Samoa - Political Economy and Social Structures Review of Basic Information by the Asian Development Bank

• Some 43 percent of the land is classified as arable and three quarters of the people still depend on the land and the sea to provide their main or a supplementary source of income. However, Samoa is ecologically fragile and vulnerable to environmental degradation and to the impact of cyclones. It is estimated that more than 30 percent of agricultural production is carried out in areas with severe soil limitation; steeper slopes are being cleared, increasing the vulnerability to erosion (2).
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• The traditional culture is the foundation for social and political life and is regarded by most Samoans as a vital source of national stability. The traditional chieftaincy (matai)1 system still plays a dominant role both at the village level and in national politics. More than 80 percent of the land is under traditional matai control. However, it is notable that succession to matai titles is by election rather than by any fixed mode of inheritance.
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• The national system of government combines traditional and democratic features. Universal suffrage has applied since 1991, but, with the exception of two seats reserved for voters considered to be outside the governance of the matai system (out of a total of 49 seats), only matai can stand for parliament. The present government has been in power continuously for about 18 years. The traditional matai system is a major factor in explaining remittances, which are the single most important source of monetary income at the village level. One factor that helps to explain the scale and stability of the remittances is that emigrants with titles have cultural obligations and emigrants without titles can be granted titles if they have been diligent in sending remittances and maintaining contact (2).
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• Agriculture plays an important role in the economy of Samoa, with at least two thirds of households reliant on a mixture of subsistence activity and cash income. Subsistence production is thought to comprise about half of agricultural output.
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• The agricultural sector was responsible for just under 30 percent of Samoa's export revenue in 1999. However, agriculture and the economy are vulnerable to the potentially destabilizing impacts of external shocks, such as fluctuating commodity prices, exchange rate movements, and changes in the economic policies of major trading partners. Furthermore, agriculture is vulnerable to natural disasters, such as cyclones and disease infestations. According to ADB the approach to the economic development of agriculture should focus on the private sector and on those already involved in commercial agriculture. The approach should include initiatives that will bring further investment, including foreign investment, into the sector (1).
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• The most important structural change in the economy has been the decline in the relative importance of subsistence activity-agriculture and fishing-in real GDP. The subsistence share of GDP has declined from about 25 percent in the early 1980s to about 15 percent in 2000 (1).
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• Despite the good overall economic growth performance in recent years, growth of formal-sector employment has been relatively weak. This largely reflects job losses at the Yazaki factory. Most of the workforce is still employed, albeit often part-time, in the agriculture and fisheries sector, reflecting the importance of subsistence activity (1).
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• Remittances have traditionally been the major source of external income but have declined in relative importance in recent years. Aid has also been very important, averaging over 10 percent of gross domestic product (GDP) for the past two decades. Tourism receipts have grown from 5 percent of GDP in the early 1980s to 10-15 percent of GDP in recent years. In contrast, merchandise exports declined substantially from the early 1980s to the mid-1990s, but recently have shown improvement (1).
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• A comprehensive market-based financial liberalization program was initiated in early 1998... Economic growth is currently quite strong. However, this strength is largely provided by the dramatic expansion of the fishing sector, which, it is considered, would have grown in the absence of any reforms. (1)
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• Other sources argue that economic performance has benefited in recent years from reforms introduced in the 1990s. In 2001, GDP growth accelerated to about 10% from 7.3% in 2000 Manufacturing, construction, transport and communications, electricity and water, and hotels and restaurants all did well. However, agriculture declined by about 16% as subsistence production fell and efforts to diversify production for export remained unsuccessful. Fishing continued its expansion with the introduction of new, larger fishing vessels. In contrast, tourist arrivals were down somewhat because of the impact of the September 11th events (2).
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• Provided that the economy does not receive severe external shocks, the outlook is for annual growth in 2002-2003 of 5%, driven mainly by ongoing and new construction projects. The expansion of the fishing fleet and of agricultural production will also contribute. Stronger agriculture will have a beneficial impact on the poor, who reside mainly in rural areas. Manufacturing will continue to register strong growth as garment production strengthens further, and copra-processing activity recovers somewhat. However, a slowdown in tourism-related sectors is expected (2).
