Making It #17 - Small islands, developing states

8/10/2019 Making It #17 - Small islands, developing states

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A quarterly magazine.Stimulating, critical andconstructive. A forum fordiscussion and exchangeabout theintersection ofindustry and development.


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EditorialThe worlds 39 small island developing states (SIDS) face a unique set ofchallenges due to their small size and often remote location. They are alsohighly vulnerable to climate change and natural disasters.

SIDS tend to have fairly narrow economic bases, limited product andmarket diversification, low economies of scale and a high dependency oninternational trade. Yet, while they have many things in common, thestandard of living among the islands populations differs widely, with, forexample, the gross domestic product per capita ranging from US$51,000 iSingapore to US$830 in the Union of the Comoros.

As a follow-up to the United Nations Third International Conference onSmall Island Developing States, held in Samoa in September 2014, thisissue of Making Ittakes a look at the SIDS potential to pursue sustainableeconomic development through steadily raising economic productivity.

Can the SIDS fully utilize their resources both physical and cultural

generate income and employment, while managing their environmentalassets and human resources in a sustainable manner? What is the future ftheir two economic mainstays fishing and tourism? How can these stateaddress the prospect of the major economic disruptions expected to beassociated with the impact of climate change?

Illustration:istock.com/vencavolrab


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6 Letters8 Who will lead the greenrevolution? MarianaMazzucato on the stateas a force for innovationand change10 Hot topic: Is fair trade fair?Ndongo Samba Sylla andLarry Attipoe discuss

14 Business matters news and trends

FEATURES18 Climate change: challengesand opportunities for SIDSKaierouann Imarah Radixbelieves that young peoplewill have to solve the

MakingItIndustryforDevelopment

The designations employed and thepresentation of the material in this magazinedo not imply the expression of any opinionwhatsoever on the part of the Secretariat ofthe United Nations Industrial DevelopmentOrganization (UNIDO) concerning the legalstatus of any country, territory, city or area orof its authorities, or concerning thedelimitation of its frontiers or boundaries, orits economic system or degree of

development. Designations such asdeveloped, industrialized anddeveloping are intended for statisticalconvenience and do not necessarily express a

judgment about the stage reached by aparticular country or area in the developmentprocess. Mention of firm names orcommercial products does not constitute anendorsement by UNIDO.The opinions, statistical data and estimatescontained in signed articles are theresponsibility of the author(s), includingthose who are UNIDO members of staff, andshould not be considered as reflecting the

views or bearing the endorsement of UNIDO.This document has been produced withoutformal United Nations editing.

Contents

Editor: Charles [email protected] committee:Thouraya Benmokrane, Jean Haas-Makumbi, Sarwar Hobohm (chair),Kazuki Kitaoka, Jo Roetzer-Sweetland,and Ravindra WickremasingheDesign: Smith+Bell, UK www.smithplusbell.comThanks for assistance toZHONG Xingfei andLaura Gil MartinezPrinted by ImprimerieCentrale, Luxembourg,on PEFC-certified paper

http://www.ic.luTo view this publication online and toparticipate in discussions aboutindustry for development, please visitwww.makingitmagazine.netTo subscribe and receive future issuesof Making It, please send an emailwith your name and address [email protected] It: Industry for Developmentis published by the United NationsIndustrial Development Organization(UNIDO),Vienna International Centre,P.O. Box 300, 1400 Vienna, AustriaTelephone: (+43-1) 26026-0,Fax: (+43-1) 26926-69E-mail:[email protected]

Number 17, 4th quarter 2014Copyright The United NationsIndustrial Development OrganizationNo part of this publication can beused or reproduced without priorpermission from the editorISSN 2076-8508

MakingIt4

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problems caused by climate

change20Creative industries: awindow of opportunityKeith Nurse explores howcreative industries can bean engine for economicgrowth and a mechanism fordiversifying economies inthe Caribbean and beyond

KEYNOTE FEATURE24Enhancing productivecapacities While sustainabletourism and fishing generaterevenue in the SIDS, WUHongbo considers newapproaches with thepotential to increaseproductive activities

Cover illustration: Adrian Hillman/istock


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to sustainable development

in the Pacific Islands34Country feature: ArubaTourist-rich small islandwith big energy strategy38Good business Profileof Haitis D&E GreenEnterprises

POLICY BRIEF42With more investment,the developing world canlead the way to a low-carbon future44Reaching scale:start-ups to challengeour assumptions46EndpieceThe challengesfacing the capital ofthe Maldives

30Pacific unity is paying off

in fisheries at least GiffJohnson thinks that unity isshifting control of fisheriesto the Pacific Islands32Realizing their potentialCatherine Wilson on whyyouth employment is critical

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LETTERS

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Beyondgrowth-drivendevelopmentFrom peer-to-peer production,to Latin Americas Buen Vivirmovement, to food sovereignty

projects across the globalSouth, initiatives all over theworld are transcending linearmodels of development thatprescribe paths of increasingproduction and consumptionfor the sake of growing grossdomestic product (GDP).These initiatives show that realdevelopment occurs whenpeople have the freedom tobuild on their existingstrengths, unconstrained by

pressures to grow at all costs.The notion that economic

growth is purely beneficial toindustrialized andindustrializing countries isincreasingly challenged, evenby economists (e.g., ElliePerkins and Manfred Max-Neef). As Richard Easterlin hasshown, GDP growth does notnecessarily deliver greaterhappiness. Beyond a certainpoint, GDP growth is

associated with peopleworking longer hours,spending less time with lovedones and neighbours(resulting in the loss of familyand community ties), eatingless nutritious diets, exercisingless, and suffering the physicaland psychological effects of allthese lifestyle changes. Well-

documented in the globalNorth, these trends need notbe replicated to ensureprosperity across the globalSouth.

Moreover, the addiction toeconomic growth is bumpingup against the realities ofecological limits. An economycan never be healthy if it isundermining the integrity ofthe biosphere on which itdepends.

The typical response thatwe can decouple economicgrowth from environmentaldamage is fundamentallyflawed. While relative

decoupling has occured,decoupling in absolutenumbers is unfeasible.Professor Tim Jackson hascalculated that, in order tostabilize carbon dioxideemissions by 2050 (at levelsconsidered acceptable by theIntergovernmental Panel onClimate Change), the rate of

technological innovationwould have to be 10 timesfaster than it has been in all ofindustrial history. In a contextof declining non-renewableresources and anticipatedincreases in the size of ourglobal population, absolutedecoupling becomes entirelyunrealistic.

The case of Londons air

quality actually highlights acommon misunderstandingabout decoupling. Londonsability to deal with its smogproblem is mostly explained bythe international division oflabour, rather thantechnological innovation.Nowadays, most productsconsumed in the UK areproduced overseas, withconsiderable environmentaland social effects where the

manufacturing and resourceextraction occur, despite strongefforts towards cleanproduction.

A focus on decouplingdistracts from the emergingopportunities for prosperitywithout growth. The UnitedNations Secretary-General, forexample, has endorsed GrossNational Happiness as a way ofmeasuring economic success.In this light, we suggest the UN

Industrial DevelopmentOrganization (UNIDO) helppave the way by changing itsgoal from achieving inclusiveand sustainable industrialdevelopment to achievinginclusive and sustainable well-being for all.The Post Growth Institute,by email

Divert fossil fuesubsidies

Assaad Razzouks Wheresmoney? (Making It, issue #is a great article. Yet, what dyou think of the potential tdivert the substantial resouused to subsidize fossil fue(and that often fail to benef

the lower-income househoto climate financing? As fofuel subsidies (in the form consumer and producersubsidies obviously not ththat are directed to R&D ormaking generation equipmmore efficient) generally seto aggravate emissions, thereform would already bedesirable from a climatechange perspective. As theyalso make up an enormous

amount of governmentspending, their reform woufree up a huge amount ofmoney that could then bespent on climate changemitigation and adaptation

Although those with vestinterests in the fossil fuelindustry would definitelylobby against reform effortthere seems to be an increaawareness regarding theineffectiveness and harmfu

effects of fossil fuel subsidi(see reform efforts in MoroIran, etc). What do you thinLaurie van der Burg, webscomment

I couldnt agree more. As I hav

written elsewhere, governmen

should lighten the load on citiz

wallets by phasing out fossil fu

The Global Forum section of Making Itis a space for interaction anddiscussion, and we welcome reactions and responses from readers aboutany of the issues raised in the magazine. Letters for publication in Making Itshould be marked For publication, and sent either by email to:[email protected] or by post to: The Editor, Making It,Room D2142, UNIDO, PO Box 300, 1400 Vienna, Austria.(Letters/emails may be edited for reasons of space).

