Economics





The Propensity for Political Dependence in Island Microstates









JEROME L. MCELROY and MEGAN MAHONEY

Saint Mary's College, Notre Dame







Introduction



Since 1960 over 60 former dependent territories (DTs) have achieved independence.1 Roughly two dozen of these have been island microstates distributed rather evenly between the Caribbean and the Pacific. Since 1983, however, no Caribbean island has achieved autonomy and, with the exception of the move to Free Association with the United States by members of the former U.S. Trust Territory (Federated States of Micronesia, Palau, Marshall Islands), the situation is similar in the Pacific.2

Electoral Record

As a result, there remain over 40 dependent oceanic islands scattered across the globe. Although they vary in size and colonial history, they are relatively small (usually less than 1 million in population) and share a propensity for dependence. This is repeatedly evident from electoral results. In recent Caribbean status referenda, independence failed to garner more than a quarter of the votes in the French Antilles (1988), the Dutch Antilles (1993, 1994), Puerto Rico and the U.S. Virgin Islands (1993), and in Bermuda (1995).3 Outcomes have been similar in the Pacific. According to Connell, "...demands for greater incorporation into the centre have been

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stronger than pressures for independence. With the principal exception of New Caledonia, independence movements in small island territories are absent..."4

Determinants

A variety of factors have been suggested to explain this propensity for dependence. In the Caribbean literature, the external determinants range from deliberate metropolitan attempts to thwart independence,5 to a lack of overall status strategy and/or neglect.6 The internal determinants include pragmatism and political conservatism, lack of consensus among pro-independence groups, inter-island rivalry in archipelagic states where secessionist tendencies are more apparent, and even demands for greater assimilation such as in the French Antilles and Puerto Rico.7 In the Pacific, internal ethnic cleavages and the acculturation process of "European-

ization" have allegedly delayed progress toward autonomy.8 Few authors emphasize the role that territorial economic advantages play in the politics of dependence.9

Scope

This paper argues (1) that the key determinant of continuing dependence is the islanders' awareness of the substantial socio-economic benefits associated with territorial status, and (2) that such affiliation provides a legal/institutional framework especially conducive to mass tourism development, the postwar strategy of choice for small dependent microstates. In the first case, the general socio-economic advantages of dependence are substiantial for particularly small, resource-poor islands. They include free trade and export preferences for island produce and manufactures, access to lucrative metropolitan capital and labor markets, grants and welfare assistance, the subsidized provision of quality infrastructure, external defense, and disaster relief.

In the second case, two inter-related forces have considerably stimulated the devel-

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opment of dependent islands in the postwar era: the robust worldwide growth of international tourism and the transformation of insular economies. Since 1960 tourism has grown in excess of 5 percent per year. It has become the largest global industry accounting for 10 percent of world GDP and 7 percent of capital spending.10 This same period has witnessed the restructuring of small island economies away from traditional colonial monocrops (sugar, copra) to tourism, related construction and off-shore financial services. As a result, tourism now dominates the landscape and finances of the DTs.11

Method

In order to indirectly quantify the socio-economic differences assumed to be the result of these general and specific (tourism-induced) territorial concessions, a group of 39 islands was selected based on data availability. This group was divided into Caribbean (22) and Pacific (17) subgroups. Each subgroup was divided into dependent and independent clusters: 11 each for the Caribbean and 10 and 7 respectively for the Pacific. On the basis of these clusters socio-

economic comparisons were made of average behavior across 17 indicators for the Caribbean islands and 15 for the Pacific. To preserve uniformity and reliability in so far as possible, all data were taken from two standard sources: the CIA Fact Book (1997) and the World Tourism Organization's Compendium of Tourism Statistics (1997).

Results

Despite the relatively small number of observations and the potential for mean distortions, the contrasts in socio-economic performance are visible and striking. For example, in the Caribbean according to Table 1, results indicate the considerably smaller average population size (25%) and resource base (12%) of the Dts as well as their marketdly higher population



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density and assumed poorer labor/land ratios. On the other hand, per capita income in the territories is nearly twice the level of the independents while the unemployment rate is only half as large (11% vs. 22%). This contrasting economic performance is primarily due to the aggressive specialization of the dependencies in rapid tourism growth. Average per capita visitor spending is over three times the level of the more diversified and balanced independent economies. In addition, the Dts have been able to leverage twice as much debt per capita and enjoy signficantly higher rates of telephone and TV usage.

