|Case Studies on Technical and Vocational Education in Asia and the Pacific - Fiji (UNEVOC - ACEID, 1996, 28 p.)|
Condensed from a paper on the Fiji economy delivered by the Governor of the Reserve Bank of Fiji to the Asian Productivity Organization 34th Workshop Meeting of Heads of National Productivity Organizations, Fiji 4 February 1994.
Fiji is dependent on the sugar and tourism sectors, with garment manufacturing emerging recently as a significant new industry. It compares well with many other developing countries in terms of a range of social indicators relating to life expectancy, health and education.
Following robust growth in the sixties and the early seventies, and a slowdown from the mid-seventies, the economy performed unevenly over the decade ending in 1991. This pattern was especially pronounced in agriculture but has been more typical than not in industry as well. Growth was especially poor in the first half of the 1980s, primarily because of:
(a) a deterioration in Fiji's terms of trade and a reduction in tourism, both caused by the oil price increase of 1979-1980;
(b) the adverse impact of cyclones on tourism and sugar in 1983 and 1985; and
(c) an exhaustion of possibilities for import-substituting production.
The period of unsatisfactory growth included the 1970-86 years when four sets of interventions characterized public policy.
· First, the Government attempted comprehensive five-year plans, far beyond the broad indicative framework employed in the market-oriented economies of East Asia.
· Secondly, barriers to international commerce were intensified, supporting inefficient import-replacement industries and discriminating against exports.
· Thirdly, prices of key products and factors were set through administrative arrangements, and private sector investment activities were intensely regulated.
· Finally, a large and generally inefficient public enterprise sector was established as Government sought to control the "commanding heights" of the economy. One consequence of this public sector orientation was a sharp decline in private investment; as a proportion of GDP investment fell from 15 per cent in 1981 to less than 7 per cent in 1989.
The second half of the 1980s was characterised by efforts to restore an economic framework conducive to the growth of private investment and initiative. In 1985-1988, real GDP grew at an average annual rate of about 0.5 per cent, but the strong economic recovery in 1986 was reversed in 1987 as a result of the military coups in May and September 1987.
Real growth accelerated in 1989 and 1990 as the political situation stabilised. Measures to restore financial stability and a redirection of the economy towards export-orientation took effect, and some degree of confidence returned.
Tourism, construction and manufacturing recovered and the expansion in agriculture was much below that of overall real GDP, reflecting industrial disputes as well as adverse weather conditions for sugar production. Within the agricultural and manufacturing sectors, the importance of sugarcane production and processing continued to diminish, while fishing and forestry gained importance, and garment manufacturing expanded rapidly.
Economic activity stagnated in 1991, notwithstanding strong growth in construction and manufacturing. The service sectors contracted as tourism arrivals declined reflecting recession in the major tourist markets and increased competition from other tourist destinations within the region. There was a further decline in sugar production (resulting from labour unrest and unfavourable weather), offset by the continued expansion in the fishing and forestry subsectors, while manufacturing reflected a continuation of the expansion in the non-sugar sectors.
Economic activity bounced back in 1992 led by a surge in sugar exports and tourism. Despite the resumption of growth, private investment continued to remain at low levels.
The largest sector in terms of its contribution to gross domestic product (GDP) is agriculture. However, its share in total GDP has declined by 5.0 per cent from an average of 23.3 per cent in 1983-87 to 22.2 per cent in 1988-92. The distribution, hotel and catering sector has improved its position from third before 1988 to second in 1988-92 (from 17.3 per cent to 19.6 per cent). The social community and personal services ranked third with 17.0 per cent in 1988-92 after losing ground from its second ranking in 1983-87.
A notable gain was evident in transport and communication which moved from fifth position with 12.0 per cent in 1983-87 to fourth in 1988-92 when it accounted for 13.8 per cent of GDP. The share of the finance, insurance and real estate declined to 12.8 per cent from 13.4 per cent during the two subperiods while the share of manufacturing declined marginally.
The economy has therefore undergone some structural transformation as the relative importance of agriculture, construction, social and community services, finance and insurance, declined while that of distribution hotels and catering, transport and communication, and mining gained in relative importance. The manufacturing sector more or less retained its share of some 11.8 per cent during the two periods.