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World Bank Document - . ,.~~~~~~~~~~IS1 Ap- II'1 ~~~~~~~~~~~~ 11 ½ -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Public Disclosure Authorized 4~~~~~~~~~~~~~~~~~~~~~4f ~~~ ~~~~ iWA Public Disclosure Authorized 2 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~I rt~~~~~~~~~~~~~~~~~~~~~~~~~E P-r.A- Public Disclosure Authorized VAn~~~~~~~~~~~~~~O Public Disclosure Authorized *~~~~~I- IT A W O R L D B A N K C O U N T R Y S T U D Y Pacific Island Economies Building a Resilient Economic Base for the Twenty-First Century The World Bank Washington, D.C. Copyright © 1996 The Intemational Bank for Reconstruction and Development/ THE WORLDBANK 1818 H Street, N.W. Washington, D.C. 20433,U.S.A. All rights reserved Manufactured in the United States of America First printing April 1996 World Bank Country Studies are among the many reports originally prepared for intemal use as part of the continuing analysis by the Bank of the economic and related conditions of its developing member countries and of its dialogues with the govemments. Some of the reports are published in this series with the least possible delay for the use of governments and the aca- demic, business and financial, and development communities. The typescript of this paper therefore has not been prepared in accordance with the procedures appropriate to formal printed texts, and the World Bank accepts no responsibility for errors. Some sources cited in this paper may be informal documents that are not readily available. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorse- ment or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the Office of the Publisher at the address shown in the copyright notice above. The World Bank encourages dissemination of its work and will normally give pennission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. Permission to copy portions for classroom use is granted through the Copyright Clearance Center, Inc., Suite 910, 222 Rosewood Drive, Danvers, Massachusetts 01923,U.S.A. The complete backlist of publications from the World Bank is shown in the annual Index of Publications,which contains an alphabetical title list (with full ordering information) and indexes of subjects, authors, and countries and regions. The latest edition is available free of charge from the Distribution Unit, Office of the Publisher, The World Bank, 1818 H Street, N.W., Washington, D.C. 20433,U.S.A., or from Publications, The World Bank, 66, avenue d'Iena, 75116Paris, France. ISSN: 0-0253-2123 Library of Congress Cataloging-in-Publication Data Pacific Island economies: building a resilient economic base for the twenty-first century. p. cm. - (A World Bank country study, 0253-2123) The report includes economic profiles of eight Pacific Island countries: Fiji, Federated States of Micronesia, Kiribati, Marshall Islands, Solomon Islands, Tonga, Vanuatu, and Western Samoa; it was prepared by a team led by Hilarian Codippily. Includes bibliographical references (p. ISBN 0-8213-3554-5 1. Oceania-Economic conditions. 2. Oceania-Commerce. I. Codippily, Hilarian M. A., 1938- . II. International Bank for Reconstruction and Development. III. Series. HC681.P276 1996 95-48482 338.99- dc2O CIP iii CONTENTS Page No. Abstract ................................................................ vii Acknowledgments................................................................ viii Acronyms and Abbreviations................................................................ ix CurrencyEquivalents ................................................................ xi Executive Summary ................................................................ xiii Introduction. 1 2 Growthand Trade in the Pacific IslandEconomies. 7 Growth, Investmentand Shocks. 7 PacificIsland Trading Conditions.13 The ChangingGlobal EconomicScene .16 The ChangingTrade Environent .17 Recomendations .22 3 Tourism .29 Backgroundand Introduction.29 Tourism Demand.30 Tourist Accomodation .33 Promotionand Diversification.33 SupportingInfrastructure .39 Role of Governent .41 Country SpecificInitiatives .42 Priorities for Action.43 4 Fsheries .45 Background.45 EconomicContribution .46 Offshore Fisheries.49 MaximizingRent from OffshoreTuna Fisheries.49 ManagingInvestment Effectively .58 Coastal Fisheries.61 5 Forestry .73 Introduction.73 RecentDevelopments in the Sector.73 Role of Forests.74 The Forest Resource.75 Forest Products Markets.78 Forestry Policiesand Management.79 Key Issues to be Addressedin ImprovingForest Conservationand Management.86 Summary.93 iv 6 Prioritiesfor Regional Actions ............................................................. 