Economic Importance of the Sugar Industry for Fiji

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Narayan, Paresh
Prasad, Biman Chand
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2005
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Abstract

For more than a century, the sugar industry has been perceived as the backbone of the Fijian economy, given its contributions to gross domestic product (GDP) and employment generation. However, because of the non-renewal of land leases and the gradual withdrawal of preferential prices by the European Union, the industry is on the verge of collapse. We use the Fiji computable general equilibrium model to simulate the economy-wide impact of a 30% reduction in sugar production. Among our key results, we find that in the long run a 30% reduction in sugar production leads to a 2.1% fall in exports, and government expenditure and real consumption fall by 1.9% and 1.6%, respectively. These declines in the aggregate demand components are reflected in a fall of approximately 1.8% in Fiji's GDP. The negative repercussion of declining economic growth is reflected in a 1.5% decline in real national welfare.

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Review of Urban & Regional Development Studies

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17

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2

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© 2005 Blackwell Publishing. The definitive version is available at [www.blackwell-synergy.com.]

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Urban and Regional Planning

Human Geography

Policy and Administration

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