Competitiveness strategies and the South Pacific island countries

Abstract

This chapter undertakes a review of competitiveness strategies adopted by the South Pacific island countries (SPIes) and examines the challenges arising from the globalisation process. It proposes a set of reforms which are urgently needed in this area. The island countries selected for the study are two Melanesian countries (the Solomon Islands and Vanuatu), three Polynesian countries (Samoa, Tonga and Tuvalu), and one Micronesian country (Kiribati). The chapter shows that the SPIes' labour productivity is poor, mainly because of its unskilled human resources, and this is leading to low international competitiveness. The chapter also shows that, additionally, SPIes suffer from severe distortions in factor markets of land and labour, which have rendered them unattractive for FDI inflows. The chapter argues that with the decline in aid inflows, SPIes should put their houses in order so that FDI inflows improve, supplying the much needed foreign savings and skills. Institutional improvements are needed so that land tenure ceases to be a problem.