SOME ASPECTS OF ECONOMIC DEVELOPMENT AND HUMAN WELL BEING IN THE PACIFIC ISLAND MINI STATES *

Transcription

1 SOME ASPECTS OF ECONOMIC DEVELOPMENT AND HUMAN WELL BEING IN THE PACIFIC ISLAND MINI STATES * Azmat Gani Macmillan Brown Centre for Pacific Studies University of Canterbury Christchurch New Zealand 16 August 2007 ABSTRACT This paper traces the achievements in economic development and human well being in Pacific Island mini states. An assessment of the several of the indicators of human well being reveal that most countries remain off track or are slow in terms of achieving satisfactory levels of well being. For example, poverty levels remain high; children under the age of five remain underweight; the under five mortality rate is high; immunization rates are deteriorating; maternal mortality rates remain high; there is prevalence of gender gaps; and many countries still lag in terms of rural population with access to improved sanitation. Above all this, several countries economic performance has not been impressive as it remains poor and uneven across a number of countries thus posing major long-term developmental challenges. Some policy implications are drawn. * This paper is part of an extended project resulting from the 2007 Macmillan Brown Research Scholarship awarded to the author. The author is grateful for the Macmillan Brown financial support. 1

2 1.0 INTRODUCTION Among the twenty two Pacific Island countries, there are 12 countries that can be classified as mini states as their populations number less than 100,000. These are American Samoa, Cook Islands, Kiribati, Marshall Islands, Nauru, Niue, Northern Mariana Islands, Palau, Pitcairn, Tokelau, Tuvalu and Wallis et Futuna. These mini states are also characterized by small land area, ranging from 10 square kilometers in Tokelau to 811 square kilometers in Kiribati with a combined population of some 369,000 people. Other than low levels of physical and natural resource endowments, the economic development is considered to be unsatisfactory in several of these countries. This poses a major developmental challenge for them, for example, in terms of achieving the targets of the Millennium Development Goals launched six years ago with a vision for a better world (see United Nations, 2000 and 2006). While the overall state of human well being is considered to be poor in the developing countries, studies providing a comprehensive and systematic investigation into societal well being for the Pacific Island mini states are rare. Such inadequacies in the literature make it difficult for various stakeholders (governments, non-governmental organizations, donors, development financing institutes and Pacific regional policy makers) to gauge the extent of policy intervention and investment required in achieving a satisfactory level of progress towards improving human condition. In this spirit, where published data is available, this study assesses the status of human well being in the Pacific Island mini states. The intention here is to provide an assessment of progress and not to review the causes of progress or stagnation. It is 2

3 thought that such an analysis will unfold the current state of human well being and generate debate on formulating policies to ensure improved societal welfare. The paper is organized into four sections; beginning with an assessment of the overall economic progress in section two. Section three examines the dynamics in the progress in human well being. A summary with policy implications follow. 2.0 ECONOMIC ACHIEVEMENTS According to United Nations Development Program (UNDP, 1990), the basic human development objective is to increase individual choice allowing people to lead longer and healthier lives. One way to achieve this to have conducive economic polices that facilitate higher level of production and exports and hence economic growth. Economy wide polices are important but erroneous policies can have disruptive effects on economic growth and national progress. Deteriorations in economic progress are likely to compound the social and human effects and reduce the capacity of countries to counter the worst effects (Dixon et al, 2001). A number of indicators are used to assess economic achievements of the Pacific Island mini states. These are economic growth, unemployment, per capita incomes, political stability, environmental sustainability and technological diffusion. 2.1 Economic Growth The economic achievements of the Pacific Island mini states happen to be poor with some countries experiencing long periods of sluggish growth. Figure 1 depicts the real GDP growth rates for five countries for the last ten years. With the exception of Cook 3

4 Islands, Kiribati, Marshall Islands, Micronesia and Nauru recorded very low or negative GDP growth rates for most of the years between 1996 and The sluggish economic growth depicted in Figure 1 is consistent with views expressed in a recent World Bank Report that noted that many of the Pacific Island Countries have been characterized with poor economic growth among other factors (see The World Bank, 2006a). Figure 1. Growth Rate of Gross Domestic Product 30.0 Percentage Years Cook Islands Kiribati Marshall Islands Micronesia Nauru Source of data for Figure 1: Asian Development Bank (2006). 2.2 Unemployment The unemployment rate is also a useful indicator of economic progress. The long-term unemployment statistics do not exist for the Pacific Island mini states. Latest available data is for 2000 for most countries with the exception of 2005 for Palau (Figure 2). On this basis, the unemployment picture for most countries is depressing as unemployment 4

