Action and Reaction

The increasing – but certainly not intractable – tension that exists between the traditional and modern economies needs to be reconciled. Before that can happen, though, a great deal more research will be required.

The process of understanding will be a messy, decidedly un-scientific affair. While Vanuatu’s economic managers have made great strides in systematising their economic analysis, their tools and metrics just don’t translate usefully into the custom economy. While the movement of cash can ultimately be tracked as closely as time and resources allow, the same cannot reasonably be said about the often intangible inputs and outputs of the kastom economy.

It’s one thing to draw up a spreadsheet of VAT revenues per sector and use them to extrapolate domestic business activity. It’s another thing entirely to track the movement of mats and yams between families and to infer from them the potential for employment stability brought about by renewed alliances.

[Originally published in the Vanuatu Daily Post’s Weekender Edition.]

For every action, there is an equal and opposite reaction.

When Isaac Newton first formulated his third law of motion, he codified a long-observed phenomenon. Wits have suggested a fourth law: ‘No good deed goes unpunished.

At the Lowy Institute’s recent conference, The Pacific Islands and the World, attendees witnessed two contrasting views of Vanuatu. The gathering, timed to coincide with the Pacific Forum, was attended by dignitaries from major global institutions as well as government leaders from throughout the region. It was billed as an opportunity to discuss the impact of the global economic crisis on vulnerable Pacific Island nations.

By all accounts, though, Vanuatu has been less affected than the global economic giants. Mid-year numbers do indicate a slight slow-down, but in real terms, our economy’s still growing fairly well. In a recently published briefing paper by the Pacific Institute of Public Policy, Nikunj Soni and the Australian National University’s professor Stephen Howes point to tourism and construction as the leading drivers of this growth.

But they are quick to note that the environment is as critical to this success as the actual business opportunities. One noteworthy chart clearly shows the rise in economic activity starting in 2003, about the same time as major budgetary and macro-economic reforms began to take hold in Vanuatu.

The briefing paper goes on to highlight the fact that none of this growth would have been possible without social stability. That may seem like so much common sense to some. Civil disturbance and political turmoil are seldom on a tourist’s must-see list. Likewise with home buyers.

But what brings this stability about?

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