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US economic assistance to two Micronesian nations: Aid impact, dependency and migration
Author(s) -
Friberg Emil,
Schaefer Kendall,
Holen Leslie
Publication year - 2006
Publication title -
asia pacific viewpoint
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.571
H-Index - 38
eISSN - 1467-8373
pISSN - 1360-7456
DOI - 10.1111/j.1467-8373.2006.00301.x
Subject(s) - remittance , accountability , bureaucracy , government (linguistics) , micronesian , corporate governance , development economics , business , developing country , economic growth , economic policy , economics , political science , finance , linguistics , philosophy , politics , genealogy , law , history
The USA provides economic assistance to the Federated States of Micronesia and the Republic of the Marshall Islands under the Compacts of Free Association. Both economies demonstrate three of the four MIRAB components: migration, aid and bureaucracy. Only the remittance structure has not developed. Significant US assistance supported large government sectors in both nations. Reductions in US assistance of over a 17‐year period led many island citizens to migrate to the USA. However, to date, remittances have not been substantial. In addition to structural challenges, both nations face institutional constraints including poor governance and lack of accountability over assistance. To improve future growth through more effective use of US assistance, these institutional constraints must be overcome. Future US assistance to both nations will fall over the next 20 years, putting pressure on the island governments and will likely contract their economies. The need for remittance streams is likely to increase. New Compact assistance structures strive to improve aid accountability.