5 rates exceed 10 percent in Cook Islands and Palau and 20 percent in Marshall Islands and Micronesia (Figure 2). The high levels of unemployment of labour means that a large proportion of population has no income earning capacity, thus having a direct negative bearing on household s wealth and welfare. It is also very likely that the sluggish economic growth in the post-2000 period experienced by Kiribati, Marshall Islands and Micronesia may not have extended any significant effect in curbing unemployment. Figure 2. Unemployment Rate Percentage Cook Islands (2001) Kiribati (2000) Marshall Islands (2000) Micronesia (2000) Palau (2005) Countries and Latest Years Data Source of data for Figure 2: Asian Development Bank (2006). 2.3 Per Capita Incomes The per capita gross national product (GNP) is another indicator of economic progress. The World Bank uses the per capita GNP as a criterion to classify economies (see The World Bank, 2006b). Accordingly, the Pacific Island mini states fall in the lower-middleincome category of countries meaning that their per capita income ranges from US$876 5

6 to US$3,465 (see The World Bank, 2006b). The trends in per capita GNP for selected countries are depicted in Figure 3 indicating stagnation in Kiribati, Marshall Islands and Micronesia in the post-2000 period. Figure 3. Per Capita GNP US Dollars Years Kiribati Marshall Islands Micronesia Palau Source of data for Figure 3: The World Bank (2006b). It is generally assumed that an increase in investment, industrialization and agricultural productivity are closely related to a rise in economic growth which in turn would raise the quality of life measured in terms of per capita GNP. However, nonmonetary variables are other useful indicators of well being. Sen (1998) notes that the GNP per capita may be a good indicator of the average real income of a nation, but the quality of life of a person depends not merely on his or her personal income, but also on various physical and social conditions. Infant mortality rate is a better indicator of human welfare as it is epistemically rich, practically important, and mortality data also moves 6

7 fast enough to provide guidance on a rapidly changing economic and social situation (Sen, 1998). This aspect of human well being is analyzed is section Political Stability Political changes and developments can also affect national progress. For example, political instability can result in economic failures such as unemployment, falling incomes, deterioration in law and order, violence and crime; all likely to have detrimental effects on human well being. On the political front, most of the Pacific Island mini states are politically stable as their political indicator scores are in positive numbers and it also increased from 2004 to 2005 in all countries as depicted in Figure 4. According the World Bank (2006c), the political stability indicator is measured on a scale from to 2.50 with lower scores indicating worsening outcomes. The trends depicted in Figure 4 reveal evidence of politically stable economies. Figure 4. Political Stability Indicator Score Kiribati Marshall Islands Micronesia Nauru Palau Tuvalu Countries

8 Data for Figure 4: The World Bank (2006c). 2.5 Environmental Sustainability Ensuring environmental sustainability is vital for long-term economic growth and national development. It requires achieving sustainable development patterns and preserving the productive capacity of natural ecosystems for future generations. The poor are the most vulnerable to worsening environmental conditions through the depletion of natural resources and the degradation of ecosystems and their services. Environmental resources are limited in the Pacific Island mini states. Although some have wide areas of sea, its resources are depleting as well as costly to access. Global climate change tends to cause damage and threaten several small states to be uninhabitable. The Pacific Island mini states are not gifted in terms of land based resources. While data is limited in terms of available land resources, statistics on land area under forest does indicate environmental sustainability. Figure 5 depicts the proportion of land area under forest in two periods 1990 and According to Figure 5, large areas of forest are found in the Cook Islands, Micronesia and Palau. Tuvalu has just over 30 percent of land area under forest cover while Nauru has just over 15 percent of land area under forest. Kiribati and Marshall Islands have less than 10 percent of land area under forest. Other than Cook Islands and Palau, none of the countries experienced any significant increases in forest cover over the 15 year period through bringing more land under forest cover. 8

9 Figure 5. Proportion of Land Area Covered by Forest Percentage Cook Islands Kiribati Marshall Islands Micronesia, Fed. States of Nauru Palau Tuvalu Countries Source of data for Figure 5: Asian Development Bank (2006). Another indicator of environmental sustainability is the carbon dioxide emissions. Carbon dioxide emissions remain very low for Cook Islands and Kiribati while Nauru and Palau have made some reductions in carbon dioxide emissions (Figure 6). 9

