50/50 by 2020: poverty and redistributive politics in post-independence Fiji

The affirmative action program launched by the Fiji Government in 2002 espoused a '50/50 by 2020' vision; that is, by the year 2020, some 50 per cent of all economic activities would be owned by the indigenous population. The surprising impact of this heavy-handed redistribution of income and wealth from the non-indigenous to the indigenous population has been poverty-raising. One in eight in the population lived in poverty in 1977, the figure had risen to one in four by 1990/91 and one in three by 2002/2003; and on current trends, would reach one in two (that is 50 per cent) by 2020. Such an outcome would be a direct consequence of these redistributive policies. While the politics of redistribution may have been compelling, its economic costs, including the impact on poverty, are devastating. The 2006 military takeover was executed to rid the country of corruption and race-based politics. Achieving these goals may have a bonus in terms of reversing the rise in poverty. Only time will tell

Building peace in Bougainville: measuring recovery post-conflict

Description: This discussion paper documents the socio-economic status of the Autonomous Region of Bougainville and the extent of rebound in investment and access to services since the cessation of conflict there in 1997. Data on the level of income, the age profile of the population, the level of access to basic services, and levels of investment in residential housing were collected via a household-level survey that was administered in the four major urban centres. Analysis of these data shows that per capita income has rebounded to 40 per cent of the pre-conflict level; approximately half of the population is aged less than 20 years; and one-third of school age children are not attending school. These observations have value in assessing the extent of economic recovery following the installation of peace and the levels of public investment required for improving access to basic services

Risks and Rewards of allowing seasonal workers from the Pacific into Australia

It is time some considered thought was given to allowing businesses short of workers to recruit from neighbouring Pacific island countries. Pacific island nations have an abundant supply of able and keen workers. It is, therefore, a ‘no brainer’ that a well regulated temporary worker scheme has the potential to be a ‘win-win’ for the employers and their employees in a regionally-deregulated labour market. What is less well recognised is the fact that easing of access to workers from neighbouring Pacific can also be a ‘win-win’ proposition for the participating governments

Swim or Sink: the predicament of the Fiji economy

In announcing the revised Fiji budget for 2007, the Interim Finance Minister claimed that there was little choice for the economy but to swim, or else it would sink. This survey endorses the Interim Minister's view that the prevailing economic problems are the cumulative outcome of decades of poor economic management but disagrees with his conclusion that the only options are 'swimming' or 'sinking'. Much like the previous three coups, the December 2006 coup exacerbated an economic decline that was well under way when the current administration took office. Each coup, moreover, has on average wiped off three years of economic progress. Hard choices have to be made, and the Interim Government has to learn to swim out of the economic turbulence created by the last coup. Failing that, the administration could 'just float', but is more likely to be sucked into an economic crisis that will draw many more into poverty. Learning to swim will entail restoring political stability, improving governance, and charting a clear and quick path to democratic rule

From Predation to Production Post-conflict

This paper builds an analytical framework that models predation (banditry) and production as part of the choice of a rational utility-maximising agent. Aggregating this choice up for society produces equilibrium outcomes ranging from Utopia (where no one predates) to Amorphy (where everyone does). The intermediate position constitutes Anarchy where a mix of predation and production prevail. This framework shows that (i) organized conflict can lower welfare relative to the level that prevails without such organization; and, (ii) peacekeeping raises welfare, but the equilibrium is self-enforcing only with the requisite level of peacekeeping technology. The last is then used to analyse conditions under which peacekeeping arises endogenously and the potential (and catalytic) role for external assistance in the above.production; predation; post-conflict; peace-building

Who receives Australian aid and Why?

The bulk of official development assistance (ODA) from Australia is provided to Asia and Oceania. Indonesia and Papua New Guinea together account for nearly a quarter of the total. Physical proximity to Canberra and large receipts of bilateral aid from the United States is a significant determinant of who receives this aid. The level of poverty is (statistically) a significant determinant of aid allocated by Canberra only after recipients have been chosen.aid

Rolling RAMSI forward: some ideas from the literature

A key challenge for the Regional Assistance Mission to the Solomon Islands (RAMSI) is accelerating the rate of growth of the economy. For this to happen, various economic reforms need to be implemented. While some of these are in train, many remain within the long and sometimes windy pipelines of the bureaucracy. Here we draw lessons from the extant literature on aid, economic growth and the political economy of reform. We also consider the need for the ‘deep-rooting’ of independent institutions that can mediate between vested interests as part of the reform process so as to ensure its sustainability. These lessons could be particularly pertinent given new administrations in Solomon Islands and Australia, who are keen for new ideas to accelerate the pace of development. Among our recommendations are the support of institutional structures that help build constituencies for reform and more effective types of assistance that are non-financial but which generate real economic benefit

How Soon Can Donors Exit From Post-Conflict States?

When can a donor (successfully) exit from an on-the-ground presence in a post-conflict state? The answer, according to the analysis presented here, is in decades: figures well beyond what was originally envisioned when peacekeeping troops were first deployed. In the specific cases of Liberia, Mozambique, Solomon Islands, and Timor-Leste considered here, the best case scenario for successful exit ranges from 15 to 27 years. Successful exit, for the purposes of this paper, entails the creation of the necessary fiscal space to fund the recurrent budget from internally generated revenues. This is a necessary, albeit, not sufficient condition for donor exit. Of essence, however, is the time rather than the dollar value of support provided. An extended donor presence, it is argued, provides the space for the creation, sustenance, and maturation of institutions that are finally able to undergird the state from rolling back into state failure on donor exit.Post-Conflict reconstruction; Public goods; State-building

Skilled Emigration and Skill Creation: A quasi-experiment

Does the emigration of highly-skilled workers deplete local human capital? The answer is not obvious if migration prospects induce human capital formation. We analyze a unique natural quasi-experiment in the Republic of the Fiji Islands, where political shocks have provoked one of the largest recorded exoduses of skilled workers from a developing country. Mass emigration began unexpectedly and has occurred only in a well-defined subset of the population, creating a treatment group that foresaw likely emigration and two different quasi-control groups that did not. We use rich census and administrative microdata to address a range of concerns about experimental validity. This allows plausible causal attribution of post-shock changes in human capital accumulation to changes in emigration patterns. We show that high rates of emigration by tertiary-educated Fiji Islanders not only raised investment in tertiary education in Fiji; they moreover raised the stock of tertiary educated people in Fiji—net of departures.migration, human capital, fiji

Facilitating adjustment to the sugar woes in Fiji

The resolution of problems with lease renewals in Fiji, particularly in the sugarcane districts, has ramifications for private investment and growth in the entire economy. The impending withdrawal of subsidies to sugar as world trade is liberalised has increased the urgency of finding solutions to these problems. This paper draws on game theory to characterise the problems facing the Fiji sugar industry. The incentives for land and ethnic politics are identified. Separate proposals are put forward to facilitate secure access to land and to minimise adjustment costs from the erosion of preferences under the Sugar Protocol. The rationalisation forced upon the sugar industry if managed well, could induce land reforms that could improve the investment climate and the prospects for growth, whilst minimising pains of adjustment