Economic Growth and Development of Fiji

Located in Oceania, in the South Pacific Ocean, about two-thirds of the way from Hawaii to New Zealand, the Republic of the Fiji Islands is often thought of as a favorite vacation spot rather than a country battling tough economic and political events. The island only became independent on October 10, 1970, after about a century of British rule. They instituted a democratic government which was interrupted by two military coups in 1987 due to a concern over the domination of the government by the Indian community who had been descendants of contract laborers brought to Fiji by the British in the 19th century. It was then that Fiji was formally declared a republic on October 6, 1987 by military coup leader Maj. General Sitiveni Rabuka. By 1990, the constitution favored native Melanesian control which led to heavy Indian emigration from the Island which resulted in economic difficulties due to the population loss. However this also insured that the Melanesians would become the majority in the country. This resulted in the amendment of the constitution on July 25, 1997 to allow non ethnic Fijians more power in government making a multiparty government mandatory which led to more equitable relations. In 1999 free elections led to a government led by an Indo-Fijian, but was disrupted by a coup in May of 2000, which resulted in a prolonged period of political unrest. Finally there were Parliamentary elections held on August 2001, giving Fiji a democratically elected government.

Physically, Fiji is quite small with a total land area of 18,270 square kilometers, slightly smaller than the size of New Jersey. It consists of 332 Islands of which 110 are inhabited with an estimated 880,874 people (2004). . In 1998 there were a reported 51% Fijian’s (predominantly Melanesian and a Polynesian mixture) and 44% Indians living on the Island, with Europeans, other Pacific Islanders, overseas Chinese and others making up the other 5% of the population. Fijian’s are mainly Christian (52%), Methodist’s making 37% of the population and Roman Catholics accounting for 9%. The Indians in Fiji are mainly Hindu making up 38% of the religious affiliation and 8% of the population are Muslim with 2% believing in other minor religions.

Most of the population, 64.1%, is in the 15-64 age range, with 32% in the 14 and under age range, and just 3.8% in the 65 and over age range. The median age in Fiji is 23.7 years. In terms of gender, there are roughly the same number of females and males in the working age range with 278,759 males and 278,150 females in the 15-64 age range. In the other age ranges there is a slight difference with about 1.04 males per every female under 15 years of age and .85 males per every female in the over 65 age range. However in the overall population there is only a minor difference with 1.01 males per every female in the total population. There was a reported 1.41% population growth rate with a recorded birth rate of 23.06 births per 1000 population in 2003 and a death rate of 5.7 deaths per 1000 population. There is on average 2.81 children born to each woman. However there are 13.35 of deaths per 1000 live births with 2.86 more male births deaths than female per 1000 population. The average life expectancy is 68.88 years with females outliving the males by about five years at 71.44 years on average. However people are emigrating from the Island at a rate of 3.24 migrants per 1000 population.The population of Fiji is extremely literate with 93.7% of the population being literate. There are slightly more males who are literate, 3.6% more than females.

Economically, Fiji is one of the most developed Islands of the Pacific. Its major source of industry is tourism with 300,000 to 400,000 tourists annually. This along with their sugar exports, are the major source of foreign exchange. Sugar processing actually makes up 1/3 of the industrial activity. Other industries include clothing, copra, gold, silver, lumber, and small cottage industries. There is however still a large subsistence sector with problems stemming from low investment, uncertain land ownership rights, and the government’s inability to manage its budget. Even though 10.95% of the land is fit for cultivation, crops are only maintained on 4.65% of the land. Deforestation and soil erosion have recently become a problem.

GDP is $4.822 billion as reported in 2002 with a real growth rate of 4.6%. Per capita GDP is $5,600. GDP by sector consists of agriculture making up 17%, industry 25%, and services 58% as reported in 2000. Trade in goods accounted for 84.7% of GDP in 2001. The population living below the poverty line as reported is 25.5%. The inflation rate is 2% as reported in 2002. The labor force includes 137,000 as reported in 1999. Mostly the labor force is involved in agriculture including subsistence agriculture making up 70%. The unemployment rate is 7.6 % as reported in 1999. One of the main problems of Fiji is that while the countries revenues are $427.9, its expenditures are $531.4 which leads to a deficit as reported in 2000.

Fiji’s prime natural resources include timber, fish, gold, copper, offshore oil potential and hydropower. Agricultural products include sugarcane, coconuts, cassava, rice, sweet potatoes, bananas, cattle, pigs, horses, goats and fish. Fiji makes $442 million in exports which makes up 66% of the GDP in 2000. Exports in order of importance include sugar, garments, gold, timber, fish, molasses, and coconut oil. US is one of its biggest trading partners with 25.1% of the exports, Australia with 19.5%, the UK with 10.6%, Japan with 6.3%, and Samoa with 5.5% as reported in 2002. Fiji however imports $642 million making up 64% of the GDP in 2000 with the imports in the order of importance being manufactured goods, machinery and transport equipment, petroleum products, food and chemicals. Its import partners include Australia 37.3%, New Zealand with 17.2%, Singapore with 16.1%, Japan with 4.2%, and China with 4%. Its external debt was $135.9 million in 2000. It also received $40.3 million in economic aid in 1995 and $31.8 aid per capita in 2001.

