Doubling fish exports or garment exports: which would benefit the Fijian economy most? Evidence from a computable general equilibrium model

Abstract

The need to diversify Fiji's export base has been identified as an important avenue for reducing Fiji's vulnerabilities in international trade. This paper poses the question: Doubling fish exports or garment exports: which would be most beneficial for the Fijian economy? To achieve the goal of this paper, the computable general equilibrium model is used, this being at the forefront of research on ‘impact studies’. The main finding is that when garment exports and fish exports are doubled, the benefits to the Fijian economy are greater from garment exports, suggesting that the latter has stronger linkages with the rest of the economy. On the basis of this finding, policymakers should divert resources towards sustaining the garment industry whose future is uncertain due to expiring trade agreements and unstable economic policies.

Acknowledgements

We thank Russell Smyth, an anonymous referee, and the editor of this Journal for helpful comments and suggestions on earlier versions of this paper. Any errors or omissions are, however, our own.

Notes

¹ See also Narayan (2003a), Narayan (2004a), Narayan and Narayan (2005), Narayan and Smyth (2005a/b).

² Fiji's impressive economic performance is largely due to the exceptional performance of its tourism industry. For an analysis of Fiji's tourism industry and its contributions to the economy, see Narayan (2004b, 2005).

³ Minister for External Trade and Foreign Affairs, Mr Tavola, is reported as saying that ‘If the US quota is removed, the local exporters will have to compete with countries like China, Philipines and Thailand, who have a low cost of production. This can be very competitive for us because it will not be a fair ground of competition'. Tavola has identified Gim Li Fashions as one of the local garment exporters to be affected by the embargo (Daily Post, 2004: http://www.fijilive.com).

⁴ Approximately 85% of the fishermen are indigenous Fijians.

⁵ This may be so only in the case of coastal fisheries. With respect to tuna, only the bigeye tuna are subject to overfishing, while skipjack are not threatened. The yellow fin tuna is considered to be at its maximum yield. Given the extensive migration of tuna, the issue of tuna depletion may not be a serious concern. The cost of the catch could, however, increase depending on the pattern of migration and the technology available to track the location of tuna.

⁶ Approximately 70% of workers in the garment industry are Indians while the remaining 30% consist of Indigenous Fijians and other ethnic groups.

⁷ For a previous application of this methodology, see Narayan (2003b), and for an application of CGE models of tourism, see Adams and Parmenter (1995).

⁸ In the Fiji CGE model, real national welfare is defined as including GDP, net private receipts of investment income from abroad, net private unrequited transfers from abroad and net foreign aid.

⁹ At the suggestion of a referee of this Journal, we re-estimated the results by making employment levels flexible and fixing real wage rates. The difference in our results was trivial hence we do not report them here to conserve space. However, the results are available from the authors upon request.