Transitional problems in small Pacific and Caribbean island states
Part of : Αρχείον οικονομικής ιστορίας ; Vol.XIV, No.1, 2002, pages 9-36
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9-36
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Objectives: To examine the continuing problems of transition through which many Pacific and Carribean States are still working. Data/method: Economic and interdisciplinary data are used to trace the root of recent transitional problems and to anticipate future problems. In some of the least developed countries, including Vanuatu, pressures applied by Aid donors to liberalise the economy appear to involve efforts to reform too much, too quickly, in a “one size fits all” approach to globalisation. Critics of the present reform pressures see reason to question at least the optimal pace of reform, and express concern that excessive zeal for a hasty implementation of orthodox IMF reform packages will place strain on social coherence and thus threaten to replace traditional social structures with a social vacuum. Something similar is reflected in the emergent problem of lawlessness in Papua New Guinea. In Vanuatu the root of this problem is not one of ethnic division, but in the Solomons, Fiji and elsewhere ethnic conflict is an added pressure. In short, two types of objection to the Washington Consensus approach to reform may be identified –the first involves Stiglitz-style objection to the putative impact of interest rate changes and the like, and the second involves issues of social capital. Problems considered include the way in which such States are meeting the challenges of globalisation and diminished reliance on traditional commodity exports, along with: (i) the time frame for reform (ii) the applicability of “the one size fits all” approach without regard to local custom: no one ever owned land individually in Vanuatu, for example. (iii) Reforms of a competitive, individualist kind may destroy the communal framework which traditionally has given coherence to such societies without first establishing the social capital prerequisites of an efficient market system, giving rise to the prospect of a Russian style transition, or social tension of the type now evident in Fiji. (iv) the tax reform issue: is the replacement of trade taxes by a VAT such a good idea in countries where a significant proportion of the population still live a cash-poor subsistence lifestyle?(v) Vanuatu and the tax haven issue: Are Vanuatu and other small States guilty of being poor international citizens by virtue of endorsing “harmful tax practices”? (vi) can governments of small island states really be expected to have the resources to implement and monitor comprehensive reform packages? (vii) problems of sustainability, youth unemployment, ethnic divisions, vulnerability and gaps in financial markets –and the interplay of such issues in the political economy of the Fijian coup of early 2000. Conclusions: there are substantial differences between the small island states of the Pacific and the Caribbean; there are reasons to be critical of a “one size fits all” approach as it applies to small island States; the charge of “harmful tax competition” is flawed; globalization pressures on small island States have the capacity to deliver some sting in the tail to OECD countries.
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Includes several tables
