Pacific island countries could –and should– do more to help one another
[Originally published on Pacific Politics.]
The recent breakdown of Vodaphone Fiji’s investment in Papua New Guinea’s BeMobile is just the most recent in a series of missed opportunities in cross-investment that could not only improve small island economies, but mitigate against some of the worst aspects of large-scale development projects in the Pacific.
Pacific island nations possess a chronic, unfixable weakness: With few exceptions, their economies are so small and fragile that a failure which might cause only ripples in a larger economy can hamstring theirs for years. Furthermore, their diminutive markets make them unappealing to most investors. Although they’re often put in the same basket as Caribbean states, their distance from other markets renders them unique – and in the eyes of many, uniquely unsuited for investment.
It serves no one’s interests to imagine that the development and financial approaches that work well in other developing states can simply be cut-and-pasted into the Pacific. And yet, far too often, this is the hole into which our development pegs are hammered. Although development banks and donor nations offer loans at extremely low interest rates, the assumptions under which funding is offered are sometimes unrealistic. And because return on investment is generally smaller than just about anywhere else on the planet, governments are expected to offer either guarantees or exclusive concession rights to investors, or to become shareholders themselves, and sometimes both.