GLOBAL FORUM

Picture:istock/DeAndaImageDesign


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subsidies. Tax payers worldwide

pay for climate change twice, once

by subsidizing dirty fuels to the

tune of US$1.9trn per year (the

conservative estimate from the

IMF), then again by footing the

bill for extreme weather events,

floods and droughts fuelled by a

changing climate. Releasing some

US$2trn per year of funding is

likely to go most of the way, if not

all the way, in paying for solutionsto climate change and for

adaptation strategies.

Assad Razzouk, websitecomment

Manufacturedchange?Im rather sceptical aboutPeter Marshs fifth new

industrial revolution (MakingIt, issue #15). His elementsthat power the latestindustrial revolution seem tobe mainly about nichemarkets, clusters, networking,and greater participation ofemerging economies. Hardlycomparable to major shifts indevelopment which saw thecreation of factories,

transport, electricity andcomputers!

He argues, For thosedeveloping economies that inrecent years have been startingto catch up with the lifestylesand standards of living seen inthe well-off, Western nations,the period of change couldwell accelerate the advances.This assumes continuedgrowth of the emerging

economies on the scale theyhave enjoyed over the pastperiod, which has alreadystarted to slow down.

The Organization forEconomic Co-operation andDevelopment, amongst itspredictions for the worldeconomy until 2060 (OECDEconomic Policy Papers,Policy challenges for the

next 50 years), says thatgrowth will slow to two-thirdsof its current rate.

It claims, In the period to2060, global growth prospectsseem mediocre comparedwith the past, with GDP in theOECD and the emergingG20-countries likely to growby 2.7% in 2010-2060,compared to 3.4% in 1996-2010.

It goes on, While growthwill be more sustained inemerging economies than inthe OECD, it will still slow dueto a gradual exhaustion of thecatch up process and lessfavourable demographics inalmost all countries.

Marsh picks out somecompanies in a good positionto exploit the processes of

change he identifies, and saysthat companies and countrieswho pay attention to newtechnologies, develop newideas and link up with supplychains and networks will dobetter than others. That doesnot seem to be a revolutionarychange but just good businesssense.Duncan John, websitecomment

For further discussion of theissues raised in Making It, pleasevisit the magazine website atwww.makingitmagazine.net andthe social networking Facebooksite. Readers are encouraged tosurf on over to these sites to joinin the online discussion anddebate about industry fordevelopment.

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Green entrepreneurship what everypolicymaker today seems to want toencourage is not ( just) about start-ups,venture capital and garage tinkerers. It isabout the willingness and ability ofeconomic agents to take on risk anduncertainty: what is genuinely unknown.Most of the radical, revolutionaryinnovations that have fuelled thedynamics of capitalism from railroads tothe Internet, to modern-day

nanotechnology and pharmaceuticals trace the most courageous, early andcapital-intensive entrepreneurialinvestments back to the state. Such radicalinnovations did not exist before the stateenvisaged and developed them.Consequently, markets for these newproducts or services had also to be createdand shapedby the visible hand of the state.The state can act as a force for innovationand change, not only de-risking theeconomic landscape for risk-averse privateactors, but also boldly leading the way, with

a clear and courageous vision. This isexactly the opposite image of the state thatis usually sold: the state is usually cast asinertial necessary for the basics, but toolarge and heavy to be the dynamic engine.

However, across the globe the countriesthat are leading in green transformationsare precisely those where the state plays anactive role. Historically, it was state fundingand the work of particular state agencies

that provided the initial push, early stage,high-risk funding and institutionalenvironment that could establish importantgreen technologies such as wind turbinesand solar PV panels. Currently, it is also statefunding, particularly through developmentbanks, which is promoting the diffusion ofthose green energy technologies, and thishighlights the fact that states have a role toplay throughout the entire innovation chainand not just in public good areas such as

research and development (R&D).Therefore, the public sector organizationsinvolved are not just creating the righthorizontal conditions for private sectorentrepreneurs: they are directing theirfinance towards the most innovative, risky,and uncertain parts of the green economy.

Need for patient capitalAdvanced clean technologies, like all radicaltechnologies, have many hurdles to clear.Some hurdles may relate to technicaldevelopment, others are due to market

conditions or competition. Given these

challenges, the long-term financial risksupporting a firm until it can massproduce, capture market share and reaeconomies of scale, driving down unitcosts, is huge. In the innovation game, therefore crucial that finance be patienand be able to accept the fact thatinnovation is highly uncertain and taklong time.

The most visible patient capital madavailable to renewable technology

manufacturers and developers has beedelivered through national andmultilateral development banks. The rand scope of development banks is modiverse than simply financing projectsThese institutions differ from privatebanks because they are able to take morisk associated with political, economiand technological aspects, and can bealong time needed for risky and uncertaprojects to mature. Furthermore,development banks can set conditionsaccess to their capital in an effort to

maximize economic or social value to thome country. Most development bankdeliberately seek to invest in areas thathave high social value, and are willing tmake risky loans that the commercialsector would shy away from.

Development banks are flexiblefinanciers, and can provide significantcapital to renewable energy projects, wcan represent as great an investment rias the development of new technologieGiven the amount of financial resourcetheir possession, their investment

decisions play an important role ineconomic development trajectories. Inthis sense, it came as good news that in2013 some development banks (such thWorld Bank and the European InvestmBank) decided to curtail funding for copower. And, in recent years, developmebanks have been a key source of fundinfor clean energy projects, committingmore than US$100bn in 2012.

Who will lead thegreen revolution?

Mariana Mazzucato on how the state canact as a force for innovation and change.

When organized effectively,the states visible hand is firmbut not heavy, providing thevision and the dynamic pushto make things happen thatotherwise would not have.


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Follow the leaderThe green energy industry is still in itsearly stages. Even though some renewableenergy technologies, such as wind andsolar power, received a big push in the1970s (due to the energy crisis), they arestill characterized by market andtechnological uncertainty. They will notdevelop naturally through market forces,in part because of embedded energyinfrastructure, but also because of a failure

of markets to value sustainability or topunish waste and pollution. In the face ofsuch uncertainty, the business sector willnot enter until the riskiest and mostcapital-intensive investments have beenmade, or until there are coherent andsystematic policy signals in place. In arecent interview, Microsoft founder BillGates, one of the principals of theAmerican Energy Innovation Council(AEIC), recognized that a key element toget an energy breakthrough is more basicresearch. And that requires the

government to take the lead. Only whenthat research is pointing towards aproduct then we can expect the privatesector to kick in.

As in the early stages of IT, biotech andnanotech industries, there is littleindication that the business sector alonewill enter the new green sector and driveit forward in the absence of strong andactive government policy. Indeed, theClimate Policy Initiative reports that in2012 institutional investors, includinginsurance companies, pension funds,

foundations and endowments,contributed only US$0.4bn to climatechange mitigation and adaptation projects(a minimal figure considering theUS$70trn in assets that they manage).Meanwhile, venture capital, private equityand infrastructure funds invested onlyUS$1.bn. Thus, while nudging mightincentivize a few entrepreneurs to act,most business actors will need stronger

signals to justify their engagement inclean technology innovation. Only long-term policy decisions can reduce the

uncertainty of transforming corebusiness from legacy into cleantechnologies. In fact, no other high-techindustry has been created ortransformed with a nudge. Most likely, astrong state-led push is needed. Thus,rather than relying on the false dreamthat markets will run the worldoptimally for us if only we just leavethem alone, policymakers must learnhow to efficiently use the tools andmeans to shape and create markets making things happen that otherwise

would not. And making sure those

things are things we need. Increasinglythis requires growth to be not only smartbut also inclusive and sustainable.

It is of course important not toromanticize the states capacity. The statecan leverage a massive national socialnetwork of knowledge and businessacumen, but we must make sure its poweris controlled and directed through avariety of accountability measures anddiverse democratic processes. However,when organized effectively, the statesvisible hand is firm but not heavy,providing the vision and the dynamicpush to make things happen thatotherwise would not have. Such actions are

meant to increase the courage of privatebusiness. This requires understanding thestate as neither a meddler nor a simplefacilitator of economic growth. It is a keypartner of the private sector and often amore daring one, willing to take the risksthat business wont. The state is thus theiron horse of the green revolution: thespeed and direction of change willcrucially depend on it.

Mariana Mazzucatoholds the RM Phillipschair in the Economics ofInnovation at the SciencePolicy Research Unit atthe University of Sussex.Between 2009-2012, shedirected a three-yearEuropean Commission-funded project on

finance and innovation.Her current project onfinancing innovation isfunded by the Institutefor New EconomicThinking. She advisesthe UK governmentand the EuropeanCommission oninnovation-led growth.

Mariana MazzucatosThe Entrepreneurial State:Debunking Public vs.Private Sector Mythswasnamed one of the

Books of the Year 2013by The Financial Times.


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The unequal distribution of the gains ofFairtrade (FT) derives in a large part fromthe characteristics of certification. Thecertification system presents a two-fold biasagainst the poorest developing countries.First, there are considerations related to thecosts of certification. These being the sameeverywhere, they are relatively moreexpensive for the most disadvantagedcountries, all other things being equal.

