The MIRAB Model in the TwentyFirst Century

1
The MIRAB Model in the Twenty-First Century

• Geoff Bertram
• Victoria University of Wellington
• New Zealand
• Presentation to Islands of the World VIII
• Kinmen, Taiwan, November 2004

2
Outline

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

3
Methodological Critique Marsters et al

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

4
Marsters et al continued

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

5
Marsters et al continued

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

6
Marsters et al continued

• What is to be developed sustainably (or at
  least given the space to change on its own terms)
  is a transnational formation of places, people,
  beliefs, values and practices, and not simply the
  nation
• Sustainability might be reinterpreted as less
  the problem of promoting national economic
  growth, and more encouraging the flourishing of
  transnational networks..
• We believe that MIRAB leads us to this
  conclusion if we broaden the focus from the
  economic to more meaningfully incorporate the
  social, the cultural, and the personal.

7

• I dont actually disagree with any of that.
• It sums up clearly some of the directions in
  which our understanding of the MIRAB model (and
  its other reductionist relatives) will have to
  move .
• It identifies the awkward fact that poets and
  novelists, along with anthropologists,
  geographers and historians, probably have the
  edge on economists in pursuing the sort of deep
  understandings called for.
• But Im staying with the empiricist/naturalistic
  side, at least for the moment.

8

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

9
Quick Review of the Model

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

10
Unproductive Capital was Productive
Productive Capital was Unproductive

• Infrastructure provided direct use values
  schools, hospitals, roads, reef passages, ports,
  airports, water supply, radio links, government
  buildings ..
• Development-project-related capital was moribund,
  loss-making, often idle

11
The model described stable steady states
underpinned by two stock-flow nexuses

• Stock of overseas migrants gt flow of remittances
• Flow of aid gt stock of public sector employees
  (bureaucrats)
• These were the locomotives of the economy

12
Vulnerability has been overplayed. Being small
means being

• Below the political radar
• A price taker in global markets
• Able to establish and maintain solidarity while
  nimbly responding to opportunity

13
Theres a solid number of MIRAB cases identified
in the literature now

• Cook and Kirkpatrick (1998) FSM
• Poirine (1998) French Polynesia, US Virgin Is,
  Guadeloupe, Martinique, St Perre et Miquelon,
  Mayotte
• Bertram (1999) Samoa, Tonga, Easter Island,
  Palau, Marianas
• Royle (2001) St Helena, St Kitts, and the
  Marshall Islands
• McElroy Morris (2002) Cape Verde, Comoros, Sao
  Tome Principe

14
Two Stylised Facts

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

15
(No Transcript)
16
(No Transcript)
17
(No Transcript)
18
(No Transcript)
19
Here are a couple of charts from Bertram (2004)
on political status, income of metropolitan
patron, and GDP per capita in the Pacific
1970-2000 (panel data)
20
Pacific Islands
21
Pacific Islands
22
Pacific Islands
23
Global dataset for 63 island economies, using
average of colonial power and chief import
supplier
24
Global dataset for 63 island economies, using
average of colonial power and chief import
supplier
25
Global dataset for 63 island economies, using
average of colonial power and chief import
supplier
26
Regression lines through region-adjusted
observations
27
Armstrong and Read 2004

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

28
Multivariate regression

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

29
Three Common Criticisms

• MIRAB applauds failure and is complacent
• MIRAB is unsustainable
• Slow growth in the Pacific is due to poor
  governance, not economic structure

30
Applauds failure?

• The argument is circular, from a particular
  modernisers definition of failure
• MIRAB outcomes have been better than the
  alternatives would have been

31
Bad Governance, not Structure?

• Friberg et al (2004)
• Institutional constraints such as poor
  governance and a lack of accountability over
  assistance have played a major role in inhibiting
  FSM and RMI growth It is the alleviation of
  these institutional constraints to improved aid
  effectiveness that will be necessary to sustain
  the FSM and the RMI economies.

32
Fraenkel (2004)

• The MIRAB model downplays the role of weak
  governance structures in inhibiting export
  production.

33
But

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

34

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

35
The Marshall Islands/FSM work by Fribergs GAO
team underlines two points

• 1987-2000 total aid totalled 2.1 billion
• Thats 13,100 per capita over 13 years
• Per capita annual Compact aid is to fall
• Many completed factories (clothing, fish
  processing) stand empty
• Theres no sign of progress towards
  self-sufficiency
• Migration to the USA is straightforward.