The emphasis on labor-intensive tourism services for export also largely explains the sharp differences in the average migration rate, 4.5 per 1,000 net immigration into the territories versus 9.0 per 1,000 net emigration from the sovereign islands. This may reveal one of the more telling contrasts between the two island subgroups: the propensity to migrate from independent islands to their more affluent dependent neighbors. This is an inter-island pattern that is well documented: from Antigua/Barbuda and St. Kitts/Nevis to the U.S. Virgin Islands, from Dominica to St. Maarten/St. Martin, from Haiti to Turks and Caicos and so on.12

The same contrast emerges from the social quality of life measures. Average life expectancy is over six years longer in the Dts while the average infant mortality rate is half (12.3 vs. 27.0). The territories have also proceeded further along the demographic transition, another index of modernity. For example, birth rates are significantly lower and the rate of natural increase about half the level for the independents (9.7 vs. 15.1). Finally, adult literacy in the dependencies averages over eight points higher and approaches the standards (95%) that obtain in affluent industrial societies.

Similar socio-economic differences are apparent in the Pacific figures although the

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level of modernization is a rung below the Caribbean. Among other things, this is partly due to the remoteness of the Pacific islands, their relatively long tradition of subsistence agriculture, and their relatively brief colonial exposure and tourism experience. The small Pacific Dts record significantly higher levels of per capita income, visitor spending, and external debt by multiples of two, three and larger. They also enjoy markedly higher rates of telephone, radio and TV usage in comparison with their independent counterparts. As a result, the differential migration rate (0.9 vs. -1.9) again may suggest the possibility of emigration from the autonomous to the dependent territories (as well as elsewhere). According to Connell,13 "....approximately half the population of American Samoa has migrated from Western Samoa...."

The social standard of living contrasts are also analogous to the Caribbean pattern. Life expectancy in the territories average five years higher while infant mortality is nearly half as low than in sovereign islands. Both birth and death rates are lower in the Dts, but the rate of natural increase averages roughly the same. Adult literacy in the dependencies averages about five points higher (90% vs. 85%). On this and several other socio-economic indicators, the Pacific dependents approach levels achieved by the independent islands in the Caribbean.

U.S. Virgin Islands

Although it is difficult to specifically pinpoint the impact of the territorial package of concessions on dependent island tourism development and the islanders' standard of living, the experience of the U. S. Virgin Islands (USVI) is presented as illustrative of similar cases in other small U.S. Territories (Guam, Northern Marianas, American Samoa), and analogous to the experience of British (Bermuda, Caymans, Cook Islands), Dutch (Aruba, St. Maarten, Curacao), French (Guadeloupe, Martinique, French Polynesia) and other dependencies.

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The American Virgins were purchased from Denmark in 1917. In the 1960s the former sugar exporter experienced a massive tourism boom stimulated in part by the U.S. embargo of Cuba, America's former Caribbean paradise. During the decade, the annual number of visitors increased five-fold, personal income rose four-fold, and the population and housing stock doubled. Hotel and infrastructure construction, fed by immigration and foreign public and private capital flows, were at an all-time high.14

Much of this growth was facilitated by the territorial connection. One new airport was built and another significantly expanded while a modern road network was established through reliance in great part on U.S. federal dollars. U.S. citizenship allowed the immigration of many nationals from Puerto Rico and the mainland to set up and staff tourist related businesses. Citizenship, along with geographical proximity, also enabled the USVI to gain a strong foothold in the lucrative U.S. travel market. It eased the burden of mainland tourists who still make up 85 percent of the Island's total annual visitors. They enjoy a common currency, a common language, no passport requirement, the familiarity of similar US-VI regulatory regimes, and of course the protection of the U.S. flag.15

There are other territorial advantages. U.S. visitors receive roughly twice the duty-free customs allowance for personal goods bought in the USVI versus those purchased on other non-US competing tourist destinations. They also receive a significantly higher duty-free liquor allowance. The USVI also enjoys a special "freeport" legacy inherited from its Danish past. As a result, gifts, liquor and other luxury goods enter the Territory with low or no tariffs. This preferential treatment, along with other concessions, has helped establish the American Virgins within the space of a generation as the luxury ghopper's premier bargain paradise in the

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Caribbean.

