Daunting Challenges in Fiji - Essay Example

Fiji is richly endowed with natural resources, with forest, fish, and mineral assets, and is among the most developed among the Pacific Ocean islands.

Yet, the economy of Fiji is still dependent on revenues from sugar export, tourism, and remittances from Fijians abroad. 8.9 percent of Fiji's GDP of $2.033 billion in 2007 was accounted for by agriculture, 13.5 percent by industry, and 77.6 percent by services, mostly tourism. One-third of Fiji's industrial activity is related to sugar but the processing of sugar is inefficient. Fiji exports most of the sugar output to Europe and maybe hit by proposed subsidy cuts on sugar by the European Union. Tourism has also been affected by the repeated coups in the country.

The Reserve Bank of Fiji anticipated a contraction of the economy by 3.1 percent in 2007-08 (CIA) and a runaway current account deficit, which was 23 percent of GDP in 2006. Relative Economic Development and Concerns Fiji ranks 92nd in the Human Development Index (HDI) and in terms of per capita Gross Domestic Product at Purchasing Power Parity, with $6,049 and 108th in terms of life expectancy at birth, which is 68 years (HDR). In 1998, Fiji ranked top of the World Bank's list of lower-middle-income group countries and was in the same category as Latvia, Peru, Lebanon, and Costa Rica (Bank of Hawaii, 1998).

However, political instability and lack of industrial activity have resulted in some contraction of the economy since then. Fiji is a small country, slightly smaller than New Jersey. The economy is also far smaller than the United States. The per capita GDP at official rates in Fiji in 2007 was $4,100, less than one-tenth of what it was in the US, at $46,000. Life expectancy at birth in Fiji, at 68 years, was also lower than in the US, 78 years. Population below the poverty line in Fiji in the last estimated year, 1990-91 was 25.

5 percent and the unemployment rate was 7.6 percent. On the other hand, only 12.4 percent of the population in the US was below the poverty line in 2004 and the unemployment rate in 2007 was 4.6 percent. Fiji exports primary products, mostly agricultural to the US and Europe, and imports manufactured commodities. The major concern for the Fijian economy is the political uncertainty that the islands have been facing over the last two decades.