New
Zealand
100,000
Ethnic Tongan residents of
New Zealand born in Pacific
Islands
50,000
1906
1911
1916
1921
1926
1936
1941
1945
1951
1956
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
0
Resident population in Tonga
45
Figure 4: Niuean Community by Place of Residence
30,000
Niuean migrants elsewhere in
the world
25,000
20,000
Other/no detailed data, making
up the New Zealand-resident
total
15,000
Ethnic Niuean residents of
New Zealand born in New
Zealand
10,000
Ethnic Niuean residents of
New Zealand born in Pacific
Islands
5,000
Resident population in Niue
1906
1911
1916
1921
1926
1936
1941
1945
1951
1956
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
0
46
Figure 5: Tokelauan Community by Place of Residence
10,000
Tokelauan migrants elsewhere
in the world
9,000
8,000
Other/no detailed data, making
up the New Zealand-resident
total
7,000
6,000
EthnicTokelauan residents of
New Zealand born in New
Zealand
5,000
4,000
2,000
Ethnic Tokelauan residents of
New Zealand born in Pacific
Islands
1,000
Resident population in Tokelau
3,000
1906
1911
1916
1921
1926
1936
1941
1945
1951
1956
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
0
47
Figure 6: Tuvaluan Community by Place of Residence
16,000
Tuvalu-born migrants
elsewhere in the world
14,000
Other/no detailed data, making
up the New Zealand-resident
total
12,000
10,000
Ethnic Tuvaluan residents of
New Zealand born in New
Zealand
8,000
Ethnic Tuvaluan residents of
New Zealand born in Pacific
Islands
6,000
4,000
Temporary migrants: seafarers,
students, phsophate workers
2,000
0
1906
1911
1916
1921
1926
1936
1941
1945
1951
1956
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
Resident population in Tuvalu
48
Host Countries of the Pacific-Born Diaspora
700,000
600,000
500,000
Other countries
185,290
Others
GUM
ASM
400,000
Australia 99,211
PHL
NCL
CAN
300,000
AUS
New Zealand 117,156
USA
200,000
100,000
0
NZL
USA 196,838
49
Figure 17: The Migration Transition in Seven Island Communities
Proportion of Total Community Living in Home Island(s)
100
80
Samoa
70
Tonga
60
Cook Islands
50
Niue
40
Tokelau
30
Fiji
20
Tuvalu
10
2001
1991
1981
1971
1961
1951
1941
1926
1916
0
1906
% of total
90
50
Proportion of Total Community Living in New Zealand
90.0
70.0
Samoa
60.0
Tonga
Cook Islands
50.0
Niue
40.0
Tokelau
30.0
Fiji
20.0
Tuvalu
10.0
2001
1991
1981
1971
1961
1951
1941
1926
1916
0.0
1906
% of total
80.0
51
“Carrying capacity” limits are psychological rather than physical
but appear genuine.
• So long as there is a migration outlet available, Pacific islands’ home
population has levelled off at roughly the pre-contact level (mideighteenth century) and population growth has been exported.
• Niue and Tokelau have depopulated in response mainly to ill-advised New
Zealand policies and attitudes regarding security of citizenship and
unwillingness to work on political/constitutional integration. [The ‘Realm
of NZ’ is at last getting a better press…]
• The urgency of out-migration grew rapidly in Tuvalu from the 1980s as
pre-contact population was re-established.
• Kiribati now faces an even worse Malthusian cul-de-sac, but the barriers
may be beginning to break. [Here is perhaps a case for the UK to extend
the boundaries of ‘citizenship’?]
• Smaller countries are better able to do “bottom-up globalisation” (John
Connell’s phrase) – see Figures 8 and 9:
52
Size matters
Propensity to migrate in 74 microstates with total home-born
population under 1.8 million (Botswana and less)
90.0
Pitcairn
Niue
80.0
Montserrat
60.0
Tokelau
Cook Islands
50.0
Luxembourg
40.0
American Samoa
Netherlands Antilles
Guam
Suriname
Samoa
Guyana
Timor L'Este
Barbados
Malta
Cape Verde
Cyprus
Fiji
30.0
20.0
10.0
Trinidad and Tobago
Mauritius
Comoros (!!!)
Botswana
2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0.0
0
Percent in diaspora
70.0
Total Population Including Diaspora
53
Sovereignty is a tax on material living standards
• Small island countries that are sovereign, independent nation states
tend to be less well-off than sub-national island jurisdictions (SNIJs)
• GDP per Capita in the Pacific by Political Status, US dollars, PPP adjusted,
c2000
GDP $
per
capita
Sovereign
Associated
Integrated
Region average
2,897
4,665
26,650
7,841
54
Relationship of Real Per Capita Income of Islands and their
Metropolitan Patrons, Panel Data at Five-Yearly Intervals, Log Data
Log of Island Real GDP per capita
12
11
10
Integrated
9
Associated
8
Sovereign
7
6
5
8.8
9
9.2
9.4
9.6
9.8
10
10.2
10.4
10.6
Log of Metropolitan Real GDP per capita
Source: Geoff Bertram, “On the Convergence of Small Island Economies with their Metropolitan Patrons”, World Development 32, 2 (February 2004) pp.343-364.
55
Relationship of Real Per Capita Income of Islands and their
Metropolitan Patrons, Panel Data at Five-Yearly Intervals, Log Data
Log of Island Real GDP per capita
12
11
10
Integrated
9
Associated
8
Sovereign
7
6
5
8.8
9
9.2
9.4
9.6
9.8
10
10.2
10.4
10.6
Log of Metropolitan Real GDP per capita
Source: Geoff Bertram, “On the Convergence of Small Island Economies with their Metropolitan Patrons”, World Development 32, 2 (February 2004) pp.343-364.
