The challenges of Small Island Developing States and the Blue Economy

Introduction

The challenges faced by countries around climate change, environmental degradation, rising population and inequality and global economic uncertainty are common. Nowhere do these challenges come into sharper focus though than in SIDS. Alongside the challenges mentioned, they deal with small, often dispersed populations, making public sendee delivery particularly difficult. They are often susceptible to devastating weather events and can struggle to recover from these due to narrow economies that rely heavily on the oceans for much of their GDP. That ocean-based or Blue Economy is at the heart of much of the discussion around building the strength and sustainability of these island economies, but that in itself faces some significant challenges.

This chapter will examine the specific challenges and vulnerabilities of SIDS, the challenges and problems with overemphasising the Blue Economy and the ways in which the digital-creative industries can aid in facing those challenges.

SIDS as a concept

SIDS were first recognised as a distinct group at the United Nations Conference on Environment and Development in June 1992, a group of island countries that displayed certain characteristics such as small size, limited resources and geographic dispersion. The Agenda 21 document at this conference recognised that these small island states were a special case for both environment and development.

The United Nations Department of Economic and Social Affairs (UN-DESA) currently recognises 57 SIDS (37 UN-Members and 20 Non-UN), divided into three main geographic areas:

• 1. Caribbean
• 2. Pacific
• 3. Atlantic, Indian Ocean. Mediterranean and South China Sea (AIMS).

Specifically, the World Bank defines small states as countries that (a) have a population of 1.5 million or less or (b) are members of the World Bank Group Small States Forum (World Bank, 2016).

They are, however, a diverse group with varying population sizes, cultural characteristics and development progress. Some island states, such as the Maldives, have officially become an upper-middle-income country and is classed by the World Bank as a development success (World Bank, 2020b) with the second-highest Human Development Index (HDI) rank in South Asia and an income per capita of SI 1,890.

In the same Indian Ocean region however, the Comoros has a per capita income of S1362, with 23.5% of the population living below the poverty line (World Bank, 2018). This diversity however does not mean that there are also some notable common characteristics, particularly as is generally stated, vulnerabilities, that SIDS share.

Key characteristics of SIDS

The Organisation for Economic Cooperation and Development (2018c) does state that the differences among SIDS "point to the need for tailored development approaches across the group”, yet the common challenges they face mean there is “scope for mutual learning”.

SIDS are often discussed in their regional subgroups - for example, the Pacific, the Caribbean and AIMS SIDS. However, it has also been suggested that some smaller SIDS subgroups could be created along issues-based categorisations (Alonso Rodriguez et al., 2014).

The most often citied defining characteristics and vulnerabilities of SIDS are their small population sizes, their remoteness from economic markets and principal trade routes, and their often dispersed populations. These dispersed populations mean that domestic markets are small, limiting the economies of scale that larger countries with more condensed populations benefit from (Bartelme et al., 2018). This dispersion also leads to high per-capita costs to deliver essential public services such as health, education and security, with a subsequent significant impact on public finances.

These ’negative effects’ of small, dispersed populations and the remoteness from markets lead to "high production and trading costs, limiting investment, competitiveness and the scope for integrating global value chains” (Organisation for Economic Cooperation and Development, 2018b).

This coupling of limited domestic market size and higher export costs means that SIDS economies generally focus on a limited number of sectors, most notably tourism and fisheries, thereby fostering their narrow economic bases. Because of this, public sector jobs often account for a large percentage of the total employment on island states, with the Maldives, for example, having around 40% of its total employment in the public sector (World Bank, 2020c).

The public-private wage differentials along with the other benefits associated with public employment disincentivise young people from seeking private sector jobs and also hold down private entrepreneurship. This has caused relatively elevated levels of youth unemployment, at 15.3%, and low rates of women participating in the workforce (Organisation for Economic Cooperation and Development, 2018b).

This can lead to a shortage of skilled workers and. despite the high unemployment rate, a reliance then on expatriate labour. This stems from limited access to good-quality secondary, tertiary and vocational education, particularly away from capital cities and for those nations with archipelagic structures, coupled to a lack of high-skill and high-value jobs opportunities and the subsequent ‘brain drain' of talent to larger population centres in other countries (de la Croix et al., 2014).