Trade Orientation and Economic Performance of Pacific Island Countries

Abstract

The academic community, the International Monetary Fund (IMF) and the World Bank maintain the view that outward orientation or the openess of an economy is directly related to a country's economic performance. This has been supported by empirical studies undertaken on the subject. The popularity of outward orientation heightened during the 1980s as a result of improved economic performances of the few developing countries adopting this strategy and the failure of inward oriented policies to promote growth in countries adopting inward orientation. This research therefore attempts to look at the relationship between the trade orientation strategies of Pacific Island countries and their economic performances. The study also aims to determine whether the positive link between outward orientation and economic performance apply to Pacific Island countries, given their political, social, physical and economic conditions.