The MIRAB Model in the Twenty-First Century

1. The MIRAB Model in the Twenty-First Century Geoff Bertram Victoria University of Wellington New Zealand Presentation to Islands of the World VIII Kinmen, Taiwan, November 2004

2. Outline • Background: the Wellington conference • Methodology: empiricism v hermeneutics • The model: a quick review • Stylised facts about size, sovereignty, and geographical attributes • Standard critiques of MIRAB: complacency, unsustainability, governance • Taxonomy: alternatives to MIRAB • Jurisdiction and tourism =>PROFIT and STID • Multiple equilibria and the kaleidoscope

3. Methodological Critique: Marsters et al “There is much going on in the constitution of identity and remittance practice that resists reduction … “If we are concerned with policy and the sustainability of remittances, misreading motivations is dangerous. “ More dynamic conceptions of diaspora and identity formation are fundamental to any understanding of remittance practices and how these are being reconstituted and doing different work….. “We argue for a rethinking of remittances that begins with a different metaphor – the network.

4. Marsters et al continued: “The network is fluid and does not recognise pre-constituted boundaries such as the nation or household. “Networks are not pre-constituted, but are constituted by the flows and the practices that govern them. They change with, and are constituted by, their changing nodes and the changing relations among the family members and their relations. “The metaphor helps us to rethink the family (or the household) as temporary and constituted in part both by the flows of people, identities and remittances and by the practices involved..…

5. Marsters et al continued: “The network is not rooted in or on the island, although this is a crucial node and reference point that gives it significant meaning and nurtures it with a range of symbolic and physical resources – from land rights to language to holiday destination to iconography to cultural identity… “The network makes its own, temporary constellations of responsibility, economy and decision making….

6. Marsters et al continued: “[W]hat is to be developed ‘sustainably’ (or at least given the space to change on its own terms) is a transnational formation of places, people, beliefs, values and practices, and not simply the nation… “[S]ustainability might be reinterpreted as less the problem of promoting national economic growth, and more encouraging the [flourishing] of transnational networks….. “We believe that MIRAB leads us to this conclusion if we broaden the focus from the economic to more meaningfully incorporate the social, the cultural, and the personal.

7. I don’t actually disagree with any of that. • It sums up clearly some of the directions in which our understanding of the MIRAB model (and its other reductionist relatives) will have to move . • It identifies the awkward fact that poets and novelists, along with anthropologists, geographers and historians, probably have the edge on economists in pursuing the sort of deep understandings called for. • But I’m staying with the empiricist/naturalistic side, at least for the moment.

8. In the methodology of social science there has always been a gulf between • proponents of a deductive empiricism, and • proponents of local meanings and understandings as the starting point from which the social scientist seeks to translate the story of each place and culture The MIRAB model has had more of the first than of the second.

9. Quick Review of the Model • Attempted to capture some stylised facts about five small island communities: Cook Is, Niue, Tuvalu, Tokelau, Kiribati • These turned out to be examples of turning orthodox development models on their head • We found a radical disconnection of political discourse from reality

10. “Unproductive” Capital was Productive; “Productive” Capital was Unproductive • Infrastructure provided direct use values: schools, hospitals, roads, reef passages, ports, airports, water supply, radio links, government buildings ….. • Development-project-related capital was moribund, loss-making, often idle

11. The model described stable steady states underpinned by two stock-flow nexuses: • Stock of overseas migrants => flow of remittances • Flow of aid => stock of public sector employees (“bureaucrats”) These were the locomotives of the economy

12. “Vulnerability” has been overplayed. Being small means being • Below the political radar • A price taker in global markets • Able to establish and maintain solidarity while nimbly responding to opportunity

13. There’s a solid number of MIRAB cases identified in the literature now • Cook and Kirkpatrick (1998): FSM • Poirine (1998): French Polynesia, US Virgin Is, Guadeloupe, Martinique, St Perre et Miquelon, Mayotte • Bertram (1999): Samoa, Tonga, Easter Island, Palau, Marianas • Royle (2001): St Helena, St Kitts, and the Marshall Islands • McElroy & Morris (2002): Cape Verde, Comoros, Sao Tome & Principe

14. Two Stylised Facts • Small is beautiful (fractal effect) • Sovereignty has been a millstone even if it feels good • Armstrong and Read (2004) tables provide an eyeball test for smallness and islandness:

19. Here are a couple of charts from Bertram (2004) on political status, income of metropolitan patron, and GDP per capita in the Pacific 1970-2000 (panel data)

20. Pacific Islands

21. Pacific Islands

22. Pacific Islands

23. Global dataset for 63 island economies, using average of colonial power and chief import supplier

24. Global dataset for 63 island economies, using average of colonial power and chief import supplier

25. Global dataset for 63 island economies, using average of colonial power and chief import supplier

26. Regression lines through region-adjusted observations

27. Armstrong and Read 2004: “Neither small size or insularity leads to systematic poor performance in terms of GNI per capita. On the contrary, the relationships if anything suggest just the opposite. On the other hand, being landlocked or being located a long distance from the main global markets does seem to have important implications. The position with respect to the effects of being an archipelago or being mountainous is less clear, although systematic disadvantages are not at all evident.”