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• According to the ADB, the immediate challenge of the Government is to continue the momentum of the recent economic reforms and in particular make more effective progress with reform of various public enterprises to improve their efficiency and effectiveness. Other important challenges include making further progress on budget reforms; broadening the tax base; addressing infrastructure and policy weaknesses in the rapidly growing fishing sector; and improving the quality of primary education, the scope and effectiveness of preventive health care, and the prospects of poorer people in society (1).
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• Samoa has recently adopted a wide-ranging program of public sector reforms. The introduction of output budgeting, a greater emphasis on strategic planning, the provision of increased autonomy for line agencies, and a privatization and corporatization program have resulted in the pursuit of modern public-sector management practices. Substantial improvements have been made in a relatively short period and the public sector has indeed become more accountable and transparent. However, the Government recognizes that much work remains to be done and further reform initiatives are being introduced (1).
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• External grants increased by 15%. Current expenditures declined by 3%, with the wages bill falling, despite a 5% civil service salary increase from 1 January 2001. There was a reallocation away from general services toward education, pensions, and public works. A current surplus equivalent to 3.2% of GDP was recorded. Development expenditures rose by 53.6% from the fiscal year 2000 level, and the overall deficit in fiscal year 2001 was financed about 30% externally (through soft loans) and 70% domestically. This quite heavy reliance on domestic financing resulted from disbursement delays in external loans (2).
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• Implementation of the economic and public sector reform program continued in 2001, and the Government's commitment to ongoing reform was reaffirmed in the Strategy for the Development of Samoa 2002-2004, which emphasizes the theme of opportunities for all through sustained economic growth, better education and health, and revitalized cultural and traditional values (2).
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• Samoa has relatively good education and health services by general comparison with the developing world. The present under-five mortality rate of around 27 per 1,000 population reflects enormous strides in public health for Samoa since 1960, when it stood at 210. Some 98 percent of the adult population have attended some portion of primary school and around 70 percent have some secondary education. Health and education are tightly woven into the Samoan way ( fa'a Samoa) through village committees. Thus stakeholder and grassroots participation has a long and successful history in Samoa. The present government reform process specifically aims to devolve much greater responsibility to line agencies (1).
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• Minimum adult wages apply but are among the lowest in the Pacific, and real minimum wages have declined substantially since 1980.Where Samoa has a natural advantage associated with its resources,such as fish or certain agricultural products, or because of preferential access to large markets, the cost of labor is not a binding constraint (1).
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• With excess labor readily absorbed into subsistence activity, formal unemployment rates are very low. The 1991 census showed that 3.2 percent of the female workforce and 1.5 percent of the male workforce were unemployed and looking for work. It is considered, however, that there is significant underemployment, in the sense that there are many people capable of undertaking higher-value-added activity if the opportunities were available (2).
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• For most of the 1980s, Samoa achieved modest economic growth averaging about 1.7 percent per year. Although the natural rate of population growth is over 2 percent, a high rate of emigration to New Zealand, and to a lesser extent Australia and the United States, has meant that population growth averaged only about 0.3 percent in the 1980s and about 0.5 percent in the past decade. Even with modest economic growth, this low level of population growth meant a small increase in average per capita incomes in the 1980s (1).
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• The social indicators have been relatively good since the early 1980s and have generally shown improvement. Life expectancy at birth in the early 1980s was reported to be around 63 and is estimated to be around 69 today; access to health services has also been very good for at least the past two decades (2).
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• The general impression from economic and social indicators is of relatively good and improving quality of life, especially by developing-country standards. There are no slums and the abject poverty that is common in many parts of Asia is not evident in Samoa. In 1994 Samoa ranked 88th out of 174 countries in the Human Development Index. The index measure was slightly less than that of Fiji, well below that of Tonga but well above that of Papua New Guineav (Figure 1.2). The Human Development Index has three components: health as measured by life expectancy, education as measured by adult literacy and mean years of schooling, and income as measured by GDP per capita at purchasing power parity. The Human Development Index for Samoa shows good performance in health and education but weaker performance in output (2).
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• There are four levels of socioeconomic status in Samoa (Hooper 1998) (2):
  • Those who derive their livelihoods from land resources supplemented by remittances;
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  • Unskilled and semi-skilled labor, mainly in the towns;
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  • A middle-class group distinguished by their levels of formal education and employed in managerial and professional positions (largelyin government positions); and
