Helsinki: The United Nations University World Institute for Development Economics Research (UNU-WIDER)
Abstract
Globally, state failure is hugely costly. We estimate the total cost of failing states at around US276billionperyear.InthispaperweapplyourglobalframeworkandmethodologytoanalysethecostoffailingstatesinthePacificOcean.Globally,failingstatesinflictverylargecostsontheirneighboursandthisbothjustifiesandrequiresregionalinterventionindecisionprocessesthatwouldnormallybethesovereigndomainofnationstates.Ouranalysissuggeststhatislandsdonothaveneighboursinthiseconomicsense.InthisrespectthePacificregionisdistinctive,becauseitscountriesareislands,theneighbourhoodspilloversthatnormallygeneratethesecostsdonotapply.DuetothelackofspilloversweestimatethecostofstatefailureatUS36 billion. However, our results also indicate that failing states themselves suffer considerably more in terms of income losses if they are islands. This may be due to the greater openness of islands, implying greater flight of financial and human capital. We conclude that because neighbours are not directly affected by state failure in the Pacific, any possible interventions should be centred on the humanitarian concern rather than be guided by self-interest of the other countries within the Pacific region