Then, due to its sliding-scale pricestructure, certification is less costly forlarge producer organizations than forsmaller ones. Finally, the cost ofcompliance with FT standards (changes inagricultural and administrative practicesthat often lead to an increase in workinghours) is higher for small organizations dueto their lower productivity and lowereconomies of scale.

The fair trade scandal:

marketing poverty tobenefit the rich

Is fair tradefair?

Ndongo Samba Sylla argues that the Fairtrade Internationalfederation excludes those who need fair trade the most andthat its benefits are essentially captured by the wealthiestgroups in the supply chain.

Fair trade is a trading partnership that aims to help producers in developingcountries to achieve better trading conditions. It sets out to ensure that trading

practices are fair, both in terms of payment and prices, and to ensure safe workingconditions. The basic idea is that everyone in the chain, from producer to consumer,gets a fair deal as part of a product. But not everyone is convinced that fair trade works.


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Organic coffeegrown in theBolaven Plateau

region, ChampasakProvince, Laos PDR.

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FT-certified articles tend to be based onproducts usually exported by LatinAmerican countries. Coffee represents36% of certification demand. Tea (9.3%),fresh fruit and vegetables (9.1%) andbananas (8%) complete the list of topcertified products in 2009. One out of twoFT-certified products is either coffee,bananas or cocoa. In terms of exportrevenue, coffee is also the most sold FTproduct, at 47%, followed by bananas at

18.8%. Coffee and bananas account fortwo-thirds of export revenue generated byFT. Yet, Latin America accounts for 263 outof the 317 coffee certifications granted in2009 (or 83% of certifications) and 70 outof the 71 banana certifications.

Latin America enjoys a double benefitcompared with Africa and Asia, namelythat certification is less costly in its caseand FT markets are dominated by itsmain exports. The result of this bias is thatLatin America accounts for 56% ofeffective certification demand against 29%

for Africa, 14% for Asia and 1% forOceania. Though Latin Americancountries are no doubt among the mostunequal in the world, they are certainlynot among the poorest. Mexico is the firstcountry where FT was tried out. Yet thisOrganization for Economic Co-operationand Development member state accountsfor nearly a quarter of the GDP of LatinAmerica and the Caribbean. Its GDP isactually higher than that of the whole ofsub-Saharan Africa. Seen from this angle,it would seem that the FT system was

biased right from the start.FT no doubt helps poor and vulnerable

producers, but it certainly is not at theservice of the poorest. Effectivecertification demand is positivelycorrelated to country income. Countriesranked by the World Bank as uppermiddle-income account for 54% ofproducer organizations having receivedFT certification against 21% in


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the case of low-income countries. As forleast developed countries (LDCs), they onlyaccount for 13.5% of effective certificationdemand. Whatever definition of povertyand economic vulnerability is used, theconclusion is the same: FT tends toexclude the poorest countries.

Some argue that in rich countries, such

as Mexico, there are huge social andeconomic inequalities as a result of whichsome populations find themselves in asituation of extreme poverty. This isundeniable, but not convincing. First, thisargument does not explain why withinthese inegalitarian countries, the leastpoor groups are generally selected by FT.

Then, the criterion used to justify whichnations deserve to enter the FT system iscontradictory. France, for example, is avery rich country. Yet it has many poorworkers and farmers. So why not promote

FT in France, as some have argued, or inthe US or UK? FT protagonists will arguethat these countries can tackle their ownproblems, as they have the means to do so.But this is also the case of Mexico and ofthe richest developing countries. Betterstill, differences in income betweenFrance and Mexico are much lesspronounced than between Mexico andLDCs. If we choose to favour Mexico overFrance based on the need criterion, thesame logic should mean favouring thepoorest countries at the expense of

wealthier developing countries.Some countries are highly dependent

upon the export of a limited number ofprimary products. The slightest pricevariation can have a significant impact ontheir economies. Within the FT system,dependent countries are under-represented, whereas those countrieswith the most diversified exports areoverrepresented.

Let us take the case of coffee, a productwith a major distributive advantage, as it ismostly produced by small producerorganizations. Ethiopia and Burundi areamong the countries most dependent oncoffee. Coffee accounts for 34% and 26% oftheir export revenue, respectively. For boththese countries, only three FT coffeecertifications were issued in 2009. Incontrast, Mexico and Peru received 42 and57 certifications, respectively, which

represents nearly 31% of the effectivecertification demand for coffee. Yet thesetwo economies are relatively diversifiedand, at any rate, coffee exports account forless than 2% of their export revenue.

In Latin America, Honduras andNicaragua are two countries relying greatlyon coffee. In relative terms, theirdependency on coffee is at least 10 timeshigher than that of Mexico and Peru. Buttheir share of certification demand islower. FT bananas, cocoa and cotton followa similar narrative. The countries most

dependent on these products areunderrepresented in the FT system.Among flagship products, only FT teaseems to be an exception. Yet, one of itsspecificities (as for bananas, flowers andplants, fruit and vegetables) is that it isproduced primarily by male and femalewage workers in plantations.

MakingIt12

Fairtrade no doubt helps poorand vulnerable producers, butit certainly is not at the serviceof the poorest.

This exclusion of LDCs and othervulnerable developing countries is notresult of a deliberate choice by FTlabelling initiatives. Indeed, the movem

especially seeks to help those that alreaare on its path, in other words, produorganizations showing a developmentpotential and organizationalpredispositions.

The path taken by FT is much toonarrow for poor countries to tread. FTchose to specialize in the trade ofagricultural products. It is true that LDare generally countries where the labo


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Photo:Maxhavel

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could also work in other developing regions.If FT had been born in the African context, itwould probably have had a greater focus onmining or petroleum products. Likewise, ifit had been inspired in Asia, it wouldprobably have been more specialized in thetrade of textile products and clothing.

It seems in reality that internationaltrade is all about clubs: all other thingsbeing equal, the rich trade more with otherrich than with the poor. This is justified by

their different levels of development.Evidence of this is that, outside of allplutocratic logic, it is difficult to identify aconsistent pattern to the expansion of FTcertification in some areas of the globe.In sub-Saharan Africa, the country with therichest economy (in GDP terms), SouthAfrica, tops FT certification demand with 54out of a total of 260 in 2009. Its two majorFT products are fresh fruit and vegetables,and wine grapes, products that are not partof the countrys top 10 exports. In Asia, Indiaaccounted for 56 of the 124 FT certifications

that were granted in 2009. Its two major FTproducts are cotton and tea.

In a nutshell, although low, the gains ofFT for the most part go to Latin Americancountries. In its global operations, FT doesnot partake in a logic of internationalredistribution in favour of the poorestcountries, or even of dependent countries.In reality, this movement seems to follow aplutocratic logic, in other words, one thatserves the government of the rich.

What is striking is that the protagonistsand supporters of FT still have not realized

this. The funniest part is that thesedetractors of free trade are usually unawarethat each cup of Max Havelaar coffee that isdrunk in the world is a tribute paid to theglory of Mr Market.

This is an edited extract from The FairTrade Scandal: Marketing Poverty to Benefitthe Rich by Ndongo Samba Sylla, publishedby Pluto Press.

force is primarily employed inagriculture. The problem is, however, thatLDCs are often dependent to a greaterextent on the export of non-agricultural

primary products. The UN trade body,UNCTAD, only ranks 11 out of a total of49 countries as exporters of agriculturalproducts (over half of export revenue).To make matters more complex, mostLDCs are net importers of food products.With the exception of three countries, allLDCs are part of the FT category definedby the UNs FAO as low-income food-deficit countries.

Therefore, FT tends to mostly benefitLatin American countries because thisregion is a net exporter of agriculturalproducts. Argentina, for instance, draws

half of its export revenue from agriculturalproducts. To put things differently,agriculture in Latin America is mostlyfocused on exports, whereas for Africanand Asian LDCs, agriculture serves asubsistence purpose.

In a sense, the mistake made byfounders of FT and of the movement thatthey helped to establish was to believe thatwhat applied to the Latin American context


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The recently published book, The FairTrade Scandal: Marketing Poverty to Benefit the

Rich, by Ndongo S. Sylla, provides anintellectual critique of the Fair Trademovement, its aims and impact. As theleading global Fair Trade organization andthe label most frequently cited by Mr Sylla,

Fairtrade International welcomes theopportunity to respond to this critique.

Fairtrade International (Fairtrade)welcomes constructive criticism, which weuse to continually strengthen our systemand approach. However, we believe thecore of Syllas critique is based onunrealistic expectations about whatFairtrade can and should aim toaccomplish.