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  • A relatively small but influential power elite, entry into which depends heavily on political and family connections, education, and wealth.
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  The bulk of the population (about 70 percent) is village-based, living mainly on the resources provided from customary land in the form of subsistence crops and small cash crops, supplemented by remittances. Money and purchased goods have been used in traditional exchanges for more than 100 years, but the formal economy has grown more rapidly in the past 20 years, creating both economic opportunities and social pressures (2).
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• The situation of those who are less well off is not well documented, despite a recent household and income expenditure survey. It is also important to recognize that since many people are supported by a mix of traditional subsistence activity and modest cash income activities and remittances, the definition and interpretation of poverty can be difficult. However, the economy is highly dualistic and the growth of the formal economy, which is important for securing higher living standards, has meant an increasing concentration of income since the early 1970s. This has raised concerns that the benefits of growth and economic reforms need to be more widely dispersed so that all Samoans receive a fair share of the gain (2).
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• Within the traditional domain both pastors and local entrepreneurs have higher economic standing. However, entrepreneurs must redistribute considerable income to traditional causes to maintain their ability to operate effectively as entrepreneurs. The two main groups that are likely to be vulnerable to poverty are urban villagers with limited land for subsistence production and rural villagers with limited opportunities for earning cash. Other vulnerable groups include young people, particularly those with less formal education; women-headed households; the elderly; and disabled people (2).
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• The population in 2000 is approximately 170,000. The Samoan population structure is similar to other small Pacific Island nations. It is youthful, with the present natural increase being around 2.3 to 2.5 percent per year. However, significant emigration (with New Zealand the principal destination) means that net population growth has been around 0.5 percent for the past 30 years (1). Data sources and estimates, particularly with regard to employment categories, population growth, and migration appear incomplete or difficult to compare. This makes the next census in 2001 crucial as a means to validate sampling systems and as the single most important future source for planning data across all sectors, with special application to human resource development.
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• A high rate of youth suicide is a disturbing characteristic of the population structure; it was identified by young people in a recent Apia survey as the most serious problem facing youth today (Department of Statistics and Ministry of Youth Sports and Cultural Affairs 1997). This seems to have been first formally recognized during the 1970s and remains a significant problem. During the 1980s, the rate of male suicide in the 15-34 age group was one of the highest in the world. It continued to rise until 1994 before declining in recent years. The recent decline may reflect the effects of an awareness campaign instituted by the main nongovernment organization dealing specifically with the problem. The most common explanation for the high youth suicide rate is the clash between the raised expectations of youth from education and exposure to the modern world and the oppressive aspects of the traditional system (Hooper 1998) (2).
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• There is also recent evidence of a rise in reported crime in the past three years, perhaps reflecting growing dissatisfaction about economic opportunities (2).
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• The Government has demonstrated a strong commitment to social development. This is reflected in the priority given to education, health, and basic infrastructure. However, as the formal economy continues to grow there will continue to be growing social pressures, with urban drift possibly resulting in higher crime and environmental pressures and a weakening of traditional cultural norms and outcomes.
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• Despite the constraints of isolation and a small local market, Samoa does have relatively good economic prospects compared to many other small Pacific Island countries. Public security is very good, as is the potential for human resource development, providing important foundations for good economic growth and higher living standards. There are immediate opportunities in commercial fishing, longer-term opportunities in tourism, ongoing opportunities from migration, and potential opportunities from taking advantage of communications technology.
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• The preservation of traditional social safety nets and other measures to assist those who do not have good opportunities in the formal sector are also key challenges for effective economic and social development.
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1. Asian Development Bank (2000) Samoa 2000 Building on Recent Reforms, Asian Development Bank: Manilla.
   
   This is an economic report prepared for the Asian Development Bank, the Australian Agency for International Development, and the Government of Samoa.
   
   http://www.adb.org/Documents/Books/Samoa_2000/prelims.pdf
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3. Asian Development Bank (2002) Asian Development Outlook 2002, Oxford University Press, New York.
   
   This 14th edition of the Asian Development Outlook provides a comprehensive analysis of 41 economies in Asia and the Pacific, based on the Asian Development Bank’s in-depth knowledge of the region.
   
   http://www.adb.org/Documents/Books/ADO/2002/ado2002.pdf
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