Acta Universitatis Danubius. Œconomica, Vol 7, No 4 (2011)

Exploring the Nexus between Trade, Visitor Arrivals, Remittances and Income in the Pacific: a Study of Vanuatu

Ronald Ravinesh Kumar, Vijay Naidu, Radika Kumar


We explore the contributions of trade openness, remittance inflows and expansion in tourism towards improving income in Vanuatu over the periods 1983-2009 using the augmented Solow approach and the ARDL bounds test. The results show trade openness and remittances have a positive and statistically significant effect on the long run growth of the economy while tourism expansion is not statistically significant. For a broad-based development policy we propose: remittance inflows need to be encouraged and additional remittance markets to be explored; trade negotiations with specific focus on temporary movement of natural persons need to be prioritized; and ensuring access to financial services and technology to rural and outer islands in Vanuatu. To confine to diversity of the economy, there is a further need to develop tourism infrastructure besides putting policies in place to ensure that tourism sector operations benefit trickle down to the grassroots level of the society.


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