10 Figure 6. Carbon Dioxide Emmissions Per Capita Metric Tons Years Cook Islands Kiribati Nauru Palau Source of data for Figure 6: Asian Development Bank (2006). 2.6 Technology The new information and communications technology (ICT), including innovations in microelectronics, computing and telecommunications most likely to have an influential role for the betterment of national and individual well being. Technology is important in nation building. The new-growth theory explains that technical progress is determined by the accumulation of knowledge by forward-looking profit maximising agents (Romer, 1986). Technological progress is considered to generate productivity gains and is an essential component behind sustained economic growth. Technological progress has its effects far beyond economic growth: technology and human capital have a bi-directional causation. Technology contributes to human capital as well as assisting in the progress of individual well being. On the other hand, higher levels of human capital make strong contributions to technology creation and diffusion. 10

11 Although a country s level of achievement and development in technology can be a result of advancements in several physical and natural disciplines, for the Pacific Island mini states, the focus is narrowed to developments in ICT and its vital role in accelerating the dissemination of essential knowledge. Such knowledge may include nutrition, dietary patterns, hygiene, sanitation, modern medicines, education, human rights, and rule of law directly connected to individual well being. While several factors contribute to economic well being, Sen (2002) has emphasised that the importance of global contact and interaction applies to economic relations among others and that there is much evidence that global economy has brought prosperity to many different areas of the globe and in overcoming pervasive poverty, both modern technology and economic interrelations have been influential. Figure 7 depicts the trends in telephone lines and cellular subscribers. While diffusion of telephone lines and cellular subscribers have increased in Cook Island, Micronesia and Nauru over the period, Kiribati, Marshall Islands and Tuvalu reveal depressing state of line and cellular phone subscribers. In these three countries, less than 10 per 100 people have access to telephone lines and cellular phones. 11

12 Figure 7. Telephone Lines and Cellular Subscribers Per 100 population Years Cook Islands Kiribati Marshall Islands Micronesia Nauru Tuvalu Source of data for Figure 7: The Asian Development Bank (2006). The trends in internet users are depicted in Figure 8. Marshall Islands, Kiribati and Nauru have very low internet users while Cook Islands, Micronesia and Tuvalu reveal increasing levels of internet users. In general, low levels of the diffusion in information and communication technologies in Kiribati, Marshall Islands, Nauru and Tuvalu is likely to impose serious negative effects on the development of the private sector as well as the state of their human condition. 12

13 Figure 8. Internet Users Per 100 population Years Cook Islands Kiribati Marshall Islands Micronesia Nauru Tuvalu Source of data for Figure 8: The Asian Development Bank (2006). 3.0 HUMAN WELL BEING ACHIEVEMENTS The eradication of human poverty, reducing the state of misery and deprivation and improving overall economic well being of the large proportion of the world s deprived population is certainly an issue of prime concern for many poor countries. The Pacific Island mini states are no different. Theoretically, the contributions to the endogenous growth literature, pioneered by Romer (1986) and Lucas (1988), provide new ways of conceptualising how human capital might contribute to self-sustaining per capita income growth. The endogenous growth provides ample evidence that human capital plays an essential role in a country s development (Barro, 1991). This theoretical framework gives significant weight to human capital creating agents who can become more productive through their acquisition of knowledge, increased skills and better health and nutrition. Epidemiological policies, health care, educational facilities directly influence the quality 13

14 of life and longevity of populations and these, together with levels of literacy, contribute to improvements in human capital. Therefore, higher levels of individual well being are likely to represent an increase in human capital, hence contributing to higher levels of aggregate output. Increased output generates higher incomes and improves per capita incomes inducing overall well being. This section provides an assessment of a range of indicators of human well being in the Pacific Island mini states. These include poverty, education and literacy, gender equality, mortality, maternal health, incidence of diseases and sanitation. Each of these indicators is discussed on the basis of available published data. 3.1 Incidence of Poverty The commonly used measure of poverty is the poverty line. The World Bank and UNDP have attempted to estimate the number in poverty by applying a standard poverty line that uses an expenditure of US$1 in purchasing power parity terms as the minimum expenditure to meet the basic needs (see The World Bank, 2006b). Application of this standard poverty line yields an estimate of the total number of poor of approximately 38 percent in Kiribati in 1996; 20 percent in Marshall Islands in 1999; 5 percent in Micronesia in 1998; and 17 percent in Tuvalu in While these statistics are useful, the data is not current as it dates back some eight to ten years. It is quite likely that over this period economic, demographic and social changes could have influenced the number of people in poverty. Measures of poverty line in the post-2000 period are not available for any of the Pacific Island mini states. Given the poor economic growth and high 14

