Free Custom «Economic Growth of Fiji» Essay Sample
Table of Contents
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- The General Prerequisites for Economic Growth in Fiji
- Statistical Background Concerning Country’s Economy Today
- The Country Prospects for Economic Growth 10 Years Ago
- The Realistic Expectations for Future Economic Growth
- Related Free Economics Essays
The main goal of the International Labor Organization (ILO) is to promote available opportunities for women and men in order to secure productive and decent work in conditions of security, freedom, human dignity and equity. Decent work country programs (DWCPs) are established to enhance decent work, because it is the major element of progress procedures and is the state strategy objective of communal associates and government. The country’s current programs are informed by the regional and international development agendas that include the United Nations Development Assistance Framework (UNDAF) for the Pacific sub-region in 2008 –2012. Furthermore, it includes the Pacific Plan and the national development objectives, which were expressed in Fiji’s Strategic Development Plan (SDP) in 2007 – 2011. The Fiji DWCP, as was created by the tripartite consultations, follows the distinct consultations, such as the Fiji Trade Union Congress (FTUC), Ministry of Labor, Industrial Relations and Employment (MLIRE) and the Fiji Employers Federation (FEF), by whom the provided priorities were agreed on. The Fiji DWCP provided the details concerning the strategies, policies and expected results, in order to make progress in Fiji on decent work for all. In addition, this will also reflect the Fiji Government’s last steps in the Labor Reform program. It replicates constitutions like the ILO experts’ assessment of past cooperation, which aims at ensuring a strong coherence of ILO activities in Fiji and thus, it leads to the achievement of bearable effects that reach the maximum extent. This paper will analyze the economic growth, general prerequisites, past and future prospects on economic growth and the challenges faced by Fiji.
The General Prerequisites for Economic Growth in Fiji
The prerequisites for growth include the examination of the impact of information and communication technology (ICT) in Fiji for decent work, by using International Labor Organization (ILO) statistical indicators. The examination was undertaken in Japan Institute and ILO for training and to investigate labor policy. The ILO’s indicators of decency are significant in Fiji’s context because of the increase in unemployment, nonexistence of social security safety nets, and poverty stages that can lead to further aggravation of the ‘fallouts’ of a ‘free market’ economy. In addition, drawbacks of decent work have been considered to be one of the contributing factors of Fiji’s industrial sector, even before ICT proliferation. There are equitable opportunities for social and development justice in the ICT sector because of the knowledge content of the work. There should be an environment, where practices and policies are favorable to attain decent work, in order to achieve these social partners. The country should apply an approach, which combines the social justice and market potential to enable a balance for development, in order to serve the interest of the industry or Fijian and society long-term. It is not likely for the quest for industry and productivity to worsen in decent work and labor standards (Lukyanenko, Iryna, n.p). There were severe labor shortages in Fiji due to ongoing immigration of skilled persons and the low levels of workplace competence. Nursing was the most affected area and therefore, it needs replacement. In addition, there is high demand for skilled and competent trade persons, especially in the construction industry. The country should ensure it has finishing trades, such as plasterboard fixing, painting, plaster rendering, tiles and completion, because big hotels require world-class finishing’s in tiling, painting and plastering. Fiji should ensure it has skilled workers, because they are required to maintain and install plumbing, electrical and mechanical services, which are demanded by the hotel operators. In addition, the country should ensure it has trained and retrained labor force to enable it to develop and make the tourism industry be fully effective. The country has an adequate supply of technical and vocational colleges, but its training does not provide the satisfying quality that is set by the present institutes. Therefore, the country should ensure that its tutors and lecturers have necessary qualification, institutions have the necessary materials and equipment that facilitates satisfying standard of training and ensure that practical training is used as a form of workplace attachments. Some institutions in Fiji, such as the Training and Productivity Authority of Fiji (TPAF), are mandated to provide training, which is closely connected to the enterprise and industrial requirements. It is meant for those who are not within the school system to boost the increment of productivity within enterprises.