Conclusion

In the postwar era, island societies in the Caribbean and Pacific have been engaged

in political and economic modernization. They have followed two distinct paths. The larger, more resource-rich island nations have opted for independence and diversification of the colonial export base with an emphasis on manufacturing and import substitution, and tourism to a lesser extent. The smaller, more vulnerable microstates have opted for continuing dependence and primarily a strategy of export substitution, i.e. replacing the tradition colonial staples with tourism and related services.

As a result of this wholesale restructuring, the Dts have experienced superior economic performance and social status in comparison with their sovereign island neighbors. Their success has been partly due to the buoyant growth of worldwide tourism, their leading sector of choice, and partly due to the package of concessions embedded in the territorial relationship that facilitate the gestation of rapid, mass tourism development. Small islanders' awareness of their lucrative dependent political economy, in combination with the expected expansion of tourism in the 21st century, suggests they will continue to vote their pocketbooks in favor of the status quo for the foreseeable future.

It is small wonder, then, that the march of decolonization has stalled at the shores of small dependent oceanic islands. Despite their periodic chafing and complaints of neglect, territorial residents-in the face of intensifying destination competition for tourist dollars and the pressures of globalization-remain unwilling to trade the visible security, affluence and standard of living of affiliation for the less tangible but more costly rewards of autonomy.

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NOTES

1. G. Boughton and P. Leary, A Time for Change: Relations Between the United States and American Samoa, Guam, the Northern Marianas, Puerto Rico and the United States Virgin Islands (Atlanta, GA: CBW-Elbow Graphics, 1993).



2. Ibid.



D. G. Lockhart, D. Drakakis-Smith and J. Schembri, eds., The Development Process in Small Island States (London: Routledge, 1993), 135-136.



5. H. M. Hintjens and M. D. D. Newitt, The Political Economy of Small Tropical Islands.

Exeter, UK: University of Exeter Press, 1992.



6. See D. Marlow, "Constitutional change, External Assistance, and Economic Development in Small Islands: The Case of Montserrat," in Hintjens and Newitt, eds., pp. 42-50; and

U.S. Government Accounting Office, U.S. Insular Areas: Development Strategies and

Better Coordination Among U.S. Agencies are Needed (Washington, D.C.: GAO/NSIAD, 1994.



7. F. P. Constant, "Decolonization Revisited: The Case of the Non-Sovereign West Indies,"

Caribbean Affairs 3(1990): 151-162. See also Constant's "Alternative Forms of Decolonization in the East Caribbean," in Hintjens and Newitt, eds., pp. 51-63.



8. R. Aldrich and J. Connell, France's Overseas Frontier (Cambridge, UK: Cambridge University Press, 1992).



9. R. Aldrich and J. Connell, The Last Colonies (Cambridge, UK: Cambridge University Press, 1997).



10. F. Vellas and L. Becherel, International Tourism: An Economic Perspective (New York:

St. Martin's Press, 1995).



11. J. McElroy and P. Olazarri, "Developing a Tourism Penetration Index for Small Island

Destinations," Journal of the Academy of the Social Sciences Vol. I (1997): 66-75.



12. K. de Albuquerque and J. McElroy, "West Indian Migration to the United States Virgin

Islands," International Migration Review 16 (1982): 61-101.



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13. J. Connell, op. cit., p. 138.



14. J. McElroy and J. Tinsley, "United States Virgin Islands," in S. B. Seward and B. K. Spinrad, eds., Tourism in the Caribbean: The Economic Impact (Ottawa, CA: Inter-

national Development Research Centre, 1982), 23-65.



15. W. Boyer, America's Virgin Islands: A History of Human Rights and Wrongs. Durham,

NC: Carolina Academic Press, 1983.



16. World Tourism Organization, Compendium of Tourism Statistics (13th Ed.) (Madrid,

Spain: WTO, 1997).



17. Central Intelligence Agency, The CIA World Fact Book (Washington, DC: Government

Printing Office, 1997).