15 unemployment rates discussed earlier, it is quite likely that the total number in poverty would have increased in most countries. The data on national estimates of poverty are available, again for the pre-2000 period with the exception of Palau (Table 1). According to the data in Table 1, poverty levels are high with more than half the population of Kiribati and Palau in poverty while more than quarter of population in Micronesia and Tuvalu are in poverty. Table 1. National Estimates of Poverty. Country Cook Islands Kiribati Marshall Islands Micronesia Nauru Palau Tuvalu Proportion of population below the poverty line 12.0 (1998) 50.0 (1996) 27.9 (1998) 59.2 (2004) 29.3 (1994) Source: Asian Development Bank (2006). Prevalence of underweight children under 5 years of age indicates data not available. The prevalence of underweight children under five years of age is another indicator that can be used to gauge the extent of poverty. The statistics on this is not impressive (Table 1) as Cook Islands, Kiribati, Marshall Islands and Micronesia have more than 10 percent of the children under the age of five to be underweight (Table 1). In Marshall Islands alone more than a quarter of its children under the age of five are underweight (Table 1). 15

16 3.2 Education and Literacy Literature on economic growth has heavily emphasized the importance and the beneficial effects of education. Among the early studies based on the endogenous growth model, Lucas (1988) showed that education as the critical force that generates technological progress in an economy while empirical studies confirmed that schooling was closely correlated with economic growth (Barro, 1991) and that output growth is positively related to the change in educational attainment (Temple, 1998). The World Bank report on the East Asian Miracle (The World Bank, 1993) noted that Hong Kong, Korea, Singapore and Taiwan achieved unpredented rates of economic growth while making large investments in education. Similarly, Krugman (1994) also noted of rapid expansion of education in East Asian Tigers. Education is also seen as an intentional effort to increase the resources needed for creating new ideas, and thus any increase in education will directly accelerate technological progress (Van Den Berg, 2001, p.273). Table 2 gives some indication of educational attainments in the Pacific Island mini states. While the total net enrolment ratio in primary education were above 90 percent in all except for Nauru, there are huge disparities across the countries in terms of percentage of pupils who start in grade 1 and reach grade 5 (Table 2). This variation across countries is quite large, ranging from 31 percent in Nauru to 84 percent in Palau. Kiribati, Marshall Islands and Palau recorded more than 80 percent of pupils who start grade 1 and reached grade 5. Cook Islands, Micronesia, Nauru and Tuvalu are the countries lagging in terms of percentage of population starting grade 1 who reach grade 5. 16

17 Table 2. Educational Attainments. Country Cook Islands Kiribati Marshall Islands Micronesia Nauru Palau Tuvalu Total Net Enrolment Ratio in Primary Education (%) 92 (2001) 94 (2000) 90 (2003) 92 (2000) 81 (2000) 96 (2000) 100 (2000) Source: Asian Development Bank (2006). Total proportion of pupils starting grade 1 who reach grade 5 (%) 51 (2000) 82 (2003) 86 (2000) 67 (2000) 31 (2001) 84 (2000) 70 (2001) 3.3 Gender Equality and Women s Empowerment The human development (defined as enlarging people s choices in a way which enables them to lead longer, healthier and fuller lives, see UNDP (1990, p. 9) approach also linked to the robust role of economic development on the impact on lives of a wide cross section of a nations population. It means extending the impact of economic development that concern for all human beings irrespective of race, class, gender or nationality. At the same time, achievements in human development make a critical contribution to economic growth with two distinct causal chains: economic growth to human development and human development to economic growth (Ranis, Stewart and Ramirez, 2000). Of main concern here is the impact of economic development on women. As a matter of fact, economic development should not discriminate national prosperity on the basis of sex. Man and women should benefit equally as nations achieve economic progress. Economic development can contribute to women s welfare through household and government activity. For example, women s disposable income is of crucial 17

