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The Economic Importance of the Sugar Industry for Fiji

In: Computable General Equilibrium Approaches In Urban And Regional Policy Studies

Author

Listed:
  • PARESH KUMAR NARAYAN

    (Department of Accounting, Finance and Economics, Griffith University, Queensland, Australia)

  • BIMAN CHAND PRASAD

    (Department of Economics, The University of the South Pacific, Fiji)

Abstract

For over 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, due to the non-renewal of land leases and the gradual withdrawal of the 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. Amongst 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 around 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

  • Paresh Kumar Narayan & Biman Chand Prasad, 2006. "The Economic Importance of the Sugar Industry for Fiji," World Scientific Book Chapters, in: Masayuki Doi (ed.), Computable General Equilibrium Approaches In Urban And Regional Policy Studies, chapter 10, pages 189-203, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789812707116_0010
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    More about this item

    Keywords

    Computable General Equilibrium (CGE) Model; Social Accounting Matrix (SAM); Urban and Regional Policies (or Urban and Regional Policy Evaluation); Each Industry's Market Clearance; Structural and Long-Term Policy Impacts;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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