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Economic Myths (A Reality Check)

Economic Myths (A Reality Check). Presented by: Fr. Fran Hezel & Chris Lightfoot. Economic Myths. Population Growth is a Problem Out-migration Causing Brain Drain Fisheries: Hundreds of Millions there for the Taking Tourism: Build it and they Will Come Agriculture: Under-performing

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Economic Myths (A Reality Check)

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  1. Economic Myths(A Reality Check) Presented by: Fr. Fran Hezel & Chris Lightfoot

  2. Economic Myths • Population Growth is a Problem • Out-migration Causing Brain Drain • Fisheries: Hundreds of Millions there for the Taking • Tourism: Build it and they Will Come • Agriculture: Under-performing • FSM must be Domestically Self-Reliant • Poverty is Prevalent / Non Existent

  3. Myth #1Population Growth is a Problem

  4. FSM Resident and Non-Resident Population Myth #1: Population Growth is a Problem

  5. Wage & Salary Employment (all sources) Persons per Job Myth #1: Population Growth is a Problem

  6. Myth #2Out Migration is Causing a Brain Drain

  7. College Graduates x Place of Residence (2000) High School Graduates x Place of Residence (2000) 5.0% 53.0% 36.0% 2.0% In FSM In FSM Overseas Overseas Myth #2: Out Migration is Causing Brain Drain

  8. Myth #3 Fisheries: Hundreds of Millions there for the Taking

  9. Profit & Loss in FSM Public Owned Fishery Enterprises Source: Matthew Jacobs, (2002) Micronesian Counsellor, Issue 40. Myth #3: Fisheries: Hundreds of Millions there for the Taking

  10. Myth #4 Tourism: Build it and They Will Come

  11. Myth #4: Tourism: Build it and They Will Come

  12. Myth #5 Agriculture: Under-performing

  13. Subsistence Share of Economy Source: FSM Department of Economic Affairs Myth #5: Agriculture - Underperforming

  14. Exports ($ ‘000) Myth #5: Agriculture - Underperforming

  15. Myth #6 FSM must be Domestically Self-Reliant

  16. Myth #6: FSM Must be Domestically Self-Reliant Imports and Exports

  17. Myth #6: FSM Must be Domestically Self-Reliant

  18. Myth #6: FSM Must be Domestically Self-Reliant “The Prescription” • Rule of Law Enforced • Stable Government • Functioning Markets • Non-Discriminatory Laws • Transparent & Consistent Governance • Secure, Transferable Property Rights in Land • Harmonised & Straightforward Investment Procedures

  19. Myth #7Poverty is Prevalent/Non-Existent

  20. What Does the Future Hold? Likely Outcomes • Remittances become a major source of income • Household production remains important support for livelihoods • Extent of Government services will be closely linked to Compact funding • Fishing Licence Fees Significant but Highly Variable Possible Additional Outcomes • Increased Tourism • Development of Small Niche Industries Likely Impact on Livelihoods • No Significant Change in Livelihoods of FSM Residents • Increasing number of families moving overseas to find work

  21. Where to now? What Should be Done? • Initiate Strategies to Increase Value of Remittances • Establish Conducive Environment for Investment • Ensure Compact Trust Fund Achieves Potential What Should Not be Done? • Pursue investment fantasies using limited Gov’t funds • Allow the size of Gov’t to grow to unsustainable levels

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