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Pacific Island Countries: In Search of a Trade Strategy

Author

Listed:
  • Hong Chen

    (Fujian University of Technology, China)

  • Lanieta Rauqeuqe

    (Reserve Bank of Fiji, Fiji)

  • Shiu Raj Singh

    (Asian Development Bank, Philippines)

  • Yiqun Wu

    (International Monetary Fund, United States)

  • Yongzheng Yang

    (International Monetary Fund, United States)

Abstract

This paper examines the role of international trade for economic prosperity in Pacific island countries (PICs), discusses their comparative advantage, and explores the potential for trade, and tourism in particular, to serve as a locomotive for inclusive economic growth. We find the trade performance in PICs has been generally weak over the past decade, with the exception of resource-rich countries. Small country size and remoteness from global economic centers may have contributed to this relatively poor performance. Using the gravity models to analyze the determinants of merchandise trade and tourism in PICs, we find tourism in these countries faces more favorable conditions for growth than goods exports. Further, we place our analysis in the context of the eastward shift of global economic gravity, focusing on emerging Asia as a source of demand for resource-based goods and services. We argue that the emergence of Asia as a dynamic global economic region presents PICs with an unprecedented opportunity to develop trade, particularly tourism, although traditional markets will remain important for a long time to come. Moreover, if stronger synergies can be established between tourism, agriculture, and fisheries, Pacific island countries stand a better chance to improve broad-based growth.

Suggested Citation

  • Hong Chen & Lanieta Rauqeuqe & Shiu Raj Singh & Yiqun Wu & Yongzheng Yang, 2019. "Pacific Island Countries: In Search of a Trade Strategy," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(12), pages 56-80, September.
    • Handle: RePEc:sgm:jbfeuw:v:2:y:2019:i:12:p:56-80
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    Cited by:

    1. Asian Development Bank Institute, 2017. "Aid for Trade in Asia and the Pacific: Thinking Forward About Trade Costs and the Digital Economy," Working Papers id:11882, eSocialSciences.
    2. Keshmeer Makun & Baljeet Singh, 2025. "Trade deregulation and fiscal revenue in selected Pacific Island countries," PLOS ONE, Public Library of Science, vol. 20(1), pages 1-16, January.
    3. Prakash, Kushneel & Maiti, Dibyendu, 2016. "Does devaluation improve trade balance in small island economies? The case of Fiji," Economic Modelling, Elsevier, vol. 55(C), pages 382-393.
    4. International Monetary Fund, 2014. "Republic of Palau: Selected Issues," IMF Staff Country Reports 2014/111, International Monetary Fund.
    5. Asian Development Bank (ADB) & Asian Development Bank (ADB) & Asian Development Bank (ADB) & Asian Development Bank (ADB), 2015. "Aid for Trade in Asia and the Pacific: Thinking Forward About Trade Costs and the Digital Economy," ADB Reports RPT157499-2, Asian Development Bank (ADB), revised 25 Aug 2015.
    6. Nguyen, Bao & Sum, Dek, 2019. "Macroeconomic Shocks and Trade Balance Adjustments in Papua New Guinea," MPRA Paper 93033, University Library of Munich, Germany.

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    JEL classification:

    • F6 - International Economics - - Economic Impacts of Globalization

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