1. Small Islands and Economic Viability Rose Marie Azzopardi Ph.D Student University of Sussex UK

2. Main Question  Are small islands helpless or resourceful?

3. The Claims and the Empirical Evidence  Disadvantages and Advantages  In terms of GDP per capita, six out of 10 richest countries are small states  Islandness is not statistically significant  Contradictory  Inconclusive

4. … and  Salvatore (2001) excludes from his analysis nations with less than 1 million population “ often small island nations with only a few thousand people and little economic significance ”  MIRAB, PROFIT, Non-market solutions  Vulnerability index

5. My Paper  26 small independent island states, 30km ² land area, 1.5 million population  arguing that successful islands are more focused on invisibles rather than visibles, services rather than manufacturing, to ‘ override ’ transportation costs  reassessment of successful islands still needed due to: –erosion of trade preferences –stricter rules in financial activities –widening remit of the WTO –regionalism

6. The Hard Facts  High Income (4 islands) (4/78) 5.1%  Upper Middle (11 islands) (11/64) 17.2%  Lower Middle (8 islands) (8/58) 13.8%  Low Income (3 islands) (3/8) 37.5%

7. Region  Mediterranean islands high income  Persian Gulf (high income)  Caribbean islands upper middle  Pacific (except Palau) all lower end  Atlantic and Indian (mixed groups)

8. GNI per capita of neighbour  Pacific all lower  Indian Ocean and Persian Gulf all above  Caribbean 6 lower, 2 higher  Atlantic 2 lower, 1 higher  Mediterranean, 1 lower, 1 higher

9. Dependence on trade and Openness of the economy  All islands import more than average of group  Only 4 export less than average of group  Except for Comoros, all islands have very open economies, above world average and above group averages

10. Sectoral Activity Primary Sector  Majority of islands are above group average (ex: Sao Tome & Principe, Cape Verde, Bahrain, UM5)  dependence on agriculture, fisheries, forestry  subsistence and exports  Sugar, bananas, fish, copra, cocoa

11. Secondary Sector  Almost all islands are below group average (ex. Seychelles, T & T, Bahrain)  scale for competition + transportation costs  industrialization is not heavy on islands, normally food processing and textiles  Bahrain - petroleum products and aluminium  T & T - petroleum products, chemicals and steel  Seychelles - canned tuna and frozen fish

12. Tertiary Sector  Almost all islands are above group average (ex: Comoros, Solomon Is. Fiji, T & T, Bahrain)  High concentration on services, which includes government  Almost all have tourism as one of their main industries, followed by offshore banking

13. GNI per capita  Only 9 out of 26 are above the world GNI per capita average of $5500  High income average is $28,550  While the four islands in this group range from $9,260 to $15,110 - all well below the group average

14. Sectoral Employment  Only the four high income islands have single digit percentages of employed people in the primary sector  Light industry for most islands and not many people employed in the secondary sector  Islands with at least 64% employed in tertiary sector are either in high or upper middle groups and their GNI per capita is above $7000.

15. Other issues for consideration  Tax havens [15(18)/26 OECD 1998 list]  Trade concessions (REPAs, WTO)  Donor fatigue (ODA decreased by 1/3 in real terms in the 1990s) World Bank, surveillance, effectiveness, package deal  Regionalism - ‘ innocent bystander ’ dilemma  Informal economy - multiple jobs, small family enterprises

16. Summing Up  Islands still too dependent on primary sector  Manufacturing not affordable, unless one has developed a niche market (Bahrain, Seychelles)  Focus on services should not be restricted to tourism due to increased competition

17. Concluding comments  Data analysis inconclusive on helpless/resourceful dichotomy  Mixture of external management blended with a variety of internal policies  Each island must design its own mode of development, based on own geographical, cultural and social realities, yet remaining open to new ideas and engaging more with the global economic environment

18. Thank you