Economic Importance of the Sugar Industry for Fiji

Review of Urban and Regional Development Studies, Vol. 17, No. 2, pp. 104-114, 2005

Posted: 10 Jun 2012

See all articles by Paresh Kumar Narayan

Paresh Kumar Narayan

Deakin University - School of Accounting, Economics and Finance

Biman Prasad

University of the South Pacific - Department of Economics; University of the South Pacific - Oceania Development Network

Date Written: 2005

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.

Suggested Citation

Narayan, Paresh Kumar and Prasad, Biman, Economic Importance of the Sugar Industry for Fiji (2005). Review of Urban and Regional Development Studies, Vol. 17, No. 2, pp. 104-114, 2005, Available at SSRN: https://ssrn.com/abstract=2080735

Paresh Kumar Narayan (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia

Biman Prasad

University of the South Pacific - Department of Economics ( email )

Private Bag, Laucala Campus
Suva
Fiji

University of the South Pacific - Oceania Development Network ( email )

Suva
Fiji

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