28. Multivariate regression: • failed to find statistical significance for four of their five geographical explanators • found signs as predicted (islandness positive, archipelago-ness negative, being landlocked negative, and mountainous topography ambiguous) • but none of the t-statisticsshowed significance at 5% (some crept in at 10%) • only remoteness had a robust negative effect

29. Three Common Criticisms: • MIRAB applauds “failure” and is complacent • MIRAB is unsustainable • Slow growth in the Pacific is due to poor governance, not economic structure

30. Applauds failure? • The argument is circular, from a particular modernisers’ definition of “failure” • MIRAB outcomes have been better than the alternatives would have been

31. Bad Governance, not Structure? • Friberg et al (2004): “[I]nstitutional constraints such as poor governance and a lack of accountability over assistance have played a major role in inhibiting FSM and RMI growth…… [I]t is the alleviation of these institutional constraints to improved aid effectiveness that will be necessary to sustain the FSM and the RMI economies”.

32. Fraenkel (2004) • The MIRAB model “downplays the role of weak governance structures in inhibiting export production”.

33. But: • MIRAB structures are found across a wide range of institutional settings and in the post-colonial territories of various colonial powers; • The logic of a MIRAB system is to produce an expanded bureaucracy • The level of accountability, and quality of decision-making, in small-island governments is not in fact uniformly poor.

34. Critics of island governments are not always clear in separating out genuinely “poor governance” (as revealed by some universally accepted metric) from a simple divergence of goals between donor and recipient governments and between their respective constituencies.

35. The Marshall Islands/FSM work by Friberg’s GAO team underlines two points • 1987-2000 total aid totalled $2.1 billion • That’s $13,100 per capita over 13 years • Per capita annual Compact aid is to fall: • Many completed factories (clothing, fish processing) stand empty • There’s no sign of progress towards self-sufficiency • Migration to the USA is straightforward.

36. Unsustainability? • Lee (2004) argues that second-generation Tongans in her sample showed weak “transnational orientation” • But she had no hard statistical evidence to offset Brown and Connell’s survey findings • (Incidentally, Brown and Connell 2004 reported that that nurses are stronger remitters than the average migrant)

37. Ahlburg (2004) results on the economic fortunes of US-resident Pacific-island migrants

38. During the 1990s • the poverty rate among Pacific Islanders fell from 20% to 16% • participation rate rose 2% • the proportion of islanders earning “middle class” incomes rose from 45% to 49% • the proportion of “working poor” fell 4% • the proportion of employed householders with “middle class” jobs rose from 51% to 58% • the average Pacific Islander migrant household acquired an extra year of education and an extra year of work experience”

39. Poirine’s (2004) model of remittances showed that we can’t predict time trends without case-by-case empirical calibration

43. This exercise showed that • A purely theoretical economic model can be made to predict pretty well any time-path for remittances depending on which assumptions we make. • Hence we can’t make any clear prediction a priori. What we can do is fit the model to the facts after the event.

44. The conclusion here is that the MIRAB model has very limited predictive power on its own. It has to be harnessed to knowledge of the particular community before we can draw forward-looking policy conclusions or social-scientific predictions. • But we do have a powerful forensic tool for classifying MIRAB case studies into sub-species. • The model is weak on prediction, but it is strong as part of a taxonomy of islands.

45. This brings us to: Criticism: MIRAB has limited applicability outside of a small subset of the world’s islands, since there are numerous case studies of island economies which do not exhibit the MIRAB characteristics. Reponse: Correct. This points to a need for a wider-ranging taxonomy

46. Baldacchino (2004) and PROFIT • An explicit attempt to outline alternative possible trajectories that small-island economies might follow. • Starting point: not all small islands are MIRABs. • Therefore at least one other small-island social and economic formation is out there.

47. Baldacchino’s two premises: • small islands are active strategic players in determining their fate • because they lack a hinterland of their own, they are obliged to treat extra-territorial resources, not interior frontiers, as the hinterland to be colonised and exploited for the benefit of the islander population

48. The MIRAB strategy is only one of a number of possible strategies for exploiting an external hinterland • Baldacchino locates it at one end of a spectrum of hypothetical pro-active policy orientations an island territory might pursue. • His paper focused on identifying and describing the ideal-type alternative strategy at the other end of the policy spectrum

49. Baldacchino (2004) cont • Focus is on the political/jurisdictional dimension rather than the economic • Carving-out and deploying jurisdictional power is the means to achievement of islander ambitions • “Political economy of success” extends to “discretion over taxation and offshore finance,… language policy, shipping registration and property ownership….. “

50. Baldacchino (2004) cont A combination of free-riding by the smaller, island party in the context of (at times deliberate) oversight by the larger, metropolitan party, crafting in the outcome some kind of regulatory legitimacy.