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Juumemmej: Republic of the Marshall Islands Social and Economic Pacific Studies Series Juumemmej REPUBLIC OF THE MARSHALL ISLANDS SOCIAL AND ECONOMIC REPORT 2005 Juumemmej Prelim.pmd 1 25/07/2006, 4:50 PM © Asian Development Bank 2006 All rights reserved Printed in the Philippines Publication Stock No. 050206 All rights reserved The views expressed in this book are those of the authors and do not necessarily reflect the views and policies of the ADB, its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequences of their use. Use of the term “country” does not imply any judgment by the authors of ADB as to the legal or other status of any territorial entity. Asian Development Bank P.O. Box 789, 0980 Manila, Philippines E-mail: [email protected] Juumemmej Prelim.pmd 2 25/07/2006, 4:50 PM Contents Abbreviations, Glossary, and Notes ix Foreword xi Acknowledgments xii Summary of Key Issues xiii Chapter 1. Introduction 1 1.1 Physical, Economic, and Historic Context 1 1.2 Opportunities for Growth 5 1.3 Challenges of Poverty Reduction 6 1.4 Link to Meto2000 7 1.5 Major Achievements to Date 8 1.6 Key Issues to be Addressed 9 1.7 Juumemmej 2005: The Value Added 11 1.8 Over-Arching Policy Recommendations 11 Chapter 2. Social and Economic Update 13 2.1 Social Indicators of Development 14 2.2 Economic Update 21 2.3 Macroeconomic Setting 25 2.4 Employment 31 2.5 Conclusions 37 2.6 Policy Recommendations 39 Chapter 3. The Role of the Public Sector and Reforms 41 3.1 The Role of the Public Sector 41 3.2 RMI Reforms Performance 42 3.3 RMI Government: Back to the Future? 47 3.4 Larger and More Expensive … But More Productive? 52 3.5 Some Achievements Have Been Made 53 3.6 Reform for Better Governance and Poverty Reduction 54 Juumemmej Prelim.pmd 3 25/07/2006, 4:50 PM iv 3.7 A New Opportunity for Reform 58 3.8 Policy Recommendations 61 Chapter 4. Population 62 4.1 Population Trends and Structure 63 4.2 Demographic Transition 65 4.3 Labor Force Characteristics 68 4.4 Household Income, Distribution, and Other Characteristics 70 4.5 Urban and International Migration 72 4.6 High Population Densities Exacerbate Problems 77 4.7 Youth Issues 79 4.8 Gender Issues 81 4.9 Untapped Resources for Social Development? 82 4.10 Policy Recommendations 84 Chapter 5. Environment 86 5.1 Environment and RMI’s Sustainable Development 87 5.2 Environmental Profile 88 5.3 Environmental Institutions 93 5.4 Constraints to Sustainable Development 94 5.5 Policy Recommendations 99 Chapter 6. Basic Services: Education and Health 101 6.1 Education 103 6.2 Health 111 6.3 Human Resource Management 119 6.4 Policy Recommendations 121 Chapter 7. Private Sector Development 122 7.1 Structure of the Formal Private Sector 123 7.2 Revenue, Employment, Wage, and GDP Trends 127 7.3 There Can Be Growth 130 7.4 The Constraints Are Clear 132 7.5 Mobilizing Private Sector Growth 133 7.6 Policy Recommendations 134 Juumemmej Prelim.pmd 4 25/07/2006, 4:50 PM Chapter 1 Introduction v Chapter 8. Juumemmej and the Leadership Imperative 136 8.1 The People Have Spoken 136 8.2 The Leadership Imperative 138 References 139 Appendix 1. Data Tables 144 Appendix 2. List of Meetings and Consultations 161 Appendix 3. Progress Report on Meto2000 Recommended Goals and Strategies 162 Appendix 4. National Accounts Sources and Methods 168 Boxes 2.1: Jenrok: Harbinger of the Future? 17 2.2: The Role of Women in Marshallese Development 36 3.1: RMI Public Sector Reforms: Which Way Is Progress? 43 3.2: The Amended Compact and Accountability 44 3.3: Social Security: A Case of Reform Success 60 4.1: Urban Youth in the RMI—No Child Left Behind? 83 6.1: High-Quality Education Only for the Privileged? 120 7.1: Visitors Authority and Tourism Growth: Qualified Successes? 126 Tables 2.1: Basic Indicators for RMI and Other Island Countries: 2003 15 2.2: Economic and Social Indicators by Atoll: 1999 20 2.3: Inflation, Lending, and Deposit Rates: 1999–2004 26 2.4: Sources of Recurrent Government Revenue: FY2000–2004 27 2.5: Recurrent Expenditure by Percentage of Total: FY2003–2004 28 2.6: Indicative MTBIF: FY2001–2008 29 2.7: Direct and Contingent Government Liabilities as of September 2004 30 3.1: Employment by Ministry: 1987–2004 49 3.2: RMI Governance Indicators Rankings: 1996–2004 55 Juumemmej Prelim.pmd 5 25/07/2006, 4:50 PM vi 4.1: Demographic Realities Versus Targets 63 4.2: Labor Force Trends: 1980–1999 68 4.3: Data on the Marshallese Community in Hawaii: 1997–2003 76 4.4: Water Contamination: 1999–2003 79 4.5: Educational Attainment by Gender: 1967, 1980, and 1990 82 6.1: RMI PILLs (Grade 4) Percentage at Risk: 1994–2002 108 6.2: Attempted and Completed Suicides: 2001–2004 118 A1.1: Population: 1920–2005 144 A1.2: Majuro and Kwajalein Versus Outer Island Populations: 1935–1999 