ABSTRACT
This chapter shows that the application of such an unrealistic and simplistic model to the functioning of the small island economies of the Pacific is not just inappropriate but potentially damaging. The Pacific islands may appear insignificant in a global context, but international interest in the functioning of the economies is growing, and, when Papua New Guinea is included, the islands currently receive 59 per cent of Australia’s bilateral aid. The rapid expansion of franchising which is evident globally as well as in the Pacific islands also creates problems in the economies of small island microstates. Underscoring the Jackson Report on Australia’s overseas aid program is a particular ideology which links trade, aid and foreign investment within a free market framework as the only sound way to achieve economic development. The Jackson Report would see aid linked to, or at least directly associated with, foreign direct investment.