Sylla criticizes the ways in whichFairtrade has not broken free of theconventional neoliberal trade system. He

argues that Fairtrade is a new iteration ofthe free market rationale, rather than analternative to the market economy. This isin part true; in order to facilitate betterdeals for farmers and workers, Fairtradehas to function within the existing marketstructures.

Therefore some elements Sylla critiquesare factors outside of Fairtrades control.For example, he believes producers should

earn a higher percentage of the finalconsumer price. We would support this,but Fairtrade cannot legally dictate retailprices. Instead, what we check is thatproducers earn a fairer price for theirproducts at origin, regardless of the finalprice to consumers.

Sylla criticizes the dominance of LatinAmerica in Fairtrade over Africa or Asia. Infact, the number of African producers inFairtrade has grown in recent years, andnow six in ten of all Fairtrade farmers andworkers are based in Africa. Ethiopia mayonly have five Fairtrade coffeecooperatives, but these are large

cooperatives that together represent ov100,000 farmers.

Nevertheless, the Latin Americanfarmers in Fairtrade do have on averaglarger plots, and produce and sell moreFairtrade terms than their Africancounterparts. Overcoming Africas histexclusion from world trade markets is long and slow process, but one in whicare actively engaged and it is theproducer-owned Fairtrade Africa leadi

much of this work. Meanwhile, LatinAmerican farmers need Fairtrade, too.There are huge disparities of wealth inmany Latin American countries, as inAfrican ones, and rural farmers andfarmworkers are among the mostmarginalized.

Other aspects of Syllas critique aredeliberate choices we have made to driwider change and impact. Sylla challenFairtrades decision to work with largeretailers and companies, while at the satime saying that farmers need to increa

sales on Fairtrade terms. It is precisely this reason that we are working with a wvariety of businesses from small shoplarge, mainstream brands. Large-scalecommitments and global partnershipsmean that we can reach many morefarmers, workers and consumers, raisepublic recognition and ultimately incrdemand for Fairtrade certified productOur approach is to engage with compato change trade from the inside.

Sylla also criticises Fairtrades relativsmall impact on global poverty. Howev

Fairtrade does not claim our approachlift entire countries out of poverty oraddress poverty everywhere it exists. Owork specifically targets small-scalefarmers and workers to support them athey improve their livelihoods andstrengthen their communities. In this,growing body of research points to thereal impact Fairtrade is having for overmillion farmers and workers worldwid

Strengthening farmersand workers position in

an imperfect trade systemLarry Attipoe, International Development Director ofFairtrade International, responds to The Fair Trade Scandal

Fairtrade aims to challengethe imbalance in global tradeby strengthening the positionof farmers and workers.


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For example, a recent study by theCentre for Evaluation (CEval) associatedFairtrade certification with betterlivelihoods and increased control over

supply chains for small farmers, andbetter working conditions for plantationworkers. This report was based onextensive qualitative and quantitativedata analysis through case studies of sixdifferent producer organizations.

Ultimately, Fairtrade aims to challengethe imbalance in global trade bystrengthening the position of farmersand workers. Our standards are a tool for

communitybased development,bringing benefits beyond the Fairtrademinimum price and premium.Supporting producers as they build

strong organizations means they are ableto reduce costs, provide a structure forcrop improvement and joint investment,and negotiate from a position that wouldotherwise be beyond their reach. Oursystem embodies this alternate visionwith producers as half-owners who holdkey roles in our global governance.

Fairtrade is a constantly evolvingsystem doing as much as we can to make

trade fairer. We do not claim to be aperfect solution to the many issues ininternational trade but we are a part ofthe solution. As we have grown, we have

strengthened our certification systems,and are confident in the strength of ourstandards as a tool for producers,traders and companies to create moreequitable trade relationships and buildthe capacity of farmers and workers tomanage the rigors of internationaltrade.

We invite everyone interested to learnmore about our work at www.fairtrade.net

Yembi Kabre, CEO, andSabine Si, GeneralManager, of theFairtrade-certifiedcooperative, CAPEDIG, in

Cte dIvoire, examinecocoa beans for quality.


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A new report shows thatSouth-South trade inenvironmental goods andservices between developing

countries is growing rapidly.South-South Trade in Renewable

Energy A Trade Flow Analysis of

Environmental Goods, publishedby the United NationsEnvironment Programme ,shows that the share ofdeveloping countries in global

cooperation could help generadditional commercially viabproducts for export.

China is the worlds largestgreenhouse gas emitter, by faThe country produces more a quarter of the planets annugreenhouse gas emissions.China is also the worlds

manufacturing hub. Accordinto an analysis carried out by TCarbon Brief, one reason for thincrease in emissions is thatChina is making more and mof the stuff the rest of the worwants to buy. On the other haemissions in places like the

trends

BUSINESS MATTERS

exports of renewable energygoods more than doubled, from32% in 2004 to 75% in 2011.

While the UNEP report

focuses primarily on renewableenergy markets, it also pointsout that there are other growingdynamic markets forenvironmental goods andservices. For instance, watertreatment equipment and watersupply valued at US$ 50bn

globally present developingeconomies with a promisinggrowth potential, as well as theopportunity to provide more

than 700 million people withaccess to improved drinkingwater. Additionally, South-Southtrade in organic food and

beverages with a global marketvalue of over US$63bn is alsoidentified as another growingmarket, where greater regional

The latest Global Green EconomyIndex (GGEI) ranks Germany(perception) and Sweden(performance) as the topcountries. Besides performingwell on both the economic andenvironmental areas of theGGEI, these countries havedisplayed consistent greenleadership and received global

recognition for itThe GGEI, published by Dual

Citizen, a consulting firm basedin the United States, measuresboth the green economicperformance of 60 countries andhow experts assess thatperformance. The GGEIperformance index usesquantitative and qualitativeindicators to measure how welleach country performs on fourkey dimensions: leadership and

climate change; efficiencysectors; markets and investment;and the environment and naturalcapital. The GGEI perceptionsurvey collects assessments fromexpert practitioners on thesesame four dimensions.

Covered for the first time inthe 2014 GGEI, Costa Ricaperforms extremely well, ranking

Green economy leadersthird on the performancemeasure, behind Sweden andNorway, and receiving strongrecognition on the perceptionsurvey, an impressive result forsuch a small country.

Many of the fastest growingeconomies in the world rankpoorly on the GGEIperformance measure,

highlighting an urgent need toreorient their economies togreener growth pathways. Thesecountries are mostly in Africa,the Gulf and South-East Asia.

There are concerning resultsrelated to more developedcountries as well notablyAustralia, Japan, the Netherlandsand the United States whereperceptions of their greeneconomic performancedramatically exceed their actual

performance on the GGEI.Despite its leadership in

founding the Global GreenGrowth Institute, South Koreaperforms poorly, ranked 39thout of 60 on this years GGEI.Despite better perceptionresults, Japan also performspoorly on the 2014 GGEI, ranked44th out of 60.


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European Union are falling partly because it ismanufacturing less, andimporting more.

The simplest way ofmeasuring a countrys emissionsis to look at how much pollutionis released within its borders,which is called territorialemissions. But, according to The

Carbon Brief, it is also possible tolook only at the emissionsassociated with products thatactually stay in a country. Theseare termed consumptionemissions, and this accountinglowers the countrys carbonfootprint a bit.

In 2012, China emitted about1.6 billion tonnes of carbondioxide in the process ofmaking products it exportedelsewhere in 2012, about 16%of its total. Arguably, thosemight be emissions the rest ofthe world is responsible for.

The people most likely to be

left behind by development arethose facing intersectinginequalities, or economicdeficits intersecting withdiscrimination and exclusionon the grounds of identity andlocational disadvantage. A newreport, Strengthening social justice

to address intersecting inequalities

post-2015, published by theOverseas Development Institute,considers the experience ofseven countries (Brazil, Ecuador,Bolivia, India, Ethiopia, Pakistanand Nepal).

The report shows that keyingredients for addressingintersecting inequalities are:

social movements demandingchanges in the rules of thegame; political trajectories andprocesses of constitutionalchange that facilitate andactualize these changes; socialguarantees, opportunityenhancements and

developmental affirmativactions as well as specificpolicies and programmesshow commitment to redintersecting inequalities otime.

The post-2015 agenda chelp establish global normwhich will support andencourage mobilization t

intersecting inequalities,including a strong commto universal quality basicservices, and the developmcountry-specific framewotargets and indicatorsmonitoring intersectinginequalities.

Photo:Interfac

e

Global carpet maker, Interface,and biodiversity group,Zoological Society of London(ZSL) have created an inclusivebusiness model that enablesimpoverished fishingcommunities in thePhilippines to collectdamaging, discarded fishingnets from the ocean and

shores. The nets are purchasedby Italian yarn manufacturer,Aquafil, which recycles theminto nylon yarn that is thenused by Interface to producecarpet tiles.