18 importance as their ability to spend contributes directly to their well being in terms of access to food, clean drinking water, education and health care services. It should be noted that many developing countries suffer from significant dualism in which a relatively high wage, high income economy appears to exist within a much less developed economy (Krugman, 1998). This kind of dualism can have a strong effect on women s well being. Gender equality is important as far as national human development policies are concerned. Heyzer (2004) notes that this recognition of gender equality is critical to achieving the Millennium Development Goals that emphasize that the promotion of gender equality and empowerment of women are effective ways of combating poverty, hunger and diseases and encouraging sustainable development. While data is scarce in terms of comprehensively measuring gender equality and women s empowerment in the Pacific Island mini states, a review of available data on the ratio of girls to boys in primary education reveals that that ratio is almost 1.0 for Cook Islands, Kiribati, Nauru and Tuvalu (Figure 9). In the Marshall Islands, Micronesia and Palau, the ratio is still less than 1.0 and deteriorated in the /04 period thus indicating prevalence of gender imbalance in primary education. 18

19 Figure 9. Ratio of Girls to Boys in Primary Education Cook Islands Kiribati Marshall Islands Micronesia, Fed. States of Nauru Palau Tuvalu Ratio Countries /2004 Source of data for Figure 9: Asian Development Bank (2006). Another measure to gauge gender equality is the share of women in wage employment in non-agricultural sector depicted in Figure 10. According to the trends in Figure 10, the share of women in wage employment in non-agricultural sector is not in par with men and in most countries; it remains below 40 percent. While Kiribati and Palau made slight progress in employing more women in non-wage agriculture over periods, Cook Islands and Micronesia made no significant progress. The share of women in wage employment in non-agricultural sector remains below 40 percent in Cook Islands and below 35 percent in Micronesia. 19

20 Figure 10. Share of Women in Wage Employment in Non Agricultural Sector Percentage Cook Islands Kiribati Marshall Islands Micronesia, Fed. States of Palau Countries Source of data for Figure 10: Asian Development Bank (2006). The final indicator of gender equality and women s empowerment considered here is women s share of seats in parliament. According to the World Bank (2006b), between 2000 and 2006, Kiribati and Marshall Islands had 5 and 3 percent of women holding parliamentary seats respectively while Micronesia, Nauru, Palau and Tuvalu had no women representation in the Parliament. These data indicate that women of the Pacific Island mini states have not managed to increase their voice in public decision making. It is quite clear that women face gender gaps and that gender discrimination is still pervasive. Women are less likely to have benefited from education, employment and voice through public decision making. Women are likely to have been deprived in terms of their economic, social and political rights. It has been noted that the promotion of gender equality should be an integral component of all the development cooperation 20

21 activities of national governments and the need to have efficient organizations that constantly push for change is important (Johnson, 2004). 3.4 Human Health According to the World Health Organisation, human health is defined as the state of complete physical, mental and social well being. Human health and development relationship is a reciprocal one. Economic development tends to improve human health while better health contributes to economic development. There are several payoffs from a healthier population. For example, better health for workers can provide direct and immediate benefits by increasing their productivity and that better child health and nutrition promotes future productivity growth. Investment in health increases the quantity of human resources for the future through increased life expectancies. While the health status of an individual can be determined through clinical examination by qualified health professional; this is an expensive way to measure the health status of an entire population. As such, there is a heavy reliance on national statistics. Health statistics generally attempt to measure morbidity (sickness) and mortality (deaths). In the Pacific Island mini states, national statistics on morbidity is inadequate. Due to large number of isolated islands and lack of infrastructure (transportation and communication services and rural health centres and health care personnel s) many sick people do not consult a doctor or enter a hospital and therefore fail to get in contact with the national statistical system. Mortality data on the other hand is considerably better as death like seldom gets unnoticed and most countries have reasonably satisfactory systems of death registration. The health status of an entire 21

