New approaches to economic progress
FIJI leads one of the most significant economies in the South Pacific with a number of lucrative industries and opportunities under its belt.
Ranging from tourism to agriculture, the sectors which rake in revenue for the country are diverse.
Foreign agencies have often touted the country’s economic growth as “impressive”. Statistics from the Asian Development Bank (ADB) put Fiji’s growth at 11.7 per cent in 2022, higher than other countries in the region.
Yet, even with such news, growth rates are expected to plunge to 8.5 per cent this year. That, coupled with the crippling $10 billion debt Fiji owes, means the new coalition Government has its work cut out for them.
Now, the focus is on finding ways to decrease expenditures and increase revenue, all the while creating an economy that is not only sustainable, but one that is able to weather a multitude of global challenges – political strife, natural disasters, health crises – and still remain afloat.
An economic summit is to be held in the coming months, but before that, a Knowledge Economy Lecture was organised by Fijian Competition and Consumer Commission (FCCC) and Asia-Pacific Applied Economics Association (APAEA) in Suva last Thursday. This allowed members of the business community to connect and try to engage in dialogue to discuss solutions for the way forward.
The panelists included: Deputy Prime Minister (DPM) Professor Biman Prasad (Minister for Finance), DPM Manoa Kamikamica (Minister for External Trade Cooperatives and SMEs), Asia-Pacific Applied Economics Association president Professor Paresh Narayan, Consumer Council of Fiji CEO Seema Shandil and FCCC chief executive officer Joel Abraham.
Keynote speaker, Prof Narayan, spoke about policy change and one of the major disconnects in drafting law and legislation; no proper consultation with academia.
“APAEA was founded by myself in 2017 and the reason I did that is because it’s important to understand that in our part of the world, in Asia-Pacific countries, we don’t have a robust relationship between policymakers and academia,” he said.
“In the US system, in the European system to a lesser extent, academics spend about 30 per cent of the time in public policy. So there is a very robust, very engaging, very democratic relationship of ideas.
“That’s one of the reasons why they lead the world in most of these public policy. We don’t have that system in the AsiaPacific countries.
“With my experience of working in the region for a very long time, not only academia, I decided to set this up to build a bridge between institutions, policies, and academics who have got a genuine interest in making changes from a policy.”
Fijians institutions like FCCC, Consumer Council, Fiji Institute of Accounts, Fiji Higher Education Commission and Tertiary Scholarships and Loans Service (TSLS) are also among the organisation’s 64 institutional members.
During the lecture, Prof Narayan shared the following approaches to economic progress in Fiji.
Speed of policy implementation and delivery
While “good” policies could be drafted to capitalise on human capital, it is important to get the fundamentals correct.
Prof Narayan said if this was not done, such policies would fail.
“One of the things in coming up with new approaches is the speed because speed is very, very important,” he said.
“There is a saying in economic jargon, that’s what we mean by productivity. So speed is very, very important for us because we don’t have time when we need to help people. It’s about people’s welfare. And my focus is precisely that.
“We want to enhance the welfare of people. You can have all the best strategies and the best policies, but if they’re not going to be implemented in a particular speed, the impact will be diluted.
“Often what we find in the Pacific Island countries when we work with donors, we often given projects that do not necessarily fit into our strategic development plan.”
Co-design of policies/programs with donors
A misconception held by locals is that donors may have more knowledge in drafting policies than they do. This could not be further from the truth.
In fact, Prof Narayan said locals should be encouraged to co-design policies alongside donor partners and agencies.
“We are basically not working from start on a particular project, but we are picking up halfway through and contributing to a particular development agenda of donors.
“What we need to be doing is co-design, to work with the donors to design those research ideas as policy. Different ministries have different strategic plans, including the National Development Plan (NDP).
“One of the first things we need to do in order to co-design ideas is to ensure that the organisation or department strategic plans contribute to the NDP.”
He said throughout his work, he had come across cases where
strategic plans were different from the NDP and there was a mismatch.
“We’ve had this fascination with consultants and we have been developing strategic plans without actually making use of it.
“So the first thing would be for the ministers to ensure that the strategic plans actually contribute to the national plan. We need to ensure that plans are not written just for the sake of just because we need a particular plan.”
Invest in a tertiary hospital
With labour mobility being one of Fiji’s major challenges, Prof Narayan said there was a need to invest in a tertiary hospital.
He said a country could make as many policy changes as required, however, it was all for naught if the people were not healthy.
“We talked about productivity, different strategies and diversification. Now you can have all that, but if 80 per cent of your people are dying from NCDs and another 70 per cent from premature death, meaning that people die before they actually reach that peak in terms of human capital contribution.
“If people are dying, which is your main asset, you can have all the best policies in the world and it’s not going to change anything. So I’m almost inclined to say that it should be a tertiary hospital because what we need what we need in Fiji, for the benefit of PICs as well, is a tertiary hospital.
“People are leaving - accountants, economists - because wages, salaries are much better in Australia and New Zealand. That’s true, but that’s only one of the reasons why they leave.
“The other is we don’t have a medical system of medical care or hospital care which gives confidence to the people as they grow older. When you are under 30, you don’t worry about medical care. You start to worry about medical care when you go beyond 35 and 40.”
He said a lot of people nowadays were dying young.
“So there’s a lot of premature death. So one of the things that government should think about it is investing and investing dollars in a tertiary hospital.”
Prioritise intellectual capital
Labour mobility comes with not only the movement of people across borders, but also loss of skills and knowledge.
Prof Prasad said there was an increasing rate of loss of capital, which didn’t just include human capital lost, but the intellectual capital.
“The intellectual capital is the total value of that particular person who leaves Fiji for that entire lifespan.
“I don’t have data, but based on some simulations I did to estimate what has been Fiji’s loss from intellectual capital that has left Fiji, it’s about anywhere between $12b to $13.5b. Mind you, this is simulated data.
“So at the minimum, we have lost $12b worth of intellectual capital so maybe a study needs to be done based on real data that looks at the cost benefit relationship of all our bilateral relationships with Australia, New Zealand, US and so forth.
“There’s a perception with the donors that they are giving us more than what we are giving them. It may be true, but that difference may not be statistically significant so we need to study to actually identify what is the benefit to Australia from the human capital we give them and what is the benefit that we get from the development assistance that we get from Australia.
“Like I said, $12b and that’s a huge drain.”
He said this could also become a point of focus for future negotiations with trade partners as this loss needed to be factored and compensation to be sought.
“Treat intellectual capital as an export market. If we can formalise that and it becomes an export market, because that’s what we are doing, we are exporting labour.
“If we classify that as an export, then we can then negotiate regarding the level of compensation and because it will be an export sector it will help us with foreign reserves and so forth.”