Discovered uninhabited by Cook. Norfolk Island was first settled by the British in 1788 because of misperceptions about the value of its flax and timber resources. It was abandoned in 1814. but reoccupied eleven years later exclusively as a penal establishment. In the next three decades convict labour permitted considerable agricultural. pastoral and construction activity.
The substantial capital stock accumulated over this period largely became a legacy for the Pitcairn descendants of the Bounty mutineers, who were resettled on Norfolk in 1856 after the closure of the penal establishment. They created a subsistence-based economy which remained essentially unchanged until externally introduced structural and institutional changes around the turn of the century forged much closer links with the international economy. The upshot was a phase of highly unstable export oriented
growth which was eventually curtailed by World War II.
The immediate post-war period was one of erratic economic change and declining population, with the economy lacking any strong and sustained growth stimulus until tourism assumed this role in the early 1960s. Subsequent expansion. strengthened temporarily by the use of the island as a tax haven. transformed Norfolk into a capital-exporting. developed mini-economy displaying a high degree of affluence in per capita terms. Admittedly, this economy has
also displayed instability. inequality and continued reliance on Australian financial support; and it faces the threat of environmental constraints impeding future growth. Nevertheless, it has so far proved resilient in the context of the greater political autonomy the island has possessed since 1979.