22 population can be measured by health statistics as this is more cost effective. Among the general measures of human health, some aspects of human health analyzed here includes under five mortality, immunization, maternal health, incidence of diseases and population with access to improved water and sanitation Under Five Mortality Child mortality rates are perhaps one of those general measures that give us a reasonably good idea of how people s quality of life changes over time (see Sen, 1998). It is a measure that accurately reflects the welfare of people. Improved health of the young can lead to a healthier population in the future as better child health and nutrition directly helps children develop into stronger and healthier adults (Perkins, et al., 2001, p. 355). Data on under five mortality is depicted in Figure 11. While all countries experienced an improvement in under five mortality rates between 1990 and 2004, this statistic is appalling for Kiribati, Marshall Islands and Tuvalu. These three countries have under five mortality rates that exceed above 45 per 1,000 live births and in Kiribati it exceeds 60 per 1,000 live births. These numbers are horrendously high for small economies. While under five mortality remains below 30 per 1,000 live births in Cook Islands, Micronesia and Palau; Micronesia and Palau did not make any significant improvement between 2000 and Cook Islands have been the best achiever in terms of reducing the under five mortality rates among the six Pacific Island mini states depicted in Figure

23 Figure 11. Under Five Mortality Rate Per 1,000 Live Births Years Cook Islands Kiribati Marshall Islands Micronesia Palau Tuvalu Source of data for Figure 11: Asian Development Bank (2006). Another indicator of child health is the rate of immunization against major diseases such as measles and diphtheria. Figure 12 depicts the proportion of 1-year old children immunized against measles for Kiribati, Marshall Islands, Micronesia, Palau and Tuvalu for the periods. The trend depicted in Figure 12 is seemingly awkward for some countries. While immunization against measles increased from around 80 percent to almost 100 percent in Palau and Tuvalu, immunization rates fell in Kiribati and Marshall Islands between 2000 and In Marshall Islands, immunization against measles fell from 94 percent in 2000 to 70 percent in 2004 while in Kiribati, it fell from 80 percent in 2000 to 56 percent in

24 Figure 12. Proportion of 1-Year Old Children Immunised Against Measles Percentage Years Kiribati Marshall Islands Micronesia Palau Tuvalu Source of data for Figure 12: Asian Development Bank (2006) Maternal Health While the world has seen huge improvements in health, survival and fertility, in recent decades global maternal mortality has not declined and that the difference in maternal mortality between the industrialized and the developing world is greater than any other development indicators (The World Bank, 2003a). For example, nearly half of the maternal deaths in developing countries occur during labour or delivery or in the immediate postpartum period (The World Bank, 2003b). The Pacific Island mini states are no different to other developing countries when it comes to maternal mortality rates. Data on this indicator is highly scarce. However, data is available for Kiribati and Marshall Islands. Maternal mortality rates in these two countries are high and show no signs of improvement. Maternal mortality ratio (per 24

25 100,000 live births) was 10 in 1990 for Kiribati and this increased to 56 in In the Marshall Islands, maternal mortality ratio was zero in 1990 and this increased to 74 in The proportion of births attended by skilled personnel is another indicator of maternal health. While Palau, Tuvalu and Micronesia have almost 100 percent of births attended by skilled personal, this is not the case in Cook Islands and Kiribati (Figure 13). Although Cook Islands saw an improvement in the proportion of births attended by skilled personal from 60 percent in 1990 to 85 percent in 2000, in Kiribati, it has been almost the opposite. The proportion of births attended by skilled personal fell from almost 90 percent in 2000 to about 85 percent in Figure 13. Proportion of Births Attended by Skilled Personnel Percentage Years Cook Islands Kiribati Micronesia Palau Tuvalu Source of data for Figure 13: Asian Development Bank (2006). 25

26 3.4.3 Incidence of Diseases Diseases undermine efficiency and lower returns on human capital investments. According to the World Bank (2006d), HIV/AIDS has a direct impact on human health, an input on economic development and an indispensable (loss of years of healthy life, reduced labour supply, and reduced efficiency of labour due to illness). The World Bank (2000) has also noted of other negative consequences becoming more severe: health systems become overburdened; fiscal cost rises; and social systems become overburdened; and there is substantial negative impact on economic growth. In general, morbidity and mortality, particularly as a result of HIV/AIDS and malaria, raise the cost of labour, lower productivity and higher health care and recruitment costs (The World Bank, 2006a). A number of diseases both endemic and epidemic continue to affect the Pacific Island mini states population (see Table 3). Tuberculosis is prominent among these countries. While data is not available for the incidence of HIV/AIDS, one of the indicators to reverse the prevalence of HIV/AIDS is the contraceptive prevalence rate. Long-term data on this is not available but available statistics indicates that the contraceptive prevalence rate is above 30 percent in Cook Islands, Marshall Islands and Tuvalu while it is below 30 percent in Kiribati and Palau (Figure 14). 26

