THE Isle of Man is not alone in implementing new economic development strategies in an attempt to mitigate the impact of further financial shocks, says a new survey.
A detailed examination of 20 islands around the world has shown that governments are responding to the recent economic challenges by revising strategies and designing plans, which integrate social, economic and environmental policy objectives.
“With such economic uncertainty in recent years our research shows that many islands are particularly susceptible, are identifying solutions which seek to mitigate the impacts of economic shocks and strengthen their economies,” said Island Analysis chief executive Chris Brock.
Island Analysis compared economic strategies from 20 different islands including the Isle of Man, Jersey, BVI, Tasmania, Cyprus, Barbados, Mauritius and the Cook Islands and found that all were looking at ways of sustaining their economies.
“Overall GDP has declined in many islands in 2010 compared to 2009 and this was especially marked in those islands which rely heavily on the finance sector and tourism. Although they have benefited from their investment in financial services, they have felt the impact of the economic crisis more than others,” said Mr Brock.
Despite the impact of the downturn, financial services remain a major contributing factor to economic success. The international finance centres of the Isle of Man, Bermuda, Jersey, Cayman and Guernsey had the highest GDP per capita and Bermuda, which at 59sq.km was the smallest of the islands surveyed, has the largest GDP per capita at US$ 94,908 (2008 figure). Financial services in the Channel Islands and the Isle of Man contribute over 40% of GDP.
“Islands recognise the importance of financial services to their economic success and 60% have identified this sector as a target,” said Mr Brock.
However, the research found that islands had also recognised the need for diversification and those islands with a diversified economy such as Prince Edward Island and Tasmania had been more resilient.
“In order to diversify their economy, all the islands analysed have recognised the need to raise the skill base but only those with financial means are actually investing in skills and training programmes and they undoubtedly will reap the rewards,” said Mr Brock.
Two areas which islands had been highlighted as worthy of investment were tourism and renewable energy.
“Tourism is perhaps less of a surprise as many of the islands have a very attractive offering and have relied heavily on this sector for many years. What is perhaps surprising is the fact that 90% have identified it as a sector to develop with a significant financial commitment, much of it being allocated to infrastructure projects. Barbados for example has set aside US$145m to enhance the tourism offering.
“In addition a third of islands were looking at developing renewable energy solutions as both a means of being more self-sufficient to avoid exposure to rising and volatile energy prices and as a way of generating additional revenue. We expect that this will be an area that an increasing number of islands look to explore in the coming years.”
Mr Brock believes that renewable energy is one area where additional funding would be needed.
“Islands have to rely on their strategies and their people and despite them all recognising the need for funding to support economic development, only three – Malta, Mauritius and Tasmania – have established dedicated Public Private Partnership units,” he said.
‘Islands are becoming more open to alternatives and that has to be a direct result of the economic downturn. Their size has magnified the impact and they now need to address this, revise strategies and ensure their economic future is certain.’
