Comments

Kia, thanks for reading the piece and raising those interesting questions. I will need to think a bit more to respond to your questions properly, but here are a few quick thoughts. On the differences/similarities in challenges facing a Pacific island country and a small remote community in a geographically large country, the latter often has far deeper economic integration with the rest of the country than a Pacific country does with a major neighboring country. Goods and factors of production can flow without manmade restrictions, fiscal transfers are often much larger, and transaction costs are reduced by the use of the same currency. In many respects, this relationship is quite similar to that between Cook Islands and New Zealand. There are studies which show that non-sovereign states tend to do better than sovereign states, and the degree of economic integration is likely to be a key determinant of this difference. To enjoy high living standards, people in a remote community in a large country do not have to live and work there. Economic geography suggests that they are often better off moving to nearby economic centers. The existence of an extracive industry does not guarantee high living standards for everyone in a remote community. It is tough to retain talent in a small community. The real issue is whether brain drain of this type is good or bad for people who are left behind. Inbound remittances tend to mitigate the negative impact of brain drain, but what would be the counterfactual to brain drain for people who are left behind? This certainly deserves a PhD dissertation. Yongzheng

My thanks to Yongzheng for an excellent presentation. I'm the current Economic Advisor to the Cook Islands, and many of the issues outlined above resonate for the Cook Islands. Between 2002 and 2012 our economy grew 58% in nominal terms, but only 10% in real terms. This masks significant variation though – real GDP grew 4.4% in 2012 (our most recent national accounts data). Tourism has been the major boom industry over the last two decades, with visitor arrivals more than doubling (mainly from New Zealand). For a population of under 15,000 residents, we receive around 123,000 visitors – meaning that during the peak season, around 1 in 4 people in the country is a tourist. The islands are still far from crowded, but the limitations you outline on the investment environment are likely limiting the growth of the industry (reliable industry data is difficult to obtain). For us, agriculture will probably always be a niche exporter due to labour constraints (not enough labour supply and a high reservation wage) and low productivity (especially compared to tourism). We are also extremely remote and have no deep harbours that could receive trans-shipments, meaning that shipping costs will also be high regardless of scale arguments. Labour services will also be a limited growth opportunity as Cook Islanders have New Zealand passports and have readily settled in New Zealand and Australia for work, education or other opportunities (moving as a family, and hence remittances are not significant, indeed we remit more than we receive). An aside on the currency: the scale of tourism is such that if we had our own currency, it would rapidly appreciate due to a huge trade surplus (reducing cost of living pressures through cheaper imports, but limiting tourism/export growth). There has been no evidence of inflationary pressure (with CPI inflation generally below 3%) and despite no central bank, money supply does not appear to be an issue (either too much or too little), although labour shortages may be combining with excess money supply to lift wages above productivity (evidence of this would be hard to prove either way though). I agree that the nations of the region need to look at their internal environments and make challenging reforms where bottlenecks exist (‘create enabling environments’). The small nature of what I term ‘nano-States’ (less than 50,000 people) mean that economies need to allocate their scarce resources even more efficiently than their larger peers, and where necessary, accepting that some things are better not pursued even when resources go unused (agricultural land being a good example). Given their status as nation-states, PICs need a sound macroeconomic environment. But given their size they need to focus on microeconomic reforms (‘nanoeconomic’ reforms?) that range from administrative issues and public sector efficiency, through to industry specific regulation, or even letting go of some of their long-held import levies. To succeed, the PICs need to have business environments that are world-class and entrepreneurs that are innovative and well connected. I guess my question would be: how different are the challenges in the Pacific to small remote communities in geographically large countries? Even with stable macroeconomic environments and greater connectivity, how have these remote communities performed if they don’t have a resident extractive industry? And on a slightly different tack: how can the PICs retain the top talent they need to make this happen, when their best and brightest are part of an international labour market that attracts greater returns elsewhere? Kia Manuia James

Proper waste segregation should start in our homes. Sadly, it has become so impossible for most of us. Waste management is now a big problem especially if we speak about environmental issues.

