Long-term Economic Opportunities and Challenges for Pacific Island Countries

Last modified: 
December 13, 2019 - 8:43pm
Type: Report
Year of publication: 2017
Authoring organizations: The World Bank
Publishing institution: The World Bank
City: Washington, D.C.

The increasing economic power of East-Asian nations, new technologies, and demographic change in the Pacific Rim countries bring new opportunities for Pacific Islands Countries (PICs). The 21st century is often referred to as the “Pacific Century,” reflecting the rising economic and political importance of East Asian nations and trans-Pacific relationships. This report argues that the PICs can truly make the Pacific Century their own, by taking advantage of new opportunities that are already on the horizon. These developments may help offset the challenges the PICs are facing to achieve sustained high growth, which include extreme remoteness, small size, geographic dispersion, and environmental fragility that limit the range of economic activities where the PICs can be competitive. Indeed, many PICs have seen only very limited increases in per capita incomes over the past 25 years.

Pacific Possible assesses whether fully exploiting new economic opportunities and dealing effectively with major threats could lead to a significant acceleration of economic growth and improved standards of living over the next 25 years. Pacific Possible examines specific opportunities and risks for the PICs in seven selected areas. These include opportunities for increased incomes (tourism, knowledge economy, fisheries, deep sea mining, and labor mobility) as well as risks (climate change and disaster risks, noncommunicable diseases - NCDs) that, if not managed well, could undermine development gains. While Pacific Possible focuses on those economic opportunities that have the greatest potential to drive faster economic growth in the future, it is important to note that other economic activities such as agriculture, coastal fisheries and so forth will remain important sources of livelihoods for much of the population of the PICs and require continued attention by policy makers.

For each of the transformational opportunities, Pacific Possible develops an “opportunity scenario” that considers external developments (such as demographic developments or technological changes) as well as policy decisions that drive the opportunity. The “opportunity scenario” typically presents an ambitious, although realistic, outlook on what is possible. For each of the opportunities, we then estimate the achievable impact on per capita incomes, employment, and government revenue. Comparing this to “business-as-usual” projections, that typically re ect historical trends, gives us the additional income, employment, and government revenue that could be achieved if opportunities are fully exploited and adequate policy decisions taken and implemented.

The report covers 11 World Bank member countries in the Pacific (PIC11-Federated States of Micronesia, Fiji, Kiribati, the Marshall Islands, Palau, Papua New Guinea, Samoa, the Solomon Islands, Tonga, Tuvalu, and Vanuatu). Opportunities and risks discussed best describe the smaller PICs but are also valid for larger countries (Fiji, Papua New Guinea), although in these countries there are many more economic opportunities (for example, Lique ed Natural Gas in Papua New Guinea or niche manufacturing in Fiji) which are beyond the scope of Pacific Possible. 

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