27 Table 3. Incidence of Disease. Countries Prevalence of tuberculosis in 2000 (per 100,000 population) Prevalence of diabetes in 2000 (per cent of population) Mortality rate for cardiovascular disease in 2002 (per 100,000 population) Cook Islands Marshall Is. Micronesia Nauru Palau Tuvalu Kiribati Source: World Health Organization (available on line at indicates data not available. Mortality rate for cancer in 2002 (per 100,000 population) Figure 14. Contraceptive Prevalence Rate Percentage of married women years Cook Islands (2000) Kiribati (1998) Marshall Islands (2001) Palau (2000) Tuvalu (2002) Countries Source of data for Figure 14: Asian Development Bank (2006). 27

28 Improved Water and Sanitation Environmental health is equally important. Improvements in environmental sanitation can lead to reduction in diseases. Two indicators are used to gauge the effect of environmental sanitation. First, is the rural population with access to improved water (Figure 15) and second, rural population with access to improved sanitation (Figure 16). While most countries have more than 80 percent of their population with access to improved water, in Kiribati this number is less than 60 percent. Other than Cook Islands and Tuvalu; Kiribati, Marshall Islands, Micronesia and Palau still lag in terms of rural population with access to improved sanitation (Figure 16). Figure 15. Rural Population with Access to Improved Water Percentage Cook Islands Kiribati Marshall Islands Micronesia, Fed. States of Palau Tuvalu Countries Source of data for Figure 15: Asian Development Bank (2006). 28

29 Figure 16. Rural Population with Access to Improved Sanitation Cook Islands Kiribati Marshall Islands Micronesia, Fed. States of Palau Tuvalu Percentage Countries Source of data for Figure 16: The World Bank (2006b). 4.0 SUMMARY AND POLICY IMPLICATIONS Pacific Island mini states economic development and achievements in human development remain poor and uneven. Other than deteriorating per capita incomes and unemployment rate, poverty levels are high with more than half the population of Kiribati and Palau and more than quarter of the population in Micronesia and Tuvalu living in poverty. Cook Islands, Kiribati and Micronesia have more than 10 percent of the children under the age of five to be underweight and in Marshall Islands alone more than a quarter of its children under the age of five are underweight. There are huge disparities across the Pacific Island mini states in terms of percentage of pupils who start in grade 1 and reach grade 5 ranging from 31 percent in Nauru to 84 percent in Palau. There is prevalence of 29

30 gender imbalance in primary education in Marshall Islands, Micronesia and Palau and in particular women face huge gender gaps and that gender discrimination is still pervasive. While several countries experienced an improvement in under five mortality rates between 1990 and 2004, this statistic is appalling for Kiribati, Marshall Islands and Tuvalu where under five mortality rates exceed 45 per 1,000 live births and in Kiribati it exceeds 60 per 1,000 live births. Although immunization against measles increased from around 80 percent to almost 100 percent in Palau and Tuvalu, it fell in Marshall Islands from 94 percent in 2000 to 70 percent in 2004 while in Kiribati, it fell from 80 percent in 2000 to 56 percent in Maternal mortality rates are high in Kiribati and Marshall Islands as they do not show any signs of improvement. Although Cook Islands saw an improvement in the proportion of births attended by skilled personal from 60 percent in 1990 to 85 percent in 2000, in Kiribati, it has been almost the opposite. The proportion of births attended by skilled personal fell from almost 90 percent in 2000 to about 85 percent in While tuberculosis is common across several countries, there is a high incidence of life style related diseases such as diabetes and cardiovascular diseases. While most countries have more than 80 percent of their population with access to improved water, in Kiribati this number is less than 60 percent. Other than Cook Islands and Tuvalu; Kiribati, Marshall Islands, Micronesia and Palau still lag in terms of rural population with access to improved sanitation. Overall, most countries remain off track or are slow in terms of improving the societal welfare. There are some priority areas that can speed up the change. First, the alarming status of poverty for small states should be of major concern to the stakeholders. 30

