The MIRAB Model Twelve Years On

• Published in: The Contemporary Pacific Vol. 11; no. 1; pp. 105 - 138
• Main Author: Bertram, Geoff
• Format: Journal Article
• Language: English
• Published: Honolulu, Hawaii CENTER FOR PACIFIC ISLANDS STUDIES & UNIVERSITY OF HAWAI'I PRESS 01.04.1999; University of Hawaii Press; Center for Pacific Islands Studies & University of Hawaii Press
• Subjects: Aid; Banking; Bureaucracy; Dividends; Economic aid; Economic aspects; Economic conditions; Economic development; Economic growth; Economic migration; Economic models; Economics; Emigration and immigration; Expenditures; Finance; Financial investments; GDP; Globalization; Gross Domestic Product; Immigrants; Imports; International aspects; International economic relations; International economics; International relief; Investments; Islands; Macroeconomic modeling; Macroeconomics; Migration; Modernization; Money; New Zealand; Pacific Islanders; Pacific Region; Production; Remittances; Socio-economic development; Standard of living; Sustainable development; Sustainable global economy; Theory; Transfer payments; World economy; Pacific Area; New York; Micronesia; Tahiti; Pacific Islands
• ISSN: 1043-898X; 1527-9464; 1527-9464

Developed in the mid 1980s to explain economic processes in New Zealand's sphere of influence in the Pacific islands, the MIRAB model has proved applicable across a wide range of island economies. Identifying features of a MIRAB economy are heavy reliance on transfer payments, including repatriated factor incomes, to finance current expenditure; a migration process that disperses the members of ethnic groups across geographical space while retaining the organic unity of families and communities; and a consequent transnationalization of the society's economic activity whenever external niches of economic opportunity become accessible. Production of tradable goods is marginalized by the operation of market forces in the absence of regulation, and policies to promote tradable-led development have little application. The paper presents macroeconomic data to illustrate three stylized facts for MIRAB economies: persistent gaps between national expenditure and gross domestic product, a combination of large trade deficits with balanced current accounts (and hence limited debt accumulation), and the long-run stability of per capita aid flows. Some country-specific variations on the basic MIRAB model in the recent literature are reviewed, along with some recent economic literature on the microeconomics of transnational networks of kin and community.