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The MIRAB Model in the Twenty-First Century Geoff Bertram Victoria University of Wellington New Zealand Presentation to Islands of the World VIII Kinmen,

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Presentation on theme: "The MIRAB Model in the Twenty-First Century Geoff Bertram Victoria University of Wellington New Zealand Presentation to Islands of the World VIII Kinmen,"— Presentation transcript:

1 The MIRAB Model in the Twenty-First Century Geoff Bertram Victoria University of Wellington New Zealand Presentation to Islands of the World VIII Kinmen, Taiwan, November 2004

2 2 Outline Background: the Wellington conference Methodology: empiricism v hermeneutics The model: a quick review Stylised facts about size, sovereignty, and geographical attributes Standard critiques of MIRAB: complacency, unsustainability, governance Taxonomy: alternatives to MIRAB Jurisdiction and tourism =>PROFIT and STID Multiple equilibria and the kaleidoscope

3 3 Methodological Critique: Marsters et al “There is much going on in the constitution of identity and remittance practice that resists reduction … “If we are concerned with policy and the sustainability of remittances, misreading motivations is dangerous. “ More dynamic conceptions of diaspora and identity formation are fundamental to any understanding of remittance practices and how these are being reconstituted and doing different work….. “We argue for a rethinking of remittances that begins with a different metaphor – the network.

4 4 Marsters et al continued: “The network is fluid and does not recognise pre- constituted boundaries such as the nation or household. “Networks are not pre-constituted, but are constituted by the flows and the practices that govern them. They change with, and are constituted by, their changing nodes and the changing relations among the family members and their relations. “The metaphor helps us to rethink the family (or the household) as temporary and constituted in part both by the flows of people, identities and remittances and by the practices involved..…

5 5 “The network is not rooted in or on the island, although this is a crucial node and reference point that gives it significant meaning and nurtures it with a range of symbolic and physical resources – from land rights to language to holiday destination to iconography to cultural identity… “The network makes its own, temporary constellations of responsibility, economy and decision making…. Marsters et al continued:

6 6 “[W]hat is to be developed ‘sustainably’ (or at least given the space to change on its own terms) is a transnational formation of places, people, beliefs, values and practices, and not simply the nation… “[S]ustainability might be reinterpreted as less the problem of promoting national economic growth, and more encouraging the [flourishing] of transnational networks….. “We believe that MIRAB leads us to this conclusion if we broaden the focus from the economic to more meaningfully incorporate the social, the cultural, and the personal.

7 7 I don’t actually disagree with any of that. It sums up clearly some of the directions in which our understanding of the MIRAB model (and its other reductionist relatives) will have to move. It identifies the awkward fact that poets and novelists, along with anthropologists, geographers and historians, probably have the edge on economists in pursuing the sort of deep understandings called for. But I’m staying with the empiricist/naturalistic side, at least for the moment.

8 8 In the methodology of social science there has always been a gulf between  proponents of a deductive empiricism, and  proponents of local meanings and understandings as the starting point from which the social scientist seeks to translate the story of each place and culture The MIRAB model has had more of the first than of the second.

9 9 Quick Review of the Model Attempted to capture some stylised facts about five small island communities: Cook Is, Niue, Tuvalu, Tokelau, Kiribati These turned out to be examples of turning orthodox development models on their head We found a radical disconnection of political discourse from reality

10 10 “Unproductive” Capital was Productive; “Productive” Capital was 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, loss-making, often idle

11 11 The model described stable steady states underpinned by two stock-flow nexuses: Stock of overseas migrants => flow of remittances Flow of aid => stock of public sector employees (“bureaucrats”) These were the locomotives of the economy

12 12 “Vulnerability” has been overplayed. Being small means being Below the political radar A price taker in global markets Able to establish and maintain solidarity while nimbly responding to opportunity

13 13 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

14 14 Two Stylised Facts Small is beautiful (fractal effect) Sovereignty has been a millstone even if it feels good Armstrong and Read (2004) tables provide an eyeball test for smallness and islandness:

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19 19 Here are a couple of charts from Bertram (2004) on political status, income of metropolitan patron, and GDP per capita in the Pacific (panel data)

20 20 Pacific Islands

21 21 Pacific Islands

22 22 Pacific Islands

23 23 Global dataset for 63 island economies, using average of colonial power and chief import supplier

