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Economic Myths (A Reality Check)

Discover the truth behind economic myths in the Federated States of Micronesia presented by Fr. Fran Hezel & Chris Lightfoot. Explore topics such as population growth, out-migration, fisheries, tourism, agriculture, self-reliance, poverty, and more. Learn about the real challenges and opportunities facing the FSM and what the future holds. Find out strategies to enhance livelihoods, maximize remittances, attract investment, and leverage the Compact Trust Fund for sustainable development.

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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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