The initiative, called Net-Works, began just over twoyears ago. So far, it has stoppedmore than 38,600 kilogrammesof discarded fishing nets frombecoming pollutants in theocean, and helped 4,500

villagers in communities in thePhilippines to earnsupplemental income equal to

84,000 additional meals, screators.

In collaboration with Zmarine biologist, Dr. NickInterface decided to focusNet-Works pilot programwithin the 7,000 Philippinislands, on the Danajon Bin one of only six double rin the world.

In an eco-system as deas the Danajon Bank, Hildiscarded nets are increddestructive. The nets takecenturies to degrade, and nylon density greater thanof water, the nets lie on thocean floor where they dountold damage to marine

As well as helping the viclean, sort and sell back thwaste nets, Interface and thNet-Works partners have

established community basystems for the residents supporting and strengthethe local economy andproviding new financialopportunities for resident

In 2015, the Net-Worksinitiative will be launchedLake Ossa area of CameroWest Africa.

Fishing nets into carpets

Filipino villagerscollecting oldfishing nets to sellfor recycling intocarpet tiles.


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changing the productivity and distribution of

fish, threatening a vital source of food and

income for island dwellers.

Because of the lack of diversification and

small market size of their economies, the

SIDS are vulnerable to fluctuating market

prices and devastating weather events,

causing further problems to the economy.

Tourism represents more than 30% of SIDS

total exports. If the sea level rises by just

50cm, the Caribbean island nation of

Grenada, for example, would lose 60% of its

beaches, severely damaging its economy.

The way forwardUnfortunately international community

negotiations have been slow-moving in the

fight to reduce the consequences of climate

change, especially in SIDS. One step they

should take is to adopt a legally binding

agreement that includes clear, achievable

targets to reduce greenhouse gas emissions.

States and multilateral developmentinstitutions need to develop appropriate

growth indicators that take into accountclimate change, poverty, natural resourcedepletion, human health and quality of life ofSIDS because typical GDP-based indicators donot reflect many of the distinctive features ofSIDS economies, such as small market size.Governments also need to drive diversificationof sectors and create low-carbon jobs so that

their economies are more resilient to climatechange. Pacific SIDSs are especially suffering

Small Island Developing States (SIDS) can

be characterized by relatively small land

masses, remoteness, livelihood constraints,

lack of food security and susceptibility to

natural hazards. Their vulnerability to rising

sea levels is also high. While the global

average of sea level rise is 3.2mm per year, the

island of Kosrae, in the Federated States of

Micronesia, is experiencing a sea level that is

rising at a rate of 10mm per year. The

tropical Western Pacific has experienced sea

level rise at a rate of 12mm per year between

1993 and 2009 about four times the global

average. Other growing threats to SIDS

posed by climate change include increased

flooding, shoreline erosion, ocean

acidification, warmer sea and land

temperature, lack of fresh water and damage

to infrastructure from extreme weather

events like hurricanes and tsunamis.

Apart from its direct impacts, climate

change will have a ripple effect on several

socio-economic factors in the SIDS. For

example, in small villages in the Caribbean

and Pacific regions, the fishing industry plays

a significant role. In the Pacific SIDS, where

fish account for up to 90% of animal protein

in the diet of coastal communities, rising

ocean temperatures and acidification are

economically because of Dutch disease. Alsoknown as the natural resource curse, Dutchdisease is the apparent relationship betweenan increase in revenues from naturalresources and the resulting strengthening

of a country's currency which makes thecountry's other exports more expensive andits imports cheaper. As a consequence, thecountrys manufacturing and agriculturesectors become less competitive. It isanother problem that governments mustwork to overcome.

Despite the challenges these small

nations have to confront, there is incredible

scope for development, particularly in the

area of renewable energy. Currently more

than 90% of the energy used by SIDS comes

from heavy oil imports, imposing a heavy

burden on the limited financial resources

that are available and pushing electricity

prices up. This explains the large percentage

of residents in SIDS that do not have access

to electricity. For example, 70% of the

population in the Pacific Islands live

without electricity.

Potential alternative and domestic energ

sources include wind, solar, tidal,

hydroelectric and geothermal, but SIDS lack

both the political will and the significant

Kaierouann Imarah Radixbelieves that young peoplewill bear the brunt of theproblems caused by climatechange and that it will fall tothem to find the solutions.

KAIEROUANN IMARAHRADIX is director ofGuyanas S4 Foundation,a network of womencommitted to helpingand supporting otherwomen in Guyana. She isalso a One Young WorldAmbassador. One YoungWorld is a UK-based not-for-profit that gatherstogether the brightestyoung people from

around the world,empowering them tomake lasting connectionsto create positive change.It stages an annualsummit where the mostvaluable young talentfrom global and nationalcompanies, NGOs,universities and otherforward-thinkingorganizations are joinedby world leaders.

Climate change: challengesand opportunities for SIDS


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and management of projects to sustainably

build resilience over time in order to make

significant gains in mitigation of and

adaptation to climate change.

A major cause for concern is the huge

financial cost of adaptation to climate change.

The capital cost of sea level rise in the

Caribbean Community countries (CARICOM)

alone is estimated to be US$187bn by 2080.

Youth actionYoung people, not only from SIDS but

over the world, can be part of the soluti

the battle to prevent damage to the

environment. I am a member of the Ca

Youth Environment Network (CYEN), w

raises awareness of climate change rela

issues across the Caribbean. CYEN Guy

helps by doing everything from coastal

ups to holding Young Eco-Change Make

environmental camps.

I believe that One Young World

Ambassadors, SIDS youth and young p

all over the world must continue to rais

awareness of these issues and make the

heard as a central part of the negotiatio

around the United Nations post-2015

development agenda on climate change

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investment needed to sustainably fund and

develop such projects. Many SIDS also

possess a wealth of unexploited natural

resources, such as minerals, renewable

energy resources and fish stocks. Papua New

Guinea has already embarked on exploratory

activities for mining of seabed manganese

nodules and rare earth elements. Other SIDS

should follow suit.

Caribbean SIDS can learn from and

emulate Pacific SIDS by moving away from

emphasizing small state vulnerabilities and

instead pay attention to new strategic

regional environmental initiatives, such as

SIDS DOCK, which helps SIDS transform

their national energy sectors into a catalyst

for sustainable economic development. At a

state level, there must be proper planning


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Creativeindustries:awindowofopportun

ity

Thecreativeindustriesareoneofthefa

stestgrowing

sectorsoftheworldeconomy.Globaltr

adeincreative

goodsandserviceswasestimatedatUS$624bnin2011

afterreboundingfromaslumpinthea

ftermathofthe

globaleconomiccrisisanddownturn.T

hisgrowthisalso

evidentinnationaleconomies.Forexa

mple,inthe

UnitedKingdomthecreativeindustrie

sgrossvalue-

addedhasgrownby15.6%,comparedw

ith5.4%forthe

overalleconomyduringtheperiod200

8to2012.The

impactofthesectoronemploymentis

alsosignificant,

withanannualgrowthratein2012me

asuredat8%,

comparedwith0.7%fortheUKeconom

y.

Inshort,inthemidstoftheworstgloba

leconomic

depressioninlivingmemorythissectorhas

outperformedmostothersectors.Thisperformance

canbeattributedtotheshifttowardsa

post-industrial

economywherepersonal,recreational,

andaudio-

visualserviceshaveexpandedasashar

eofthe

expensesoftheaveragehouseholdand

asashareofthe

economy.Ofnoteistheprocessofrapi

dtechno-

economicchangeinproducts,distribut

ionand

marketing(e.g.e-books,iTunes,Amazo

n.com,NetFlix);

theincreasingcommercializationofin

tellectual

MakingIt20

BobMarley,Jamaican

reggaesinger-

songwriter,musician,

andguitarist,who

becameoneofthe

worldsbest-selling

artistsofalltime,with

salesofmorethan

75millionalbums

andsingles.

KeithNurse exploreshowthecreativei

ndustriescanbeanengineforeconom

ic

growthandamechanismfordiversifyi

ngeconomiesintheCaribbeanandbe

yond.

Photo:ChrisWalter/urbanimage.tv


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ENHANCINGPRODUCTIVE

CAPACITIES

KEYNOTE


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Productive activities in Small IslandDeveloping States (SIDS) contribute significantlyto sustainable development but are limited bythe inter-related challenges of the small size ofthese countries, their remoteness, theirvulnerability to external economic shocks,climate change and other environment-relateddisasters, as well as by social constraints such asunemployment. These constraints have beenidentified and reiterated in intergovernmentalagreements, such as Agenda 21, the BarbadosProgramme of Action (BPOA), the MauritiusStrategy and, most recently, the SAMOA Pathway,the outcome document of the ThirdInternational Conference on SIDS held in Apia,Samoa in September 2014. We need to examinehow the SIDS have creatively tackled theseconstraints.