24 24 Global dataset for 63 island economies, using average of colonial power and chief import supplier

25 25 Global dataset for 63 island economies, using average of colonial power and chief import supplier

26 26 Regression lines through region-adjusted observations

27 27 Armstrong and Read 2004: “Neither small size or insularity leads to systematic poor performance in terms of GNI per capita. On the contrary, the relationships if anything suggest just the opposite. On the other hand, being landlocked or being located a long distance from the main global markets does seem to have important implications. The position with respect to the effects of being an archipelago or being mountainous is less clear, although systematic disadvantages are not at all evident.”

28 28 Multivariate regression: failed to find statistical significance for four of their five geographical explanators found signs as predicted (islandness positive, archipelago-ness negative, being landlocked negative, and mountainous topography ambiguous) but none of the t-statistics showed significance at 5% (some crept in at 10%) only remoteness had a robust negative effect

29 29 Three Common Criticisms: MIRAB applauds “failure” and is complacent MIRAB is unsustainable Slow growth in the Pacific is due to poor governance, not economic structure

30 30 Applauds failure? The argument is circular, from a particular modernisers’ definition of “failure” MIRAB outcomes have been better than the alternatives would have been

31 31 Bad Governance, not Structure? Friberg et al (2004): “[I]nstitutional constraints such as poor governance and a lack of accountability over assistance have played a major role in inhibiting FSM and RMI growth…… [I]t is the alleviation of these institutional constraints to improved aid effectiveness that will be necessary to sustain the FSM and the RMI economies”.

32 32 Fraenkel (2004) The MIRAB model “downplays the role of weak governance structures in inhibiting export production”.

33 33 But:  MIRAB structures are found across a wide range of institutional settings and in the post- colonial territories of various colonial powers; The logic of a MIRAB system is to produce an expanded bureaucracy The level of accountability, and quality of decision-making, in small-island governments is not in fact uniformly poor.

34 34  Critics of island governments are not always clear in separating out genuinely “poor governance” (as revealed by some universally accepted metric) from a simple divergence of goals between donor and recipient governments and between their respective constituencies.

35 35 The Marshall Islands/FSM work by Friberg’s GAO team underlines two points total aid totalled $2.1 billion That’s $13,100 per capita over 13 years Per capita annual Compact aid is to fall: Many completed factories (clothing, fish processing) stand empty There’s no sign of progress towards self-sufficiency Migration to the USA is straightforward.

36 36 Unsustainability? Lee (2004) argues that second-generation Tongans in her sample showed weak “transnational orientation” But she had no hard statistical evidence to offset Brown and Connell’s survey findings (Incidentally, Brown and Connell 2004 reported that that nurses are stronger remitters than the average migrant)

37 37 Ahlburg (2004) results on the economic fortunes of US-resident Pacific-island migrants

38 38 During the 1990s the poverty rate among Pacific Islanders fell from 20% to 16% participation rate rose 2% the proportion of islanders earning “middle class” incomes rose from 45% to 49% the proportion of “working poor” fell 4% the proportion of employed householders with “middle class” jobs rose from 51% to 58% the average Pacific Islander migrant household acquired an extra year of education and an extra year of work experience”

39 39 Poirine’s (2004) model of remittances showed that we can’t predict time trends without case- by-case empirical calibration

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43 43 This exercise showed that A purely theoretical economic model can be made to predict pretty well any time-path for remittances depending on which assumptions we make. Hence we can’t make any clear prediction a priori. What we can do is fit the model to the facts after the event.

44 44 The conclusion here is that the MIRAB model has very limited predictive power on its own. It has to be harnessed to knowledge of the particular community before we can draw forward-looking policy conclusions or social-scientific predictions. But we do have a powerful forensic tool for classifying MIRAB case studies into sub-species. The model is weak on prediction, but it is strong as part of a taxonomy of islands.

45 45 This brings us to: Criticism: MIRAB has limited applicability outside of a small subset of the world’s islands, since there are numerous case studies of island economies which do not exhibit the MIRAB characteristics. Reponse: Correct. This points to a need for a wider-ranging taxonomy

46 46 Baldacchino (2004) and PROFIT An explicit attempt to outline alternative possible trajectories that small-island economies might follow. Starting point: not all small islands are MIRABs. Therefore at least one other small-island social and economic formation is out there.

