The traditional economy as the source of resilience in Melanesia

Preliminary results of a survey undertaken by Oxfam Australia on the social impact of the global economic crisis on families in Vanuatu found that this impact has been negligible. The biggest impact reported by families was in fact from the global food crisis of late 2007 and 2008, which has affected in particular urban families more reliant on imported rice and flour for daily sustenance, and rising transport costs resulting from the global fuel crisis of 2008. Generally, however, the current “global economic crisis” has had little impact in Vanuatu compared to the massive social impacts it has had in more industrialised countries. One of the principle reasons for this is the very low level of integration of the great majority of our population into the cash economy. The classification of Vanuatu as a “Least Developed Country” (or LDC) by the United Nations is based on the fact that the great majority of the population use only a very small amount of cash in their lives, and have correspondingly negligible amounts of debt. This is a characteristic we share with our two immediate neighbours, Papua New Guinea and the Solomon Islands. These three countries are among the last places in the world where the “subsistence economy” which I prefer to call the “traditional economy” still outweighs the cash economy in terms of providing livelihoods for the population. As I will explain in this presentation, this traditional economy is the source of resilience for our populations, which has allowed them to weather the vagaries of the global economy over past decades. My comments on Vanuatu in this presentation can be extrapolated to both Papua New Guinea and the Solomon Islands, and to a lesser extent some of the other Pacific Island countries.