Public and Private in the Pacific

An economist friend working in the Solomon Islands emails with news and questions for IA readers.

Labour mobility and working visas

I liked this editorial from the Solomon Star last year (25/10/05), which I think makes the case pretty well for working visas for Solomon Islanders to work in Australia . 

"Oddly, Australian Foreign Minister Alexander Downer seems reluctant, saying this smacks of going back to the bad, old black-birding days. While we respect Australia’s right to make its own decisions, it wold be fair if our people were given the chance to try this out. It would be a new cooperation in a totally new front. … The proposed labour mobility looks like an excellent new way of advancing this cooperation. … many Solomon Islanders would be keen to try it [and it] would have major benefits for both sides. Australia’s farmers, orchardists and market gardeners often have trouble finding workers to bring in their produce. And a situation in which some islanders, reportedly, enter Australia on tourist visas, but end up working illegally, in their fields, ultimately causes trouble."

Culture and development economics

Amongst the foundations of economics are the concepts of property rights and entrepreneurship. Both of these are closely linked to culture. This isn’t much of a revelation with property rights – different attitudes to land are well known and studied. I think the question of entrepreneurship and culture is an also interesting one. Many development programs are designed to improve the "investment climate" or "business environment" on the assumption that once all the existing impediments to investors are cleaned up, then investors will emerge. However, I think this may occur much more quickly in some countries than in others.

For example, in Solomons the incentive to build up a business is often communal, not individual, because wealthy locals are expected to support their "wantok" in their home village. (I suspect that intra-national remittances here are quite considerable.) As a result, the returns to business may be mostly non-monetary – a trade off between the psychic benefits of looking after one’s extended family against the considerable additional expectations and pressure that often accompany such a role. The result, I think, is a passive attitude to business and finance amongst many villagers who lead a largely subsistence lifestyle and who rely on benefactors to meet their cash needs.

So my questions are: how would you test my hypothesis (that there are cross-cultural differences in rates of local investment that reflect different attitudes to entrepreneurship? And if my hypothesis is correct, what’s the best development policy response, ie what factors create or stimulate attitudes of entrepreneurship and how can they be cultivated without interfering with other valuable cultural norms?

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