Aid in an island microstate : the case of Niue

Abstract

This study seeks to understand and explain the aid-dependent condition of Niue, how it arrived at that condition, and what are the implications of that condition for aid policy makers in Niue and elsewhere. The study uses contributions to the literature on small island economies which attributes the present economic state of small island countries to the forces of colonialism and peripheralism. Many development agencies have subsequently argued small island countries should receive high levels of aid. In order to test the validity of this theory to Niue, the record of economic development since 1900 is reconstructed. Public sector accounts, trade statistics, development project records, employment data, migration statistics, and information on natural and extraneous events are collated and graphed to demonstrate important trends. Although it is not possible to investigate the relationships statistically, the patterns are seen to be closely related. The data reveal that relatively high levels of aid have had few positive effects in terms of increasing productivity. Niue has developed an overwhelming dependence on imports for consumption, a large and dominant public service coincident with a high and constant rate of emigration resulting in partial depopulation. These findings support the theory espoused in the small island economies literature. A major weakness of the theory, however, is its preoccupation with the macroeconomy and neglect of the micro-economy. In a bid to overcome some of the limitations of the macro-approach, a detailed case study is made of the 284 member community of Mutalau village. The study shows th at income distribution is heavily skewed in favour of government salaried employees who head a three tier social structure. A comparison of socioeconomic indicators, access to public services and labour arrangements confirms that substantial differences exist between the three tiers. A case study of three families draws links between aid and emigration. The micro-study shows that Mutalau has experienced differentiation of socioeconomic groups; partly as a result of policies employed to allocate aid, and partly as a result of differential population decline. One result has been the stratification of the society into a hierarchy of groups based on varying claims to aid subsidised government employment which has replaced land as the basic resource in the village. A major lesson learnt from the Niue study is th at present aid policies are endangering the very attributes aid policy makers wish to foster: egalitarianism, income equality, homogeneity and self-reliance. The thesis presents evidence for the case for a serious re-examination of present aid policies towards small island countries. Show more