144 A1.3: Employment by Institutional Sector: FY1997–2004 145 A1.4: Salaries and Wages by Institutional Sector ($’000): FY1997–2004 146 A1.5: Average Annual Salaries and Wages by Institutional Sector: FY1997–2004 147 A1.6: Employment by Industry: FY1997–2004 148 A1.7: Labor Force Data: 1980, 1988, 1999, and 2004 149 A1.8: Current and Real Per Capita GDP: 1981–2004 150 A1.9: RMI Nominal and Real Per Capita GDP: FY1997–2004 151 A1.10: GDP by Institutional Sector: FY1997–2004 152 A1.11: RMI GDP by Income Component: FY1997–2004 153 A1.12: RMI GDP by Institutional Sector and Income Component: FY1997–2004 154 A1.13: Loans and Grants to Low-Income Families for Home Repair and/or Modernization: 1990–2004 155 A1.14: International Airline Passenger Movements (Majuro/Kwajalein): 1990–2004 156 A1.15: Proposed Education Expenditures: FY2006 Budget 157 A1.16: Proposed Health Expenditures: FY2006 Budget 159 A1.17: Air Visitors to Majuro by Purpose of Visit: 1989–2004 160 Figures 2.1: Composition of GDP by Institutional Sector: 2004 22 2.2: Composition of Household GDP: 2004 22 2.3: RMI per Capita GDP: 1981–2004 22 2.4: Employment by Sector: FY1997–2004 33 Juumemmej Prelim.pmd 6 25/07/2006, 4:50 PM Chapter 1 Introduction vii 2.5: Average Annual Salary by Sector: FY2004 33 3.1: National Government Employment: 1997–2004 46 3.2: National Government Payroll: 1997–2004 46 3.3: National Government Average Annual Salary: 1997–2004 50 3.4: Public Sector Share of GDP: 1997–2004 51 3.5: National Government Employee Compensation: 1997–2004 53 3.6: RMI Relative Ranking for Control of Corruption: 2004 55 3.7: Operating Subsidies to State-Owned Enterprises: 1997–2004 58 3.8: Conceptualizing Public Reform 59 4.1: Population: 1920–2005 64 4.2: Population Pyramid: 1999 65 4.3: Total Fertility Rate in the Marshall Islands: 1973–1999 66 4.4: Estimated Total Fertility Rate, Selected Pacific Countries: 2004 67 4.5: Age-Specific Fertility in the Marshall Islands: 1990–2004 67 4.6: Unemployment Rate: 1988–2004 69 4.7: Gini Coefficients Showing Income Inequality: 1999–2000 71 4.8: Access to Safe Water by Household Income Quintile: 1999 72 4.9: Access to Improved Sanitation by Household Income Quintile: 1999 73 4.10: Urban Versus Rural Populations: 1935–1999 74 4.11: Net Outbound Air Passengers: 1990–2004 75 4.12: Population Density: 1920–2005 77 4.13: Population Densities on Majuro and Ebeye: 1980–1999 78 4.14: Youth Unemployment Rates (ages 15–24): 1999–2000 80 5.1: Mean Sea Level, Majuro Atoll: 1968–2005 99 6.1: Public Expenditures on Health and Education: 2003 102 6.2: Education Outlays in the Marshall Islands: FY2001–2005 104 6.3: Sources of Recurrent Financing for Education: 1999 and 2006 Budgets 105 Juumemmej Prelim.pmd 7 25/07/2006, 4:50 PM viii 6.4: Relative Public Education Expenditures (Tertiary, Secondary, Primary): 1999–2003 105 6.5: School Attendance Rates (ages 6–14): 1973–1999 107 6.6: Pass Rate for Secondary School Entrance Exam: 2001–2004 108 6.7: USP Pass Rates for Preliminary and Foundation Courses: 1996–2004 109 6.8: Percentage of Adults Aged 25 and Over with a High School Education: 1999–2000 110 6.9: Percentage of Adults Aged 25 and Over with a College Education: 1999–2000 110 6.10: Health Outlays in the Marshall Islands: FY2001–2005 112 6.11: Sources of Financing for Recurrent Health Costs: FY1999 and Budgeted FY2006 113 6.12: Public Health Spending by Type: 1999–2003 113 6.13: Medical Referrals and Cost: 2001–2004 114 6.14: Patients Admitted for Diabetes: 2001–2004 115 6.15: Teenage Fertility Rates (ages 15–19): 2004 116 6.16: Teen Births as Percentage of Total Births: 1991–2004 117 6.17: STD Cases Detected in Majuro and Ebeye: 2001–2003 117 7.1: Top Six Private Industries by Employment: 2004 124 7.2: Fish Catch in the RMI Exclusive Economic Zone: 1998–2004 125 7.3: Business Gross Revenues: FY1993–2004 127 7.4: Private Sector Employment: FY1997–2004 128 7.5: Private Sector Salaries and Wages: FY1997–2004 129 7.6: Private Sector Average Annual Salaries and Wages: FY1997–2004 130 7.7: Private Sector Share of GDP: FY1997–2004 131 7.8: World Bank Doing Business Database Rankings: 2005 133 Juumemmej Prelim.pmd 8 25/07/2006, 4:50 PM Abbreviations Abbreviations ADB Asian Development Bank AIDS acquired immune deficiency syndrome AMI Air Marshall Islands CMI College of Marshall Islands EPA Environmental Protection Authority EPPSO Economic Policy, Planning, and Statistics Office FSM Federated States of Micronesia FY fiscal year GDP gross domestic product HIV human immunodeficiency virus IMF International Monetary Fund km2 square kilometer MalGov Majuro Atoll local government MIDB Marshall Islands Development Bank MIDLRA Marshall Islands Development Land Registration Authority MIMRA Marshall Islands Marine
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