Technologically, Fiji had 80,901 telephone main lines in use in 1999 with 5200 mobile cellular phones in use in 1997. By 2001, there were 210.9 telephone and mobile phone lines per 1000 people. Their telephones consist of modern local, interisland, and international public and special-purpose telephone, telegraph, and teleprinter facilities as well as a regional radio communications center. There is also access to important cable links between US and Canada as well as between New Zealand and Australia. There is a satellite earth station – 1 Intelsat in the Pacific Ocean which Fiji uses. In 2000 there were also two Internet Service Providers with an estimated 15,000 internet users with 60.9 personal computers per 1000 people in 2001.

There are a total of 597 kilometers of railways in Fiji which belongs to the government owned Fiji Sugar Corporation who uses it to haul sugarcane during harvest season from May to September. There are also a total of 3,440 kilometers of Highways, of which 1,748 kilometers were paved as of 1999. Paved roads accounted for 49.2% in 2000. There are 27 airports, 3 of which have paved runways. Fiji is also a major transshipment point for goods destined for other South Pacific islands.

One of the biggest problems faced by Fiji is its constitutional crisis. On June 1, 2000, the World Bank expressed concern that this problem could have long-lasting consequences on the country’s reputation, raise doubts in the international community about investing and traveling and have adverse development impacts. This could account for the already low investment of Fiji. While in 1998, it was reported that the net investment in the country was 107 million in US dollars, in 2001, there was a negative balance of 2.6 million of net investment on the balance of payments account of the country. World Bank Country Director for the Pacific Islands Klaus Rohland said concerning this matter, “experience the world over shows clearly that good economic and social development is not a stop-start process. Interruptions, however caused, carry significant costs – usually borne by the poorest and most vulnerable people. For this reason, we encourage all involved to resolve the situation quickly, peacefully, and in a way which preserves Fiji’s reputation as a safe and reliable destination in the Pacific and safeguards the long term development goals of Fiji.” The problems are not going to go away soon however as the World Bank Group only has a small program with Fiji and no lending activities but rather two minor advisory engagements. The South Pacific Project Facility along with the Foreign Investment Advisory Service, both part of the Bank Group, also have continuing small-scale operations in Fiji. The Fijian exchange rate has slowly been decreasing going from 1.99 Fijian dollars per US dollars in 1998 to 2.19 Fijian dollars per US dollars in 2002. In order for Fiji to emerge from its everlasting problems, it will need a lot more help and a lot more International attention.

Unemployment is another problem plaguing the Islands. More than half of the population is under the age of 25 resulting in a deficit of jobs created for the young people coming into the workforce. By 2001, there were about 50% of households living below the official poverty line or just above it (25%). Therefore, there has been a rise in crimes as more burglaries and property crime has been reported. As discussed previous, almost 94% of Fiji’s population is literate meaning that the labor force has the potential to provide significant benefits to the industries in Fiji with the proper vocational and educational programs being funded by the government in order to achieve long term growth and economic stability.

Political unrest has both affected lack of foreign investment as well as a depletion of a trained workforce. After the Indo-Fijians emigrated from the country in the aftermath of the political coups, this resulted in a brain drain of highly skilled managers, doctors, nurses, teachers, and technical workers. Fiji, even though they have an ever-growing increasing working age population, the labor force is unskilled resulting from the brain drain. Even though tourism gained back most of its business before September 2001, the terrorist attacks of 9/11 brought another setback to the industry. Furthermore more than 1200 land leases expired at the end of 2001, forcing many Indo-Fijian farmers off their sugar cane farms. Thus this brought Fiji to a widening trade deficit in 2002. Potential area of growth in the county is likely to be the automotive assembly industry. A projected turnover of $100 million in the construction sector is an increase of 66% from 2002. Thus, there would also be more possibilities of employment at this time.

Fiji has systematic problems that all need to be addressed and solved in order for the country to turn its economy into a positive direction. The decline of its exchange rate and the decrease of foreign investment in Fiji are the first signs of a path into a negative direction which need to be addressed before Fiji’s economy slides further downward. Being one of the major transshipment points for goods destined for other South Pacific islands, Fiji has a major opportunity in marketing itself and its services in this industry. This will garner more jobs for its increasing working age population and may also make up for the brain drain caused by the emigration of its skilled workers. There are many management and industrial working opportunities waiting for the native Fijian people in this sector. There is also a new government set into place in Fiji which can help the political unrest and turmoil by setting additional amendments in the constitution stabilizing the government and making it as equitable as possible to defer future coup efforts. This will lead to a trust by the international community which would lead to investment into the Fiji, thereby strengthening Fiji’s economy and providing for further stability. These instituted changes coupled with help from the World Bank and other such international organizations will open the eyes of the world to Fiji and will help Fiji’s poor lead a life that is comfortable and prosperous.

Works Cited

Baikeirewa, Sunia and Sania, Josefa. “Fiji National Assessment Report.” 20 Feb. 2004. http://www.sidsnet.org/docshare/other/20031230154545_Fiji_NAR_2003.pdf

“Fiji Data Profile.” The World Bank Group. Aug 2003. http://devdata.worldbank.org/external/CPProfile.asp?CCODE=FJI&PTYPE=CP

“Fiji Economics.” http://www.frommers.com/destinations/fiji/0208031309.html

“Fiji.” The World Handbook. 18 Dec. 2003. http://www.cia.gov/cia/publications/factbook/geos/fj.html

Stephens, Peter. “World Bank Statement on Fiji.” 1 June 2000. http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20014831~menuPK:34466~pagePK:64003015~piPK:64003012~theSitePK:4607,00.html