The woes of economic reform: poverty and income inequality in Fiji

Abstract

Amongst the major development problems facing many of the developing countries is the increasing levels of poverty and income inequality. Economic growth in the 1950s, 1960s and 1970s was seen as a panacea for reducing poverty. While the key to development progress is still achieving economic growth, the means to do so is based on the ability of governments to move towards a free market type economy. The concern today is the impact of economic structural adjustment policies (SAPs) on the levels of poverty and inequality. In most cases the evidence on the impact of SAPs shows that despite sustained economic growth the poverty level has increased in many developing countries and Fiji is not an exception. The move towards free market reforms is being increasingly questioned as a policy measure and its ability to have positive impact on the reduction of poverty and income inequality. The criticism of the free market approach is its failure to take account of institutional, social and political factors which in many cases are the real causes of poverty and income inequality. The debate on the applicability of SAPs and the evidence of the impact of SAPs is reviewed in the case of developing countries. The level of poverty and income inequality in Fiji are discussed.