56
Relationship of Real Per Capita Income of Islands and their
Metropolitan Patrons, Panel Data at Five-Yearly Intervals, Log Data
Log of Island Real GDP per capita
12
11
10
Integrated
9
Associated
8
Sovereign
7
6
5
8.8
9
9.2
9.4
9.6
9.8
10
10.2
10.4
10.6
Log of Metropolitan Real GDP per capita
Source: Geoff Bertram, “On the Convergence of Small Island Economies with their Metropolitan Patrons”, World Development 32, 2 (February 2004) pp.343-364.
57
Some recent academic work on sovereignty and development
• Geoff Bertram, “On the Convergence of Small Island
Economies with their Metropolitan Patrons”, World
Development 32, 2 (February 2004) pp.343-364.
• J.L. McElroy and K.B. Pearce, “The Advantages of Political
Afiliation: Dependent and Independent Small-Island Profiles”,
The Round Table 95(386): 529-539, September 2006.
• G. Baldacchino, Island Enclaves 2010; and G. Baldacchino & D.
Milne, The Case for Non-sovereignty, Routledge 2009)
• Feyrer, J. & Sacerdote, B. (2009) ‘Colonialism and Modern
Income: Islands as Natural Experiments’, Review of Economics
and Statistics 91(2): 245-262, May.
58
Exports and Imports, New Zealand and the Pacific Islands, 1895-2005
1.40
1.20
% of New Zealand GDP
1.00
0.80
0.60
0.40
0.20
0.00
1895
1905
1915
1925
1935
Exports to Pacific FOB
1945
1955
1965
1975
1985
Imports from Pacific CDV/VFD
1995
59
Proportions of New Zealand’s Export and Import Trade Accounted for by Pacific Islands as Trading Partners
7.0
6.0
4.0
Pacific share of total NZ
exports
3.0
Pacific share of total NZ
imports
2.0
1.0
2005
1995
1985
1975
1965
1955
1945
1935
1925
1915
1905
0.0
1895
% of NZ total
5.0
60
New Zealand’s Trade Balance with the Pacific Islands, 1895-2007
1.00
0.80
0.60
% of NZ GDP
0.40
0.20
0.00
-0.20
-0.40
-0.60
-0.80
-1.00
-1.20
1890
1910
1930
1950
1970
1990
61
2010
0%
1895-99
1900-04
1905-09
1910-14
1915-19
1920-24
1925-29
1930-34
1935-39
1940-44
1945-49
1950-54
1955-59
1960-64
1965-69
1970-74
1975-79
1980-84
1985-89
1990-94
1995-99
2000-04
2005-07
Share of total
New Zealand Imports from the Pacific Islands
100%
90%
80%
Other Pacific
70%
PNG
60%
Samoa
50%
40%
Cook Islands, Niue & Tokelau
30%
Nauru, Banaba and Makatea
20%
Fiji
10%
62
New Zealand Aid to Pacific and Elsewhere, 1920-2008
0.6
0.5
Rest of world and multilateral
0.3
Pacific
0.2
0.1
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
1930
1925
0
1920
% of NZ GDP
0.4
63
Distribution of New Zealand Aid within the Pacific
80%
60%
40%
Polynesia
Melanesia
Micronesia
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
1945
1940
1935
0%
1930
20%
1925
% of NZ Aid to Pacific
100%
Regional organisations, shipping, etc
64
• Overall, from an islander perspective their historical relationships with
New Zealand have been economically beneficial though marred by
occasional tensions over palagi conceptions of political and economic
development.
• Infrastructure and services were developed to a reasonably good standard
under New Zealand rule, and have been sort-of sustained since by ongoing
aid commitments.
• By opening its doors to island migrants from its territories in the 1950s
and 1960s New Zealand gained a source of cheap labour while enabling
islanders to access cash incomes at levels that could not have been
secured at home, a genuine win-win outcome.
• By extending migration access over subsequent decades to a widening
range of Pacific islanders – Tongans, Tuvaluans, and most recently
Melanesians, New Zealand has cemented its role both as a good
neighbour and as a development hub for the peoples of the region.
65
• The interpenetration of small-island economies with metropolitan
national economies such as New Zealand means that conventional
national-accounts statistics conceal rather than reveal the true
developmental performance of the islander communities, dispersed as
they are across several different national economies.
• Pacific islanders resident in New Zealand produce output which is
simultaneously part of both New Zealand’s GDP and a key component of
the collective income of their transnational ethnic groups. Pacific
migrants pay income taxes and GST in New Zealand, and probably
comprise 3 - 5% of the New Zealand tax base, an amount well in excess of
the total value of aid and other grants from New Zealand to the islands.
• The modern sector of any Pacific island people with migration outlets will
lie offshore, inhabited by the diaspora of entrepreneurs and wage-workers
which controls a large share of the financial and human capital of the
ethnic community as a whole.
66
• Remittances form a direct cashflow link between the diaspora and the
home population, but other links are equally important for long-run
growth – especially patterns of return migration, back-and-forth visiting,
communication via media channels, and accumulation of financial assets
in metropolitan banks and share registers.
• Migration-adjusted national income accounting is in its infancy and is a
rich area for empirical macroeconomic research. National-accounts
aggregates prepared for the home population in isolation not only ignore
much of the actual (but offshore) modern sector; they also miss the
degree of success in preserving non-material wealth in the form of culture
and human capital while raising material welfare.
• Thus the time is ripe for a re-thinking of New Zealand’s policy stance
towards the small islands of the region, based on acknowledgement that
“sustainable development” need not mean either strong trading
performance or large-scale industrial development in the islands, but can
be secured by other forms of economic activity, many of which point
towards an informal process of regional economic and social integration
that transcends the narrow categories of national sovereignty and
domestic product.
67