3. LOCAL DEVELOPMENT
3.2 The ‘ MIRAB model’ in Oceania
Scholars of Oceania have identified distinctive features of the region that limit the
applicability of globalist models in understanding development in Pacific islands
(Hau‘ofa, 1993, 1998; Overton, 1993, 1999; Ward, 1995). The ‘MIRAB model’11 of
development was an attempt to bring greater place specificity to development
theory, in this case to the microstates of Oceania, to which models developed for
continental countries did not seem to apply. The MIRAB model was developed in
the 1980s by two New Zealanders, economist Geoffrey Bertram and geographer
Ray Watters (Bertram, 1986; Bertram and Watters, 1985, 1986; see also Bertram,
1999; and Poirine, 1998). The model was an attempt to explain the relatively
successful economic performance of small Pacific states, based on their higher
than expected rates of economic growth and their GNP per capita. Bertram and
Watters argued that, given their extreme isolation, poor soils and agricultural base,
limited natural resources, and other factors, Pacific island countries should be
among the poorest in the world. Statistically, however, these countries
outperformed much of Africa and Asia (in terms of levels of GNP and growth),
and their standards of living are higher than what classical, modernization, and
dependency models predict (Bertram, 1999, 106). Why was this so? Bertram and
Watters suggested that the cause lay in the Pacific countries’ ability to exploit
globalisation, through migration (MI), remittances (R), foreign aid (A), and
bureaucracy (B)—hence the term MIRAB. Pacific islanders would migrate to other
countries (notably Australia, New Zealand, and the United States) and would remit
a share of their earnings to families back home in the islands. Pacific island states
11
The ‘MIRAB model’ is really a description of Pacific island economies, rather than a true model or analytical framework. I use the term ‘model’ here, however, as that is how it is used in much of the literature.
were also able to use their geographic position to derive aid from Australia, New
Zealand, the United States, and the United Kingdom, among others. Finally, island
governments (bureaucracies) were the main source of formal employment. These
factors together gave the Pacific island states a relatively high and sustainable
standard of living.
The viability of MIRAB economies is based on reimagining the economic
spaces of Pacific island states. Bertram (1993) suggests that Pacific islanders
resident overseas constitute part of the economic space of island economies. As
Bertram notes, mainstream imaginings of development argue that to be sustainable
development must be ‘underpinned by productive activity within the territorial
boundaries of the island economy itself’ (Bertram 1993, 248). His alternative
interpretation of development is that it can be sustainable:
so long as the indigenous people, wherever they reside, retain a set of entitlements sufficient to support material welfare standards over the foreseeable future, while preserving or enhancing their collective identity and the natural environment of their home territory (Bertram, 1993, 248).
The majority of island-born Cook Islanders, Tokelauans, and Niueans (all New
Zealand-affiliated territories) now live in New Zealand, with about 90% of
Niueans resident in New Zealand. Thus, as Bertram (1993, 254) notes, ‘the modern
sector of the Niuean economy … lies in New Zealand’ and that ‘Samoa’s modern
sector lies in Auckland and Los Angeles’. Flows between the island territories and
islanders resident overseas are continual, with remittances flowing to the islands
identity) and continual short-term population movements between the islands and
Australia, New Zealand, and the United States.
The MIRAB model has been criticised by some scholars, largely because it
assumes that the remittances and donor aid components are constant and
sustainable.12 Some analysts claim that a ‘remittance decay’ function reduces the
rate of remittances as migrants remain longer in their destination countries
(Connell, 1980, 1987; James, 1991; Campbell, 1992). Supporters of the decay
hypothesis suggest that migrants become less connected to their home countries
and that the transfer of capital also declines; remittances are therefore an
unsustainable source of national income. More recent research, however, has
largely refuted the remittance decay hypothesis. For example, Brown (1997, 1998),
in his study of Tongan and Samoan migrants and remittances to their home
countries, found that the remittance decay hypothesis has no validity. Poirine
(1997) and Simati and Gibson (2001) have also refuted the remittance decay
hypothesis. These scholars argue that, contrary to earlier theories, remittances are
largely motivated by economic incentives such as investment and asset
accumulation in the home country, under ‘implicit loan’ arrangements, rather than
by largely altruistic motives. Nevertheless, many mainstream analysts still see
remittances and donor aid13 as unsustainable and as creating dependent
relationships with outside sources of national income.
What becomes clear from Bertram and Watters’s MIRAB analysis is that
12
Poirine (1998) provides the best overview of the arguments against MIRAB; he then goes on to critique and ultimately reject these arguments.
13
Decay in donor aid is more difficult to assess, as aid levels fluctuate with particular projects. Between 1985-89 and 1990-95 donor aid as a percentage of GNP declined in some Pacific countries (Tonga, Samoa, and Vanuatu) but increased in others (Kiribati, Marshall Islands, and Solomon Islands) (Duncan et al., 1999, 9).
‘conventional notions of what constitutes economic development cannot be applied
mechanistically to the very small island economies of the Pacific’ (Bertram 1993,
257). Island states currently depend on the export of their population, and the
return of economic gains from the employment of those islanders resident
overseas. Bertram and Watters liken this process to the transnational corporation,
which has a nominal home (a head office in a major financial centre) but operates
worldwide and whose operations support the home office but are distributed
globally. These ‘transnational corporations of kin’ (Bertram and Watters, 1985,
511; Bertram, 1993, 254-57) allocate financial and labour resources worldwide,
and, as Bertram (1993) notes, the goal is not to maximise incomes in the island
territory alone, but to maximise the overall welfare of the islander population
(which he equates with ‘shareholder equity’). Thus ‘development’ is imagined as
‘enhancement of the international collective net worth of islander groups’
(Bertram, 1993, 254), rather than as increased productivity or growth in the island
state itself.
Bertram further notes that capitalism has only a small role in island society
(Bertram, 1986, 809-10). Therefore, promotion of capitalist forms of economy is
not necessarily a solution to problems of development. Instead, Bertram argues
(1986, 1993) that the key is to make rent incomes secure: ‘what matters is whether
the entitlement of island communities to rent incomes remains sustainable’
(Bertram, 1993, 257). He notes that, given prevailing circumstances, continued rent
flows are more critical to island survival than the formation of productive forms of
industry:
sustainable. The promotion of productive activity within the territory of these micro states finds its rationale not in its direct contribution to real income, so much as in its role in defining and reinforcing the roles of individuals within indigenous society and culture (Bertram, 1993, 253).
Mainstream development models fall down in the context of microstates, in which
productive industry is important mainly for sustaining culture: Bertram argues that
‘there are viable paths to modernity and welfare that do not rely upon a repetition
of the European large-country model of industrialisation and primitive
accumulation’ (1993, 248). Economic sustainability will depend on the ability of
microstates to sustain rents over the long term. For many microstates this means
continued reliance on remittances and aid. But investing rents in financial markets
can also provide a means of sustaining the flow of rents over time.
The MIRAB model is important as a place-specific conception of
development. It was designed to describe development conditions in Oceania,
particularly in atoll microstates. In many ways it does account for the performance
of Pacific island economies (Poirine, 1998). However, it still remains very much
within the notion of capital flows from developed to developing countries as the
way to engage globalisation, and even MIRAB advocates cannot assume that donor
aid will continue at present levels. The ‘model’ thus only partially serves as a set of
policy guidelines for development in small Pacific states. It does, however,
recognize that sustaining rents is the key to the long-term viability of small island
states, and that engaging with globalisation is perhaps one way to do this. As
Bertram (1999, 107) notes, ‘Pacific islander populations became globalised long