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Problems Faced by Indian Ocean Island Economies: The Case of the Maldives

Sathiendrakumar, R. (1996) Problems Faced by Indian Ocean Island Economies: The Case of the Maldives. In: Gabbay, R., Gosh, R.N. and Siddique, M.A.B., (eds.) Economics of Small Island Nations. New Age International Ltd in collaboration with the Centre for Migration and Development Studies, University of Western Australia, [and] the International Institute for Development Studies, New Delhi, pp. 117-131.

Abstract

Maldives is a small island-atoll developing country dominated by the Indian Ocean. It has many of the typical characteristics associated with island developing countries. Island-atoll developing countries "face difficult development decisions in a world economy that has changed little to respond to the aspirations of the smallest states" (Connell, 1986:41). Smaller geographical size implies limited land based natural resource availability (see Tisdell and Fairbairn, 1983; Tisdell, 1987). The limited land based natural resource availability limits the foreign exchange earnings from their potential exports. Furthermore, even if diversification is possible, which is questionable, small size coupled with economies of scale in transport (brought about as a result of geographic isolation), production and marketing, limits the degree of diversification (Fairbairn and Kakazu, (1985). Also geographic isolation coupled with smallness is a disincentive to overseas investment. In addition, international financial institutions are not geared to the size of the smaller island states. Thus fluctuations in foreign exchange earnings from visible exports are quite high which makes the task of budgeting at all levels from government to the household precarious (Dommen, 1980).

Publication Type: Book Chapter
Murdoch Affiliation: Murdoch Business School
Publisher: New Age International Ltd in collaboration with the Centre for Migration and Development Studies, University of Western Australia, [and] the International Institute for Development Studies
Copyright: New Age International Ltd
Publishers Website: http://www.newagepublishers.com/servlet/nahome
URI: http://researchrepository.murdoch.edu.au/id/eprint/8441
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