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Abstract

Small countries, such as Pacific islands countries (PICs), vary considerably in the extent and in the ways in which they are linked to the global economy. Particularly within PICs, households and families, and different social groups also differ in their dependence on markets, cash and foreign exchange incomes for their economic welfare. A dualistic economic model is inadequate as a means for specifying the distribution of this dependence. There is a need to analyse the distribution of such dependencies more precisely using, amongst other things, relative frequency distributions. It is hypothesised that increased integration of PICs into the global economy combined with global economic reforms can be expected to result in reduced private investment in many PICs, mainly because of outflows of investible funds from PICs to take advantage of higher economic returns elsewhere. In turn, this is liable to reduce real wages and employment in these countries. At the same time, there are likely to be increasing pressures for emigration from PICs as income differentials between them and higher income countries, such as Pacific Rim countries, grow, and political demands to allow freer international movements of labour are likely to magnify as PICs demand full commitment to the globalisation concept and as various employer groups in higher income countries seek to cope with growing international economic competition brought about by increasing globalisation by importing labour. The possible implications of these trends for the economic development/future of PICs are considered.

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