47 47 Baldacchino’s two premises: small islands are active strategic players in determining their fate because they lack a hinterland of their own, they are obliged to treat extra-territorial resources, not interior frontiers, as the hinterland to be colonised and exploited for the benefit of the islander population

48 48 The MIRAB strategy is only one of a number of possible strategies for exploiting an external hinterland Baldacchino locates it at one end of a spectrum of hypothetical pro-active policy orientations an island territory might pursue. His paper focused on identifying and describing the ideal-type alternative strategy at the other end of the policy spectrum

49 49 Baldacchino (2004) cont Focus is on the political/jurisdictional dimension rather than the economic Carving-out and deploying jurisdictional power is the means to achievement of islander ambitions “Political economy of success” extends to “discretion over taxation and offshore finance,… language policy, shipping registration and property ownership….. “

50 50 A combination of free-riding by the smaller, island party in the context of (at times deliberate) oversight by the larger, metropolitan party, crafting in the outcome some kind of regulatory legitimacy. Baldacchino (2004) cont

51 51 “Utilising jurisdiction as a resource is one way of compensating for the dearth of conventional economic assets…” Essential characteristics of island elites are “shrewd survival strategy … a flexible and creative diplomacy, adopting free- riding,… slipping free through the nets of regulation …a skills repertoire that the small and powerless deploy and, being small, get away with it.” This points to a conceptual shift from the economic and the idea of the household as the key decision unit, to a focus on the political dimension at the level of territorial jurisdiction. Baldacchino (2004) cont

52 52 Five dimensions of local jurisdictional autonomy P (people considerations): powers over movement of persons (including issues of citizenship, rewsdience and emplpoyment 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.

53 53 But now, what about Tourism? Rapid expansion was not foreseen in the original MIRAB work Promises a post-MIRA B, commercially successful economic future for at least some small islands “small, tourist-dependent islands represent [an analytically] useful cluster or special case of island development.” (McElroy 2004)

54 54 McElroy (2004) found Successful tourism-driven cases are concentrated in the Mediterranean and northern Pacific, whereas the South Pacific and Indian Ocean exhibit the lowest levels of tourism penetration The nine most-developed and most heavily penetrated tourism destinations were among the smallest islands in his sample At the bottom end of the tourism-penetration spectrum lie islands which fall into the MIRAB category such as Tonga, Comoros, Tuvalu

55 55 McElroy (2004) cont: The tourism penetration data suggest divergence rather than convergence. Rapid increase in tourism penetration for the already-highly-penetrated cases, while “increases in the least developed subgroup were marginal” “Absent from the most developed destinations are the MIRAB contours familiar to many of the least developed islands”

56 56 McElroy (2004) cont: Independent sovereign juridical status is potentially as much of a handicap for tourism development as it seems to be for MIRAB economies. Eight of his nine most developed resort islands are dependencies, while six of the eight least developed are sovereign Dependent political status improve migration access and aid flows for MIRAB cases; it also facilitates more intensive tourism penetration

57 57 So let’s try some taxonomic classification

58 58 MIRABs

59 59 MIRABs STIDs

60 60 MIRABs STIDs PROFITs

61 61 The small-island world, in this view, is one of multiple equilibria coexisting within the one global space. Government can be either a reinforcer of temporary negative-feedback loops which sustain the actual; or a spur to change, to migrate to another model. External forces and circumstances dictate the set of opportunities open in the short and long run, but islanders and their institutions choose the actual trajectory.

62 62 The Kaleidoscope At each instant, you see a stable ordered temporary-equilibrium pattern The pattern persists (is “sustained”) until external circumstances change (the tube is turned) A new stable ordered pattern emerges The current pattern is always path dependent (same elements as predecessor) But the change is irreversible (turning the tube back produces yet another new pattern)

63 63 Hence our scientific claims have to be modest We can observe stability in the present and we can tell the story of the past sequence of temporarily-stable patterns; We can predict that a new stable temporary equilibrium will emerge from the next external disturbance, and that the new pattern will incorporate all the elements of its predecessor. But we cannot predict what the new pattern will be - we can only describe it once it has appeared


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