36
Unsustainability?

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

37
Ahlburg (2004) results on the economic fortunes
of US-resident Pacific-island migrants
38
During the 1990s

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

39
Poirines (2004) model of remittances showed that
we cant predict time trends without case-by-case
empirical calibration
40
(No Transcript)
41
(No Transcript)
42
(No Transcript)
43
This exercise showed that

• A purely theoretical economic model can be made
  to predict pretty well any time-path for
  remittances depending on which assumptions we
  make.
• Hence we cant make any clear prediction a
  priori. What we can do is fit the model to the
  facts after the event.

44

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

45

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

46
Baldacchino (2004) and PROFIT

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

47
Baldacchinos two premises

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

48

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

49
Baldacchino (2004) cont

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

50
Baldacchino (2004) cont

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

51
Baldacchino (2004) cont

• Utilising jurisdiction as a resource is one way
  of compensating for the dearth of conventional
  economic assets
• Essential characteristics of island elites are
  shrewd survival strategy a flexible and
  creative diplomacy, adopting free-riding,
  slipping free through the nets of regulation a
  skills repertoire that the small and powerless
  deploy and, being small, get away with it.
• This points to a conceptual shift from the
  economic and the idea of the household as the key
  decision unit, to a focus on the political
  dimension at the level of territorial
  jurisdiction.

52
Five dimensions of local jurisdictional autonomy

• P (people considerations) powers over movement
  of persons (including issues of citizenship,
  rewsdience and emplpoyment rights)
• R (Resource management) powers over
  environmental policy, especially regarding
  natural resources
• O (overseas engagement and ultra-national
  recognition)the exercise of para-diplomacy by
  sub-national governments acting as though they
  are sovereign states
• FI finance, insurance and taxation
• T (transportation) powers over access by air
  and sea.

53
But now, what about Tourism?

• Rapid expansion was not foreseen in the original
  MIRAB work
• Promises a post-MIRA B, commercially successful
  economic future for at least some small islands
• small, tourist-dependent islands represent an
  analytically useful cluster or special case of
  island development. (McElroy 2004)

54
McElroy (2004) found

• Successful tourism-driven cases are concentrated
  in the Mediterranean and northern Pacific,
  whereas the South Pacific and Indian Ocean
  exhibit the lowest levels of tourism penetration
• The nine most-developed and most heavily
  penetrated tourism destinations were among the
  smallest islands in his sample
• At the bottom end of the tourism-penetration
  spectrum lie islands which fall into the MIRAB
  category such as Tonga, Comoros, Tuvalu

55
McElroy (2004) cont

• The tourism penetration data suggest divergence
  rather than convergence.
• Rapid increase in tourism penetration for the
  already-highly-penetrated cases, while increases
  in the least developed subgroup were marginal
• Absent from the most developed destinations are
  the MIRAB contours familiar to many of the least
  developed islands

56
McElroy (2004) cont

• Independent sovereign juridical status is
  potentially as much of a handicap for tourism
  development as it seems to be for MIRAB
  economies.
• Eight of his nine most developed resort islands
  are dependencies, while six of the eight least
  developed are sovereign
• Dependent political status improve migration
  access and aid flows for MIRAB cases it also
  facilitates more intensive tourism penetration

57

• So lets try some taxonomic classification

58
MIRABs
59
STIDs
MIRABs
60
STIDs
MIRABs
PROFITs
61

• The small-island world, in this view, is one of
  multiple equilibria coexisting within the one
  global space.
• Government can be either a reinforcer of
  temporary negative-feedback loops which sustain
  the actual or a spur to change, to migrate to
  another model.
• External forces and circumstances dictate the set
  of opportunities open in the short and long run,
  but islanders and their institutions choose the
  actual trajectory.

62
The Kaleidoscope

• At each instant, you see a stable ordered
  temporary-equilibrium pattern
• The pattern persists (is sustained) until
  external circumstances change (the tube is
  turned)
• A new stable ordered pattern emerges
• The current pattern is always path dependent
  (same elements as predecessor)
• But the change is irreversible (turning the tube
  back produces yet another new pattern)

63
Hence our scientific claims have to be modest

• We can observe stability in the present
• and we can tell the story of the past sequence of
  temporarily-stable patterns
• We can predict that a new stable temporary
  equilibrium will emerge from the next external
  disturbance,
• and that the new pattern will incorporate all the
  elements of its predecessor.
• But we cannot predict what the new pattern will
  be -
• we can only describe it once it has appeared