The authors thank the referees for their comments.
ECONOMIC IMPORTANCE OF THE SUGAR INDUSTRY FOR FIJI
Version of Record online: 12 SEP 2005
Review of Urban & Regional Development Studies
Volume 17, Issue 2, pages 104–114, July 2005
How to Cite
Narayan, P. K. and Prasad, B. C. (2005), ECONOMIC IMPORTANCE OF THE SUGAR INDUSTRY FOR FIJI. Review of Urban & Regional Development Studies, 17: 104–114. doi: 10.1111/j.1467-940X.2005.00097.x
- Issue online: 12 SEP 2005
- Version of Record online: 12 SEP 2005
- Final version received May 2005.
For more than a century, the sugar industry has been perceived as the backbone of the Fijian economy, given its contributions to gross domestic product (GDP) and employment generation. However, because of the non-renewal of land leases and the gradual withdrawal of preferential prices by the European Union, the industry is on the verge of collapse. We use the Fiji computable general equilibrium model to simulate the economy-wide impact of a 30% reduction in sugar production. Among our key results, we find that in the long run a 30% reduction in sugar production leads to a 2.1% fall in exports, and government expenditure and real consumption fall by 1.9% and 1.6%, respectively. These declines in the aggregate demand components are reflected in a fall of approximately 1.8% in Fiji's GDP. The negative repercussion of declining economic growth is reflected in a 1.5% decline in real national welfare.