Island Analysis compares social, economic, and environmental performance of island jurisdictions

April 12th, 2013 by Island Analysis

Island Analysis has released the first of four 2013 Island Monitor Reports covering 14 of the 100 islands, which it monitors.

The first Report focuses on government income and expenditure trends in 14 islands shown on the map.

The primary aim of the Island Monitor is to review economic, social, and environmental activity in islands around the world and to identify best practice.

The first quarter Report highlights the fact that islands worldwide are currently experiencing some serious challenges impacting on economic performance.

Consequently, for the first time, Island Analysis is developing an economic life cycle for islands which will assess where islands are on this life cycle and what progress islands are making in terms of sustainable economic development and diversification.

This assessment will form part of the second quarter Island Monitor Report which will be published in June 2013. It will cover economic strategies and sector performance in the 14 islands.

Of the islands analysed in the Monitor, Iceland and now Cyprus have experienced catastrophic financial crises.

However, Iceland is staging a remarkable economic recovery.

Other island communities are facing contracting economies and are borrowing to meet public service costs.

An example is Bermuda which, for many decades, has enjoyed some of the strongest levels of economic performance of any island in the world.

However, the island is now in its fourth successive year of economic contraction which has led to high levels of unemployment and other social problems.

The Bermudan government is now being very proactive in its endeavours to address this decline.

One of the determining factors in an island’s economic life cycle is the ability of an island government to generate sufficient revenue not only to cover operating expenditure but also and, equally as important, how to allocate funds for essential capital projects and for sustainable economic, social, and environmental infrastructure initiatives which will benefit future generations.

Notable trends from the first quarter Report show that:

• A number of islands have to resort to borrowing in order to bridge the shortfall between income and expenditure. As a result, debt as a percentage of GDP is increasing in these islands.
• some islands (e.g. Malta and Mauritius) are investing extensively in innovative projects which will help to diversify their economic base in the medium to long term. This is seen as an essential strategy even though, in a number of cases, it requires borrowing.
• public expectations are demanding ever better public services (primarily in health and education) but, at the same time, island residents want to see reductions in public expenditure.
• external threats such as tax transparency, regulation, internet shopping, competition from locations which can offer a cheaper labour supply and better market access are all increasing the pressure on islands to broaden their economic base. This, in turn, also requires an island government to have a broad balance of direct and indirect revenue sources so that there is less reliance on only one or two sources which could be adversely affected by a changing economic profile and performance.

The cost of capital projects in the islands covered by the Island Monitor is averaging at 3% of GDP.

However, some islands are spending twice this percentage level on infrastructure.

• The development of Public Private Partnership arrangements in the provision of services and facilities (particularly in health) is a growing trend in many island communities as access to public funding decreases.
• With the economic, social and political turbulence being experienced by various islands (and possibly still to be experienced by others), island jurisdictions have to remain fully abreast of challenges, potential solutions and initiatives being addressed by islands around the world.
• Increasing unemployment levels are placing further pressure on public sector funding in terms of benefits and loss of taxation revenue.

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Island Analysis provides research and benchmarking services specifically about islands about the world.

The company releases quarterly Island Monitor reports detailing the latest developments in island jurisdictions.

The cost of each Report is £750.00 or £2,400 for all four Reports.

Please contact Chris Brock on Chris @ islandanalysis.com or telephone +44 1481 716 227 for additional information.