Climate Change Impact and Structural Reforms in Kiribati
140
120
100
80
60
40
20
0
Papua New Guinea
0
2
3
4
5
KIRIBATI
Figure 1. Kiribati: Economic Performance of Kiribati and Its Peers
Economic growth in Kiribati trailed peers...
Annual Economic Growth by Period
(Average, percent)
...as high population growth translated in stagnant
income per capita.
Transition of GDP per Capita in Selected Pacific Islands
(Index, 1990-100)
7
180
Kiribati Pacific Islands Asia Low income countries World
+Fiji
―Kiribati
6
160
-Papua New Guinea
Tonga
-Solomon Islands
-*-Vanuatu
1990-99
Source: IMF, World Economic Outlook.
60
2000-09
2010-19
140
120
100
80
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
Source: IMF, World Economic Outlook.
The economy mainly relies on the public sector for
growth...
Government Expenditure
(Percent of GDP, average over 2015-19 period)
but a boost in the private sector is critical from a
sustainability perspective.
Selected Indicators of The Public Sector
Samoa
Fiji
Palau
Source: IMF, World Economic Outlook.
Vanuatu
Tonga
Solomon Islands
Micronesia
Marshall Islands
Nauru
Tuvalu
Kiribati
(Percent of GDP)
180
grants (rhs)
-government revenue
160
-government expenditure
140
projection
120
100
80
60
40
20
0
2022 o
20
10
70
60
50
40
30
Source: IMF, World Economic Outlook.
4.
This paper examines the potential growth and development effects of structural
reforms and takes stock of what has been achieved and what gaps remain. The paper is
organized as follows. Section B lays out a stylized model that shows economic growth under
alternative scenarios. Section C takes stock of past reforms in various domains, and Section D
concludes with policy recommendations.
B. Potential Growth Impact of Structural Reforms
5.
The paper applies a long-term growth model to analyze the quantitative impact of
structural reforms on GDP growth and poverty reduction. Long-term output growth can be
boosted by an increase in the investment rate, expansion of the labor force, and improvements to
human capital and technology—the total factor productivity (TFP) (Solow, 1956). It starts from a
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