Micro-economic Efficiencies and Macro-economic Inefficiencies: Renewable Resources Policy in Very Poor Countries
By James R. Wilson and Jean Boncoeur
ABSTRACT
Fisheries economics theory, and the major policy recommendations flowing from it, were developed principally by economists in developed countries confronting a specific set of institutional and macro-economic conditions. Whereas the theory and the policies may be appropriate in certain circumstances in developing countries, it is not necessarily true that the major two recommendations of fisheries economics, capacity control and rent capture, are optimal policies in poor and disorganised countries. This is because leakage to the outside economy and subsequent economic growth slow-down is incited by policies that encourage industrial and ministerial concentration of rents. Such concentration increases the chance of capital flight. Industrial concentration is more likely in countries that have a highly heterogeneous industry composed of few foreign owned firms and many artisanal fishermen. Foreign firms enjoy incentives given by the government, which encourages the expatriation of resource rents. Countries whose public management infrastructure and institutions have been damaged by years of internal corruption and a loss of public management ability will also concentrate resource rents only to dissipate them through rent seeking or inefficient government expenditures. If a sub-sector of the economy who enjoys the effects of the dissipated rents consumes a relatively large proportion of imported goods, then leakage occurs through the net exports equation of the standard macro-model, and by implication, unemployment and under-employment is exacerbated in the economy. In cases where the Keynesian conditions of zero opportunity costs for labour holds, the optimal policy from the macro-economic standpoint might be to encourage fringe competition by artisanal fishermen who are more integrated in local economies; to adopt modest rent extraction policies aimed at helping public managers regain their position by improving internal organisation; to develop tax policies which make the economy less porous; and to strive for the reestablishment of balance between the roles of the public and the private sectors. Standard policies proposed by fisheries economists could have the reverse effect on the economy. In this regard, macro-economic policies that seek to marry macro-models with the fisheries model, without accounting for the institutional realities of poorer countries, risk aggravating the very condition that they seek to eliminate. Practical cases from some of the poorest countries in the world are discussed.
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