Enhancing the resilience of SIDSThe 1992 Earth Summit recognized the specialvulnerabilities of the SIDS. These vulnerabilities

can limit the capacity of SIDS to fully benefitfrom trade liberalization and globalization,seriously limiting the scope and cost-effectiveness of their productive sectors.

The BPOA of 1994 identified specific actionsfor the sustainable development of the SIDS,including those to enhance SIDS resilience inproductive activities. However, the subsequentdecade saw growing challenges for SIDS, which

were experiencing increased exposure todisasters and to external shocks, while dealingwith their unique vulnerabilities.

Productive sectors suffer every time disastershit SIDS. Measured by the frequency and severityof disasters, SIDS are among the top hot spotsof the world, with economic losses per disasteroften exceeding one percent of gross domesticproduct (GDP) or more. When disasters hit them,the debt to GDP ratio of SIDS grows by as muchas five percentage points.

The Mauritius Strategy for the furtherimplementation of the BPOA, adopted in 2005,set forth actions in 19 priority areas, building onthe original 14 thematic areas of BPOA. The newadditional thematic areas in the MSI includedtrade, sustainable production and consumption,and knowledge management, and were intendedto support SIDS in enhancing their productivecapacities and opportunities to participate inglobal supply chains. The new SAMOA Pathwaycalls for support for the efforts of SIDS to build

resilience to the impacts of climate change andto improve their adaptive capacity through thedesign and implementation of climate changeadaptation measures appropriate to theirrespective vulnerabilities and economic,environmental and social situations.

Working with natureDespite their inherent vulnerabilities andsetbacks, SIDS have achieved many successes, inpart thanks to their own efforts but also throughinternational cooperation. Take tourism as an

example. The number of international touristsvisiting SIDS reached over 40 million in 2011,with annual revenue generated by internationaltourism exceeding US$38bn. For some of theSIDS, tourism accounts for over 40% of GDP,and 50% to 75% of exports of services. However,given its scale, tourism has the potential to createhuge economic and human costs in the longterm if not done sustainably. Learning from pastmistakes, the governments and the private sectorof SIDS have been looking at how to maketourism sustainable as a main revenue-generating productive sector.

This requires ensuring that sustainability isadopted as the primary objective of all sectors ofthe tourism industry, encouraging responsiblepractices through voluntary codes of conduct,applying appropriate environmental regulationsand management measures, providingappropriate financial incentives such as user feesand tourist taxes, and applying the polluter paysprinciple. As a result of these measures, moreand more SIDS tourism operators are

WU Hongbo was appointed UnitedNations Under-Secretary-General forEconomic and Social Affairs on 1 August2012. Prior to this appointment, he servedas Ambassador of the Peoples Republic ofChina to the Federal Republic of Germany.As head of the UN Department ofEconomic and Social Affairs, Wu overseesintergovernmental processes, policyanalysis and capacity-development work.He also serves as the Convenor of theExecutive Committee on Economic andSocial Affairs, and advises the UNSecretary-General on all development-related issues, including climate change,internet governance and financing fordevelopment. In 2014, Wu served as theSecretary-General of the thirdInternational Conference on Small IslandDeveloping States.

Many Small IslandDeveloping States aredeveloping and

implementing policiesthat promote responsresponsible andsustainable tourism wpositive economic, socand environmentalimpacts. These includefocus on thedevelopment of eco- ,agro-, and culturaltourism, and the desigand implementation omeasures to enhanceemploymentopportunities.


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confines of their inherent vulnerabilities.In SIDS, land size and population size can

make large-scale industries problematic andunsustainable. It may be more appropriate togenerate decent work, partnerships, andinnovation by fostering entrepreneurship,

building capacity and increasing thecompetitiveness and social entrepreneurship ofmicro, small and medium-sized enterprises andstate-owned enterprises. In this respect, itwould also be important to encourage inclusiveand sustainable industrial development withthe participation of all people, including thepoor, women, youth and persons withdisabilities. Artisanal and small-scale

productive activities of note include eco-tourism operations, artisanal fisheries,community-based off-grid renewable energyprojects, and small-scale mining projects.

The fact that SIDS are small and remote alsohas its benefits, including the existence of strongsocial ties and close-knit communities, and thepreservation of traditional culture. The strongsocial capital in SIDS should be considered animportant asset in any discussion about

increasing productive activities in SIDS. Sucdiscussion must also address the overall socdevelopment of SIDS, including enhancingquality of education, improving public healand reducing the high prevalence ofcommunicable and non-communicable di

ConclusionProductive activities in SIDS can best contrto sustainable development by recognizingstrengthening the role that all stakeholderplay in these activities through partnershipSIDS have strong social capital, which shouharnessed to strengthen productive activitand economic development.

Industries and enterprises in SIDS musinto account the structural dynamics of thSIDS, such as small size and small populatand focus on activities that are best suited the islands. New investors and partners alsshould be aware of the diversity of the SIDparticularly in different regions. Once thesfactors are adequately addressed, productiactivities will truly accelerate the sustainabdevelopment of SIDS.

Fishermen off the coastof the Pacific island ofNauru. Small-scale reef

fishing provides a goodpart of the nutritionalprotein that is thebedrock of Nauruscontinuing foodsecurity.


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Island nations in the Pacific havelong complained of too manyfishing boats in the regioncatching far fewer fish. Now,writes Giff Johnson, unity isshifting control of fisheriesto the Pacific islands.

Pacific unity ispaying off infisheries at least

As Pacific islands ratchet up control offishing in their waters, weve seen apredictable response from distant water

fishing nations.When the Western and Central Pacific

Fisheries Commission (also known asthe Tuna Commission) was established

by treaty 10 years ago, the Japanesegovernment, despite its activeparticipation in negotiations leading upto the treaty, refused to sign on at thefirst opportunity. Despite being part ofthe negotiations, it said it wouldnt backthe newly established regional fisheriesmanagement organization for thePacific. Was it unsurprising that a year

later, Japan signed on?The Parties to the Nauru Agreement

(PNA), which has set itself up as a fisheriescartel, established a vessel day scheme forselling fishing days, with the goal oflimiting the then-uncontrolled level ofpurse seine fishing to conserve tuna andincrease its value. PNA has certainly beensuccessful in the latter (tuna revenueflowing to the eight member nations hasrisen from US$60m annually in 2010 toover US$250m last year), if not assuccessful at the former.

But when PNA started enforcing thevessel day scheme, most distant waterfishing nations balked at accepting it.They had been used to sending fisheriesteams to island capitals once a year tonegotiate license fees, which historicallypaid just pennies compared to the profitsreaped by the fishing countries. Thesecountries were not about to change a styleof operation that had fed their fishing

industries for two generations. Now, withthe exception of the European Union, alldistant water fishing nations with purseseiners operating in the region are fishingunder the vessel day scheme. Shall we take

bets on the EUs ultimate acquiescence to

the vessel day scheme?Then there are the Americans, who have

enjoyed preferential access to PNA waterssince the late 1980s, when a US StateDepartment-backed fishing treaty cameinto play with all Forum Fisheries Agencyislands. The treaty ended years of US-flagged boats fishing without paying,ignoring rules, and generally giving the USa bad name in the region. When the treatysfinancial package came up for renegotiationseveral years ago, the US was payingUS$21m annually. The PNA demanded

triple this amount. Its too much, said USnegotiators. We cant pay it. Over theensuing years of negotiation the US sidefinally agreed to pay US$63m a year a dealthat went through in 2013. Now PNA hasupped the access ante because it isincreasing the fishing day fee fromUS$6,000 to US$8,000 come 1 January, 2015.And the US has tentatively agreed toUS$87m a year to secure fishing access for it

vessels. Cant afford it? The better questionis, do you want to keep fishing? And the USgovernment and industry clearly know theanswer to this question.

With it now having become clear thatbigeye tuna are being over-fished, the movefor greater control of the longline fishing

industry is gaining momentum. Since the3,000 longliners plying the Pacific generallyfish on the high seas, they are more difficultto manage than the purse seiners that fishin-zone. Still, PNA has announced plans toextend a vessel day scheme to longliners to

bring it under the control and managemenof Pacific islands.

As pointed out at a recent fisheriesmeeting by Phil Roberts, the managing

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GIFF JOHNSON is editor ofthe weekly newspaper, TheMarshall Islands Journal.

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director of global tuna supply company, Tri-Marine International, When PNA bannedhigh seas transshipment for purse seiners,there were some gripes. But then everyone

started doing in-port transshipment. In-port transshipment meets dualconservation and economic developmentgoals for Pacific islands: it increased theopportunity for monitoring vessel catches,while offering numerous spinoff economic

benefits to Pacific ports. One of the keyproposals on the table is to halt longlinerstrans-shipping on the high seas, which iswhere virtually all of the distant water

fishing fleet currently off-loads its catchesof tuna a system that is problematic foreffective fisheries management andproducing accurate stock assessments.