31 Countries should articulate clear plans in terms of reducing the level of poverty through poverty reduction strategies supported by policy reforms. They need to place appropriate and market friendly polices so as to improve and expand the role of private sector that can quickly bring about benefits in terms of employment and income for households. Foreign aid donors should use these strategies in terms of their own aid allocation. With prudent policies in place, these countries would be in a position to raise growth, increase household incomes and reduce poverty. Second, it is quite clear that the women of Pacific Island mini states face gender imbalance. Women are less likely to have benefited from education, employment and voice through public decision making. Basic health care services for women and children need to be expanded with upgrading the environmental sanitary facilities (water and sanitation). Budgetary allocations to women and children s health need to be increased in several countries. It should be noted that the promotion of gender equality should be an integral component of all the development cooperation activities of national governments and the need to have efficient development organizations that constantly push for change is important (Johnson, 2004). Third, for the Pacific Island mini states, foreign aid will continue to remain a major source of external finance. While Pacific Island mini states continue to receive aid, given the current assessment of their progress in human well being, these countries will need a substantial increase in their overseas development assistance to bring about rapid improvements in human condition. In order to attract more aid, Pacific Island mini states will have to improve their economy wide policies and institutions. 31

32 Fourth, enhanced economic growth is the prime strategy to achieve higher levels of human development. The Pacific Island mini states need to improve their trading environment through raising exports. Improving market access is important and developed countries can play a major role here in giving unconditional market access to Pacific Island mini states export products. It is now well known that growth has direct effect on poverty reduction and uplifting the quality of life. Almost all countries will have to have at least 4-5 percent of GDP growth rate annually in order to have a significant impact on human well being. While it may be hard for them to sustain this level of growth, it can be accompanied by the right policies that target private sector development, lower government consumption, reduce corruption; improve private investment and institutional strengthening. Institutional strengthening is vitally important for private sector development which should include simplification of regulations for businesses, security to property rights, enforcement of contracts and improvement of infrastructure and upholding the rule of law. REFERENCES Asian Development Bank. (2005 and 2006). Key Indicators. Asian Development Bank: Manila. Barro, R. J. (1991). Economic growth in a cross-section of countries, Quarterly Journal of Economics, Vol. 106, No. 2, pp Dixon, et al. (2001). AIDS and economic growth in Africa: a panel data analysis, Journal of International Development, Vol. 13, pp Heyzer, N. (2004). Vision, Asian development Bank Review. Manila. 32

33 Johnson, H. F. (2004). No excuses. Asian Development Bank Review, Manila. Krugman, P. (1996). Cycles of conventional wisdom on economic development, International Affairs, Vol. 72, pp Krugman, P. (1994). The myth of Asia s miracle, Foreign Affairs, Vol. 73, No. 6, November/ December, pp Lucas, R. E. Jr. (1988). On mechanics of economic development, Journal of Monetary Economics, Vol. 22, pp Perkins, D.H., Radelet, S., Snodgrass, D.R., Gillis, M. and Roemer, M. (2001). Economics of Development, Fifth Edition, W.W.Norton and Company, New York. Ranis, G., Stewart, F., and Ramirez, A. (2000) Economic growth and human Development, World Development, 28, pp Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94, Sen, A. (2002). Globalisation, inequality and global protest, Development 45(2), (2002). Sen, A. (1998). Mortality as an indicator of economic success and failure, The Economic Journal, vol. 108, pp The World Bank. (2006a). The impact of morbidity and mortality on municipal human resources and delivery: an analysis of 3 African cities. Report Number: Washington, D.C. The World Bank. (2006b). World Development Indicators CD ROM, Washington, D.C. The World Bank. (2006c). Worldwide Governance Indicators: Available on 33

34 line at: The World Bank. (2006d). Socio-economic impacts of HIV/AIDS in Ukraine. Washington, D.C. The World Bank. (2003a). Investing in maternal health Learning from Malaysia and Sri Lanka. Washington, D.C. The World Bank (2003b). Reducing maternal mortality Learning from Bolivia, China, Egypt, Honduras, Indonesia, Jamaica and Zimbabwe. Washington, D,C, The World Bank. (2000). HIV/AIDS in the Caribbean: Issues or options. Report No LAC. Washington, D.C. The World Bank. (1993). The East Asian Miracle, New York: Oxford, p.43. United Nations (2006). The Millennium Development Goals Report United Nations: New York. United Nations (2000). United Nations Millennium Declaration 55/2. 8 September United Nations General Assembly. New York. Available on line at: United Nations Development Program. (1990). Human Development Report. Oxford University Press, New York. Van den Berg, H. (2001). Economic Growth and Development, McGraw-Hill International Edition, Singapore. 34