Dear Editor, In the most recent issue of the DevPolicy blog, there is criticism of the recent actions by USP regarding two journalism lecturers. It is stated that: `We’ve become used to the Fiji Government cracking down on the media, but the University of the South Pacific?’ All expatriate staff are contractually barred by the University from engaging in domestic politics. To the best of my knowledge international donors do not object to this infringement on freedom of expression, which governs the employment of the recently admonished USP expatriate staff as well. The University also has previously barred journalism students and staff, local and expatriate from reporting or commenting on politics in Fiji. To cite just one instance, then VC Esekiah Solofa forced the closure of the Journalism Students’ publication Wansolwara during the 2000 takeover of parliament by the George Speight-led ultra nationalists. Against the objections from the head of journalism David Robie and the Academic Staff Association the VC refused to reconsider his ban on the students and their publication. Fortunately USP journalism students were able to continue to publish the news they gathered about the hostage-taking because of international support received and the ability to distribute the information electronically. The USP Council, with a membership which included the Australian High Commissioner did not object to the VC’s decision. While the USP management’s behaviour in the recent case is rightly condemned, the selectivity of the condemnation and the seemingly surprised tone of the DevPolicy blog writer is equally unsatisfactory. I look forward to the international donors, including Australia, pressing USP management to work for the removal of these forms of political restrictions on staff and students. Yours, Scott MacWilliam Visiting Fellow SSGM ANU

I think a key question here is what does this "mean" in terms of Chinese aid investments? Why the drop in aid expenditure? Have the Chinese made such an impact where they've formerly invested their aid support and are now allowing other "development elements" to "takeover" where they've reduced aid spend? Strategically what does this mean for China as well as the global donor community?

Fish can be one of the product that will contribute well to our economy but since that people don‘t manage well how they catch it that will lead to the extinction of it.

O'Neill fought hard, not smart. This would not have gone this far if he had submitted to police request to question him on the 16th of June 2014.

Hi Robin, Thanks for the summary. Very right to highlight some great progress on a number of health indicators (most notably since about 2005 when the MDGs and supportive funding really got going). In some ways, though, I think you are a bit harsh on the MDG Reports. For relatively short reports meant to cover lots and lots of info, it is great to have all that info in one place. I would rather the transparency of annual reports than getting data once every 5 years. And I would rather imperfect baselines or indicators on issues for which it is hard to collect great data than the alternative of no data at all. Of course it is full on UN-speak and is not as blunt as it could or should be but it is a UN document! Lastly, having the regional breakdowns is great. It really does highlight which regions are making progress against each indicator and which is not. It directs the reader to examine lagging regions in more detail. It is very clear where the MDG targets are and does not need to explicitly state that many regions are not meeting targets - it is very clear from the figures presented. Overall, the MDGs have been a success (compared to development progress in the 1990s) and the transparency of the annual reports is to be applauded. Joel

Yes, the acceleration story is an interesting and positive one, and it is odd that it is not told, even briefly, in the MDG Report itself. Overall, maternal mortality is estimated to have fallen by 45 per cent relative to the 1990 baseline, which might have been hailed as a triumph if the reduction target had not been set an an unrealistically demanding 75 per cent. Over the timeframe I'm considering above, which takes 'recent' to include only the last few years, there aren't enough data points to determine whether there has been further acceleration. My remark was really about relative performance against the child survival and maternal mortality targets: annual average reductions of eight per cent and four per cent, respectively, since 2010.

Thanks Aula, indeed these events like those previously, continue to question the extent to which the fundamental principles of Separation of Powers is accepted into PNG's socio-political structure.

This is a useful summary thanks Robin. I agree that we should keep one eye on the MDGs while also preparing for the post-MDGs. A closer look at maternal mortality indicates that recent progress has been good. A <a href="http://bit.ly/1jr9vWb" rel="nofollow">recent study</a> by the Institute for Health Metrics and Evaluation found "The global annual rate of change in the MMR was –0.3% (–1.1 to 0.6) from 1990 to 2003, and –2.7% (–3.9 to –1.5) from 2003 to 2013, with evidence of continued acceleration."

Hi Daniel, I think that's unduly negative. Obviously all elements and impacts of the scheme require evaluation, but the focus of this piece was on development impacts in sending communities. In addition, there's plenty of evidence to suggest the the RSE is a huge boost to local economies in NZ. Prior to the introduction of the scheme, the horticultural industry estimated that the shortage and poor quality of labor was annually costing NZ$180-300 million in lost output and NZ$140-230 million in <a href="http://goo.gl/VfrDkA" rel="nofollow">lost value added</a> (p. 174). Plugging that gap has undoubted value for local workers in terms of job-creation. These effects are difficult to observe precisely because they are indirect, but it's unfair to dismiss them on that basis. If you're interested in reading more on this Michael Clemens gives a good overview <a href="http://goo.gl/jt9Is0" rel="nofollow">here </a>and there's also some initial research from a New Zealand context <a href="http://goo.gl/ecwmox" rel="nofollow">here </a>(pp. 16-20). Luke.