The longline industry of Japan, SouthKorea, Taiwan and China is not helpingmatters, either. The fact that these fournations have, since the start of TunaCommission a decade ago, failed to

provide operational catch data that is arequirement of membership appearsfinally to be coming to a head. The 17-member Forum Fisheries Agency (FFA)issued a strongly worded statement inAugust 2014 calling for action by these fournations to provide data to reduce gaps instock assessments. An increasing numberof Pacific fisheries officials want the TunaCommission to sanction these countries

The Parties to the Nauru Agreement (PNbrings together eight Pacific Island countrsustainably manage tuna and increase ecobenefits for their peoples. PNA members Kthe Marshall Islands, the Federated States Micronesia, Nauru, Palau, Papua New GuinSolomon Islands, and Tuvalu. These countown waters which supply 25% of the worldan estimated US$2bn worth of fish every yFisheries scientists have recently releasassessments of tuna populations in the weand central Pacific Ocean. The numbers ofstock are at a dangerous level and worseniTwo of the main commercial tuna fishintechniques are longline fishing and the puseine technique.

Longline fishing uses a mainline whichmore than 100 km in length and from whicmany as 3,000 branch lines, each with a bahook, are dangled in the water column. Thmainline is kept afloat by a series of buoysattached at intervals. The gear is passive, incaptures whatever fish happen to take the

Purse-seine nets are set vertically in thwith floats attached to the upper edge, whalong the lower edge is a chain, for weightseries of rings, through which the pursing passes. The nets can be as long as 1.5km amore than 150m deep. On sighting a schotuna, a large skiff with the end of the net at

is released from the stern of the fishing veThe vessel encircles the school with the necable is hauled aboard the vessel, causing bottom of the net to close, and the fish aretrapped inside the pursed net. Most of thethen pulled aboard the vessel, confining thin a sack, from which they are transferreddeck of the vessel.

for failure to provide the required daHistory tells us that if island countr

stay unified, they can gain control oveindustry long dominated by distant wfishing nations. Enforcing best pract

management rules is the only way toensure the future viability of tuna stonot only for Pacific islanders, who depon this for food security, governmentservices and jobs, but for the rest of thworld that is increasingly dependent tuna fish as a food source. The fact thdistant water fishing nations have haforced, sometimes kicking and scream

by the PNA, FFA and the Tuna Commto comply with changes to sustain anstabilize the industry, while sharing t

benefit with island nations, simply

underlines the point that unity worksThe PNA and FFA have proved ove

years that there is power in numbersan example of success for the regioncould easily be applied to other econareas, including deep-sea mining.Republished from Pacific Politics with

permission of the Pacific Institute of Pub

Policy (PiPP), the independent think-tank

serving the Pacific islands community.


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The size of the youth population in the PacificIslands is double the global average with 54%aged below 24 years, creating enormouschallenges for slow-growing small island

economies unable to create jobs fast enough.Generating employment opportunities for

tens of thousands of school leavers is now anurgent issue on the Pacifics post-2015development agenda. Otherwise a poorlandscape of opportunity could jeopardise thepotential of a generation whose public andeconomic participation is vital to progressingsustainable development in the region.

Youth unemployment is estimated at23% in the Pacific Islands region, rising to46% in the Solomon Islands and 62% in theMarshall Islands, compared to the global

average of 12.6%.

IPSs Catherine Wilson on why youthemployment is critical to sustainable

development in the Pacific Islands

Realizingtheirpotential


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Youth unemployment in this country iscritical and one of our highest priorities,Jennifer Fruean, chair of the National YouthCouncil in Samoa, a South Pacific Island

developing state located northeast of Fiji,told IPS.

Approximately one quarter of Samoaspopulation of 190,372 is employed andeconomically active and youth account forabout half of the remaining unemployed,according to government statistics.

In the villages, I think that is where mostof the youth are static, but there is also a verynoticeable shift with urbanization that iscausing a number of youth to come to Apiaand they are becoming idle, she continued.

Lack of sufficient job creation is affecting

both young people who lack adequateeducation, as well as those who possessqualifications and experience. The only routefor many of the latter is emigration to largereconomies, such as New Zealand, Australiaand the United States.

With 76% of those with a tertiaryeducation leaving, the country isexperiencing a brain drain and 44.7% ofprivate sector employers are experiencingskills shortages, reports the InternationalLabour Organization (ILO).

Samoas economy, dependent on

agriculture, fisheries, tourism andremittances, has been severely impacted inthe last 20 years by natural disasters. In 2012,Cyclone Evan devastated infrastructure andcrops resulting in economic losses equal to30% of GDP.

The global financial crisis also led towidespread formal sector job cuts in Samoawith waged employment declining from28,179 in 2006 to 23,365 in 2011 and privatesector jobs falling from 16,921 in 2007 to12,711 in 2010.

Only one-quarter to one-third of Pacific

Islanders finishing school are likely to secureformal sector employment, according to theUnited Nations Development Programme(UNDP). This leaves a high proportion of anestimated more than 5,000 school leavers each

year vulnerable to exclusion in Samoa, whereformal sector employment is around 30%.

The social impacts of high teenagepregnancies and a low secondary schoolcompletion rate, with an estimated 35% of

more other people are entering theinformal sector, as are young peoplecoming out of college who are findingjobs in the formal sector, Williams ad

Fruean sees the same potential in Swhere two-thirds of young people aremaking a living through informal act

There is so much potential in theinformal and agricultural sectors andencourage the unemployed youth tobecome economically active in thesesectors, for example, through organifarming or creative production. The cand creative industries in the Pacific areportedly growing at about 7% per ye

Also the solution of co-operativescoming back because the cost of prod

is so high. A lot of young people [in thCaribbean] are producing music alltogether, or somebody is writing it ansomebody is mixing it, so it is sustainWilliams said.

But if the informal sector is to playin sustainable and decent job creationtraining, skills, working conditions, vaaddition and production standards nbe improved, she continued. Low-productivity subsistence activities alsto be up-scaled and developed, with gmarket orientation and potential for e

being explored, where feasible. In theagricultural sector alone, which accoutwo-thirds of the workforce, only onequarter of production is for the markethe remainder for domestic consump

Many young people in the informasector dont have experience of budgeand managing their money, and this iimportant area of awareness that needbe addressed, too, according to the SaNational Youth Council.

Efforts to galvanize the potential oPacific Islander youth must be expand

prevent increased poverty and inequathe next generation and the social falldisaffection when aspirations for prodlives are not fulfilled.

Inter Press Service IPS is an internatio

communication institution with a global n

agency at its core, raising the voices of the

and civil society on issues of development

globalization, human rights and the enviro

this age group in Samoa not in education, arealso aggravating factors.

Fruean believes the main reason is theinability of families to pay school fees and

suggests the governments introduction lastyear of fee-free secondary education will helpimprove the final year retention rate of 48%.

But there are also questions about thequality and relevance of education foremployment demand.

Institutions are still bringing out lawyerswhen there is a desperate need here forelectricians and plumbers, and at theuniversity they are producing hundreds ofstudents with commerce degrees, but that is amarket adequately filled, Fruean explained.

Somaya Moll, business, investment and

technology expert with the United NationsIndustrial Development Organisation(UNIDO), advocates private sectordevelopment, which basically enablespeople to take charge of their own lives [bygiving] them the tools to do so.

Self-sufficiency, ownership andaccountability are important and it is provento work, she told IPS during the UnitedNations Third International Conference onSmall Island Developing States recently heldin Samoas capital, Apia.

The small size of Pacific islands and their

populations is a drawback for economies ofscale, keeping costs of production high. ButMoll said introducing entrepreneurshipawareness into school curriculums andencouraging financial institutions to considerthe creditworthiness of young people couldimprove the business environment.

The informal economy, which accountsfor up to 70% of economic activity in thePacific Islands and Caribbean regions, is apotential growth area, say regional experts.

It has always been an important source ofsustainability [in the Caribbean], Dessima

Williams from Grenada and Senior PolicyAdvisor for UNIDO said during an interviewat the UN SIDS conference.

And what has happened recently is that,as the formal sector has crashed, more and

Opposite page:Students at theUniversity of theSouth Pacific,Suva, Fiji.


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MakingIt34

Aruba is a small Caribbean island of just 193

sq. km located 30 km north of Venezuela.

A former Dutch colony, in January 1986

Aruba gained status aparte, removing itself

from the Federation of the Netherlands

Antilles. It gained autonomy over its internal

affairs, but remained part of the Kingdom of

the Netherlands. Commercial and economic

matters are handled by the national

government, while the Netherlands retains

political control over Arubas diplomaticrelations and defence.

Aruba has a small and open economy.

The island possesses few natural resources

and is heavily dependent on imports,

including food and manufactures. Its main

industries are tourism, offshore financial

services, and transport (mainly shipping).