95 Background ............................................................. 95 Trade Cooperation............................................................. 95 Cooperationin Aviationand Sea Transportation........................ ........................ 96 Cooperationin ResourceManagement ............................................................ 98 Cooperationin Economicand SocialServices: Higher Educationand Environment.... 100 Annex: Country Profdes .103 Fiji.103 Kiribati.110 FederatedStates of Micronesia.113 MarshallIslands .116 SolomonIslands .119 Tonga.122 Vanuatu.125 Western Samoa.128 Bibliography .................................................................. 131 map v List of Tables 1.1 Average Growth Performance,1983-93 ....................... ..................... 1 1.2 ComparativeIndicators ......................................................... 3 2.1 Average GDP Growth Rates and InvestmentRates, 1983-1993................. 8 2.2 SectoralAllocation of DevelopmentAssistance (Avg. 1986-92)....... ......... 9 2.3 SelectedIndicators of External Trade, 1993 ................ ....................... 13 2.4 Destinationof Export Trade in Percentage, 1982-84and 1991-93 ....... ...... 15 2.5 Export Concentrationand Trade Taxes ......................... .................... 16 2.6 SPARTECAand Trade Expansion: PMC Trade with Australia and New Zealand (1987-1993)..................................................... 18 2.7 Scheduleof Tariff Reductionsin Australiaand New Zealand ........ .......... 19 2.8 Foreign Direct InvestmentRegime .................................................. 26 2.9 Foreign Direct InvestmentIncentives .............................. ................. 27 3.1 Tourism in PMC Economies, 1993 .................................................. 29 3.2 Tourist Arrivals and Receipts by Region 1988 and 1993......................... 30 3.3 Pacific Member Countries: Total Arrivals and Holiday Arrivals, 1988-1993........................................................ 32 3.4 Tourist AccommodationStock in PMCs ....................... ..................... 34 3.5 Existingand Potential Product/MarketMatch ............... ...................... 36 4.1 SelectedAitributes of Fisheries Sector in the Pacific .......... ................... 48 4.2 Artisanal and CommercialNearshore Production, 1989-92 ........ ............. 48 4.3 SubsistenceFisheries in SelectedPacific Island Countries, 1992 ....... ........ 48 4.4 Catch in the SPC StatisticalArea, 1984-93.................. ....................... 49 4.5 Access Fees-Major FishingNations, 1993 ................. ....................... 53 4.6 Rent for U.S. Purse Seiners Under Various Scenarios, 1992 ........ ........... 55 4.7 Rent for Japanese LonglinersUnder Various Scenarios, 1992 ........ .......... 55 4.8 IllustrativeCosts of Investmentin Fisheries, 1992............ .................... 59 4.9 Trends in Per Capital Supplyof Fisheries Products, 1974/76-92....... ........ 63 4.10 Main Uses and Marketsfor NearshoreFisheries Products in the Pacific.71 5.1 Timber Production from Natural Forests in 1993 ............ ..................... 74 5.2 Trade in Forest Products in SelectedPacific Island Countries, 1993 ...... .... 75 5.3 Extent of Forest Cover in SelectedPacific Island Nationsin 1993 ....... ...... 76 5.4 Extent of CustomaryLand Tenure in SelectedPacific Islands ........ .......... 77 5.5 Indicative ReferencePrices for Logs in 1992, 1993 and 1994 CIF (Japan) Price in US$/CubicMeter .79 5.6 Forest and Tree Crop Plantations.................................................... 85 vi List of Figures 1.1 Real GDP Per Capita Growth Rate . ................................................. 2 2.1 Real GDP Growth Rates in the PMCs, Average 1983-88 and 1989-93........................................................ 7 2.2 Real GDP Growth Rates 1983-1993 .................................... ............. 11 2.3 Percent Changes in the Terms of Trade, 1983-92 ............ ..................... 12 2.4 Real Effective Exchange Rates (Indices), 1983-1992 ........... .................. 12 2.5 Composition of PMC Exports, 1982-84 and 1991-93............................. 14 2.6 Composition of PMC Imports, 1982-84 and 1991-93............................. 14 4.1 Fish Exports (% of total exports) .................................................... 46 4.2 (a) Access Fees-External Sector Contribution (% of merchandise exports) ...................... 47 4.2 (b) Access Fees-Fiscal Contribution (% of taxes) .47 4.3 (a) Access Fees Paid, 1993
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