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most other Pacific islands to prospective markets for tourism in Australia and New Zealand. Finally, the relative homogeneity of the population of 215,000 (the third largest in the Pacific) shields the country from both ethnic disruptions and problems associated with crime. Despite its advantages, Vanuatu continues to provide a weak environment for private activity, with poor infrastructure, rapid population growth, and political instability, and this has compounded the difficulties stemming from the still narrow output and export base. Human development indicators
donors. The Plan was firmly supported by Australia and New Zealand. A comprehensive draft of the Plan for the upcoming 10-year period was approved by the Pacific Forum Economic Ministers at their June 2005 meeting in Tuvalu. A final version of the Plan was approved by the Pacific Islands Forum leaders at their October 2005 meeting in Papua New Guinea. 1 The Plan identifies a strategic framework of regional policies to be achieved over various time horizons. Early practical issues are to be completed or initiated within three years, medium-term proposals within five
growth in the high-end hotel and restaurant, transport, and communication sectors. The main foreign exchange earners remain sugar exports, mainly to the EU at preferential prices, and tourism, with the number of visitors now at 500,000 annually, the majority of which are from Australia and New Zealand. Recent years have seen growth in remittances from an emerging Indo-Fijian diaspora. Other exports include gold and garments, both on the decline, and timber and mineral water, mainly to the United States, Australia, and New Zealand. Fiji also serves as a regional hub in
several Pacific countries. This reflects both growing demand from Australia and New Zealand, currently the main markets for tourism services in the South Pacific, and a stronger focus on policies in support of tourism by policymakers in the region. Growing tourism activity and related investment have contributed substantially to the recent acceleration of growth. Inflation Over the last 10 years, average inflation has been relatively tame in both regions (see Table 6.2 ). Supported by the currency union and peg to the U.S. dollar, ECCU countries’ average
, there have been three military coups since the late 1980s, with trade sanctions by Australia and New Zealand and strengthened capital controls by the authorities in the wake of each coup, which has discouraged investment. In Papua New Guinea, no government has completed its five-year term since independence. In Solomon Islands, there was a period of ethnic conflict from mid-1999 through mid-2003. In the highland regions of Papua New Guinea, roadside bandits interrupt the marketing of agricultural crops such as coffee and cocoa, which has contributed to the collapse of
. Another factor was the considerable reduction in Australian and New Zealand tariffs, which eroded the advantage to Tonga of its duty-free access to these markets. The introduction of squash production in the mid- 1980s to supply Japan introduced some temporary dynamism and boosted agricultural incomes, but production peaked in 1993 and has since been in decline, partly reflecting growing foreign competition in that export market. Furthermore, even though squash production provided a welcome expansion of Tonga’s export base, it meant the economy was dependent on a single