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Statistical Background Concerning Country’s Economy Today
Fiji is a country, which is an archipelagic nation that has a small population of 860,000 people. This country has 332 islands, where the majority of these people reside on the two main islands of Vanua Levu (18%) and Viti Levu (75%). In addition, the indigenous Fijians (i-Taukei) are more than half of the population, where the remaining two-fifths of the population are the Indian descent. 50% of the population in Fiji is living in rural areas, but according to the present growth rate, by 2030 the urban population is expected to grow by approximately 60% of the total national population. Fiji has fish resources, minerals, forest and tourism sectors. The manufacturing sector, as one of the Fiji’s growing sectors, has employed approximately 26,000 workers, and includes food, sugar, beverages, garments, processing, and wood-based industries. Sugar is the backbone of the rural economy, as its industry is employing around 3,000 people, and another is employing 200,000 based on their livelihoods. The economy has a large service industrial component, where activities vary from boatbuilding to paint and brewing manufacture.
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The growth performance of Fiji has been negatively influenced by its vulnerability to both external and internal shocks. Since late 1980s, before Fiji joined the World Trade Organization (WTO), it embarked on a significant policy shift, where it headed to a more market-oriented, outward-looking expansion plan (IMF, 2003). Due to the backdrop, Fiji progressively liberalized its job and lowered import restrictions in order to promote export. The increase in the open trading method contributed to increased opportunities in the economy, whereby thousands of jobs were created in industries, such as textiles and tourism. Between the financial years of 2001–2006, the economy of Fiji faced extreme instability in growth performance. It led the annual GDP growth to fall to 2.7%, on average, and in the financial year of 2007 to 2009, the economy contracted to an average rate of –0.4%. In addition, since the early 1980s, the country’s economy experienced several structural changes, which include the fall and increase of key sectors through a relatively short time span. It resulted in a growth average of about 2.4% from the year 1980 to 2013, as compared to the year 1970 to 1979 with 6.5%.
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In 1990s, grants and revenues contributed an average of 26% of GDP and in 2001 it fell to less than 24% of GDP, and later in 2013 recovered to 27% of GDP through the increase in indirect tax collections. The government made efforts through strengthening the compliance of direct taxes. Fiji established the customer and Revenue Agency in order to improve compliance, which had stood as the subject of a key volume in the building program.
Tax administration was improved through implementation of different initiatives, which included the adoption of tax identification numbers, mandatory reporting, and the easing of tax administration procedures and processes. In 2003, there was an increase in the value-added tax rate, from 10.0% to 12.5%, and currently, the rate is 15.0% from 2011. Furthermore, in Fiji the tax system had passed through several reforms that lead to widening of the base since 2003, which includes the introduction of capital gains tax and a fringe benefits tax. The registration of the value-added tax threshold was increased together with the introduction of social responsibility tax and reduction of income taxes for high income earners. The reforms were created due to the implementation of pay-as-you-earn tax, which was considered as the final tax from 2013.
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There are four bands in the customs tariff, where 0 is for education, medicament items and tourist requirements, 15 for intermediate goods, 5 for investment goods and 32 for revenue protected and generating categories. The sin and health-adverse goods attract ad valorem and higher tax rates (Doessel & Abbas Valadkhani, 30). There is existence of significant improvement in opportunities, compliance and the widespread use of customs duty and tax concessions, which should be reduced. The control of prices on several household staples has enhanced the access for the poor, and the blunt instruments, which restrict development and competitiveness of local industry.
There are adequate legal frameworks in Fiji, for both the budgeting and public financial management, which were provided under the Finance Instructions in 2005 and the Financial Management Act, 2004. The governments most developed activities and policies are reported publicly. There is the use of legal framework, particularly in relations with compliance of follow-up and legislative provisions, in response to identification of noncompliance. A different issue leads to the reduction of public financial management (PFM) capacity, with the parting of several experienced and skilled staff from the public service, at the retirement age of 55 years. It was introduced in 2009 with the surge of immigration, which occurred after 2006 events. The reduction of the capacity influenced the quality of PFM. There were efforts made by the Fiji government to reinforce the link between its strategy and the budget priorities.
