Developing an Export

Cheshire, C L; Hezel, Francis X. (2003-06-02). [www.micsem.org Developing an Export]. Micronesian Counselor (Report). Kolonia, Pohnpei: Micronesian Seminar. pp. 1–10.

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Abstract: "Over the past fifty years, successive Micronesian governments have labored to achieve economic self sufficiency. Since the Compacts of Free Association were established in the late 1980’s, the island states that make up the Caroline and Marshall islands have tried to meet this challenge through a variety of export development initiatives. In addition to developing a local tuna industry, Micronesians have attempted to establish an aquaculture industry (giant clams, trochus, sponges, black pearls, and hard and soft corals). They have worked to wring profits from the region’s traditional export, copra, and have constructed two coconut soap factories. Rather than reduce Micronesia’s dependency on foreign aid, however, these efforts have been, for the most part, a drain on its aid funds. The challenge of developing a thriving export industry to achieve self-sufficiency still remains.

For an export industry in Micronesia to be truly Micronesian, it needs to be locally owned and operated. Some commentators, however, have suggested there is no export in Micronesia because there is insufficient business experience to develop a locally owned export industry. As the argument goes, successfully exporting a locally manufactured product is more complicated and requires a different set of business skills than those possessed by local business owners. This argument overlooks the considerable business experience and expertise that is in Micronesia. There are several large diversified service and retail businesses in Micronesia that employ scores of employees and have annual sales in the hundreds of thousands or even millions of dollars. These businesses can be viewed as an important asset in a strategy to develop a locally owned export industry in Micronesia.

Others have argued that the reason various export development initiatives have not been successful in Micronesia is its geography and scant natural resources. Micronesia, with its small, remote islands, simply cannot compete in the global marketplace with countries like Indonesia and the Philippines, with their large local markets, cheap labor, and well developed infrastructure. Yet, one can also argue that had Micronesians focused on producing export products where Micronesia possesses a competitive advantage, the results may have been different. Tahitians, for example, who are no less geographically challenged than Micronesians, were able to transform their abundance of black lip oysters into a multi-million dollar black pearl industry that they now dominate. Pohnpei, for a short time, marketed a successful pepper product that was unique to Pohnpei and was sold not simply as pepper but as “Pohnpei Pepper”. The product was admittedly a high end, niche product without a large volume of sales, but the potential of the product was barely tapped before production ceased. Likewise, Yap betelnut is prized throughout the region and could also be developed as an export product. All of these examples suggest that given the right products and the right development strategy, Micronesia, too, could develop a competitive export industry.

This paper is a proposal for an alternative export development strategy for Micronesia that is organized under the following three headings: product, team, government support. The purpose of organizing the proposal this way is to examine those aspects of export development that are particularly significant for Micronesia but are often overlooked in the standard approaches to developing an export industry..."

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