Until recently, the economy also relied

heavily on a major oil refinery but it closed

in 2012. Tourism grew rapidly from the

early 1990s and, as a consequence, tourism-

related industries particularlyconstruction boomed, contributing to

strong economic growth and to a low

unemployment rate. Over 80% of the

economy depends directly or indirectly on

tourism, making Aruba the second highest

tourism-dependent country in the world.

The global financial crisis in 2009 and the

shutdowns of Arubas oil refinery

temporarily in 2010 and more permanently

in 2012 led to an economic contraction but

the economy grew again 2013. The recovery

was backed by a strong growth in thetourism sector, and in 2014 the economy

Tourist-rich small island

ArubaCOUNTRYFEATURE

Head of state: King Willem-Alexander of theNetherlands, represented by a governor.National government: Arubaanse Volkspartij(AVP) 13 seats. Opposition parties:Movimiento Electoral di Pueblo (MEP) sevenseats; Partido Democracia Real (PDR) one seat.Population: 110,000.Number of cruise ship passengers visiting in2013: 688,588Number of stopover tourist arrivals in 2013:979,256Percentage of stopover tourist arrivals from theUnited States in 2013: 57The solar park at the Reina Beatrix InternationalAirport in Oranjestad is the largest solar energysource in the Caribbean.

Ataglance Cuba

Jamaica

Haiti

DominicanRepublic

Puerto Rico

ColombiaVenezuela

Caribbean Sea

Bonaire

Curaao

ArubaTrinidad& Tobago


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Makin

has continued to be supported by a steady

upswing in tourism and tourism-related

investment. Economic output could be

boosted sharply again if efforts to partially

restart the oil refinery are successful.

The incumbent prime minister, Michiel

Eman of the Arubaanse Volkspartij, is

serving a second consecutive four-year term

that will run until September 2017. The

government holds 13 of the 21 seats in the

legislature. Its greatest challenges remainimproving the islands volatile economic

performance and stimulating employment

growth.

Economic policy is simultaneously

focused on stimulating tourism growth,

with projects to boost investment in this

sector, and on economic diversification to

achieve sustainable growth and to reduce

the risks caused by Arubas great

dependence on tourism. The authorities are

pursuing a new growth pillar anchored

around the renewable energy sector and the

promotion of knowledge- and technology-intensive industries. Taking advantage of

Arubas location and abundant solar and

wind resources, the government has a

strategy aiming to make Aruba more

dependent on renewable energy; to turn it

into a gateway between South America, the

United States and Europe for commerce

and investment, and to establish research

laboratories.

The Prime Minister has pledged that the

government will seek a transition to 100%

renewable energy sources by 2020. In

recent years Aruba invested US$300m to

build a 20-turbine wind farm rated at 30

mw that meets 20% of the islands power

needs. It replaced its old electric turbines

with more efficient models, and is building

a solar panel park. Between 2006 and 2013

Aruba reduced its imports of heavy fuel oil

from 3,000 barrels per day to 1,700 barrels,saving some US$50m a year. The

construction of a second wind park du

completion in 2016 will mean renewab

will provide half of the islands energy

In April 2014, the government signe

partnership agreement with the

international lighting company, Royal

Philips, to revamp the islands entire p

lighting system by completing an in-d

assessment and providing solutions fo

public buildings and outdoor lighting

systems. As part of the agreement, pubbuildings will be retrofitted with LED

lighting to realize the benefits of energ

efficiency. Philips will design a tailore

solution for outdoor living that allows

to maximize energy efficiency and imp

current lighting levels to international

standards. Philips estimates sustainab

lighting could result in initial energy s

of 50-80% and lower annual CO2 emis

by 3,000 4,000 tons.

To demonstrate its commitment to

development of sustainable tourism, t

authorities have entered into an agreewith the KLM airline to demonstrate t

viability of aviation biofuel. For six mo

from May 2014, 20 KLM flights betwee

Amsterdam and Aruba and the

neighbouring island of Bonaire will be

powered by biofuel. The airline declar

the flights represent an important step

towards proving that more sustainable

aviation is possible.

with big energy strategy

Economic policy issimultaneously focusedon stimulating tourismgrowth, with projects to

boost investment in this

sector, and on economicdiversification to achievesustainable growth andto reduce the riskscaused by Arubas greatdependence on tourism.


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MakingIt36

How is Aruba transforming its economy

from one that for most of the last 100 years

has been heavily dependent on oil refining

and, more recently, tourism, to one that ismore diversified and more sustainable?

The economy of Aruba is 70% dependent onthe tourism industry. Diversifying theeconomy and reducing Arubas reliance on asingle sector is integral to the governmentslong term strategic goals. Aruba isdeveloping a new pillar of the economy aknowledge economy to bring greaterdiversification, economic stability, growthand sustainability. This important newpillar is based on Arubas initiative todevelop the island as a Green Gateway

between Latin America and the EuropeanUnion in the areas of green technology,business support services and creativeindustries.

Aruba is making use of its proximity toLatin America and its knowledge of not onlythe language (Arubans speak Spanish, inaddition to Dutch, English and Papiamento)but of business practices and customs in theregion. As a member of the Kingdom of theNetherlands, Aruba also is relying on its

privileged legal and constitutional status asa member of this major trading countrywithin the European Union. And we are

refocusing on our historically close ties tothe United States as well. Exceptional UScompanies, such as Hyatt and Marriott, haveinvested in Aruba, and we want to attractequally stellar US companies in othersectors to invest in Aruba and to use Arubaas regional hub for green energy servicesand products.

In addition, Aruba has established acollaborative public-private-academic entityas a centre of excellence for tourism inAruba with the support of internationallyrenowned tourism education institutes in

Europe and the Americas, as well as localAruban institutions. Finally, Aruba will bedeveloping highly skilled jobs as ittransitions to renewable energyHow successful has the Green Gateway

economic vision and policy for a

knowledge-driven, entrepreneurial

economy been, so far?

Aruba is off to a very strong start. In a fewshort years, we have become recognized as aleader in the region for our efforts topromote sustainable prosperity and aknowledge-based economy.

Two Dutch organizations have alreadyestablished branch offices in Aruba and arecontributing to our knowledge-basedeconomy. TNO is a leading scientificresearch organization, and is not onlyworking in Aruba, but is also using ourisland as a regional hub to expand itsresearch and services in the area ofrenewable energy. The Gerrit RietveldAcademie, one of the top Dutch universities

of applied sciences for fine arts and design,has also established a presence in Aruba.

Schiphol International B.V. is managing

the Aruba Airport Authority N.V. KLM isusing Aruba as a hub for the region, and ithas already made its first flight using biofueto Aruba. Royal Philips is partnering withthe government of Aruba to revamp theentire public lighting system in Aruba andretrofit all public building lights to LED.Several other international companies areactively considering Aruba as a site forregional expansion.What is the Smart Island Strategy, and how

does Aruba plan to transform from the

current energy mix to one that is 100%

reliant on renewable energy by 2020?Aruba views prosperity as not only materialsuccess but also as the quality of our livesand the health and happiness of ourfamilies. We have five-star hotels in Aruba,but we also want five-star schools, hospitalselderly peoples homes, neighbourhoodsand a five-star quality of life. To create thetype of prosperity that also is sustainablemeans focusing on doing more with less, sthat creating prosperity today need notsacrifice the quality of life of futuregenerations.

A key component of our strategy whatwe call a Smart Island Strategy forachieving this is to transition our island to100% renewable energy. Arubas earlysuccess in renewable energy projects hasattracted the interest of some powerfulstrategic partners, such as TNO and theCarbon War Room, the global initiativefounded by Sir Richard Branson and otherentrepreneurs. In cooperation with these

Interview with Prime Minister MICHIEL EMAN

A green gateway betweenLatin America and Europe

MICHIEL (MIKE) EMANis the fifth Prime Ministerof Aruba and the currentleader of the ArubanPeoples Party (ArubaanseVolkspartij, AVP). He isserving a secondconsecutive four-yearterm as prime ministerthat will run untilSeptember 2017. In 1992,he graduated with adegree in Netherlands

Antilles Law at theUniversity of theNetherlands Antilles.From 1992 to 2001, Emanworked as a deputy civil lawnotary and was co-founderof several companies andfoundations for politicalstudies. He enteredpolitics as a candidate forthe AVP in 2001 and waselected as leader of theparty in 2003.

ArubaCOUNTRYFEATURE


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groups, we are developing an integratedstrategy to become one of the leadingcountries in the world in the use ofrenewable energy. This will not be easy.Wind and solar energy can only take us sofar because of intermittency issues, but wewill be looking closely at newer technologiesfor both energy production and storage, asthese become more reliable and costeffective.

In Aruba, we are looking forward to

achieving our

Documents

Making It #17 - Small islands, developing states