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The Fiji government had managed in dropping its net budget deficit in 2007 from 5.1% of GDP to an estimate of 1.9% of GDP in 2014. It is because in 2009, the fiscal policy was alleviated in order to battle the recessionary impact of the global economic crisis. In addition, in 2012, it was loosened, because the government sharply improved its capital expenditure budget that enhanced investments. Furthermore, the government had a target for growth of the consumer spending through advanced salary raises for public servants, higher tax thresholds, one-off tax cuts, and the introduction of the minimum wage that improved disposable incomes and access to mortgage and consumer finance. Through exclusive growth, the government introduced universal free secondary and primary levels, which were covered in the 2014 budget together with the raft of social protection measures.
The Country Prospects for Economic Growth 10 Years Ago
The Fiji economy has not developed so much, due to the recent domestic and global developments; it is because of certain long-term fundamental difficulties in the economy, which occurred ten years ago. The country had forecast in improving its possible, potential sectors, which include tourism, forestry, agriculture, ITC and sports. This is because the country is gifted with rich natural resources, which include a huge marine environment, land and minerals, such as copper, gold, and other minerals. These are expected to be utilized in order to improve the economic growth of Fiji (IMF, 1995). The country had a positive expectation because of the pristine environment and tropical climate, which is a huge advantage that could attract thousands of tourists to its shores. In the previous ten years the country had not managed to match the population progress rate to the per capita income growth. The country was expecting a slight growth of 1.8 percent, and 1.5–2.0 percent in the year 2010 and 2011. Because of the significant effect of the global crisis, which affected the country’s economy, it had to set some strategies to revive it, such as improving tourism sector, agriculture and mining.
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The Realistic Expectations for Future Economic Growth
The country’s economy is expected to grow economically through exporting services, which the country can use to sell abroad in order to get foreign exchange for settling their imports. The country is also expecting to increase through reducing foreign exchange controls and lowering the bureaucracy and red tape. In addition, there is an introduction of extensive price controls, though investors’ confidence can be increased through scaling back the recently traded and unpredictable policy, which should be cited as a disincentive, to corporate and undertake additional reforms. The country, during the last decades, had a disappointing performance, but still has some advantages that can enhance faster growth, such as a strong capital base, natural resources and diversified production structure (Narayan, Paresh Kumar et al, 347). The country is expected to regain its strength in the future because of its good policies that govern sound, structural and macroeconomic stability. Fiji is planning to increase the tourism sector because the number of visitors is slowly increasing and is expected to continue for a long period of time, due to its encouraging tourism services. The country is planning to revise its sugar industry in order to increase growth of its economy. In addition, Fiji is addressing issues on land lease in order to create land bank that can create better land access by the investors and enable the landowners to get more profitable returns.
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The country is planning to put in place some strategies, which can assist it in solving some issues, such as natural disasters, and hostile global developments. These include the erosion of preferential market access and the recent financial crisis. In addition to strategies, ways of improving progress on structural and economic reforms and deteriorating terms of trade are being positioned by the government, which are vital to backing a balanced path to economic growth. It should ensure that there is a reduced unemployment level, in order to improve the economic growth rate.
Fiji has the responsibility of ensuring it has finishing trades, which include plaster board fixing, and completion, because big hotels require world-class finishing’s in tiling, painting and plastering. In addition, Fiji should ensure that its workers have the necessary skills in order to meet requirements of plumbing, electrical and mechanical trades, in order to maintain and install the services, which are demanded by the hotel operators. Furthermore, the country should ensure that it has trained and retrained labor force to enable it to develop and make the tourism industry be fully effective. The country has the ability to regain its strength in the future because of its good policies that govern sound, structural and macroeconomic stability. Fiji is planning to increase tourism sector because the number of visitors is increasing and is expected to continue for a long period of time, due to its encouraging tourism services. In the last ten years the country had forecast in improving its possible, potential sectors, which include tourism, forestry, agriculture, ITC and sports. The country is gifted with rich natural resources, which include a huge marine environment, land and minerals, such as copper, gold, and other minerals. These are expected to be utilized in order to improve the economic growth of Fiji.
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