It is, as i’m sure you’re aware, largely a matter of ideology. Some of the external (and internal) influences on policy are possessed with a mindset in which markets will solve everything and government should just get out of the way. But this is just wrong: as so many other development experiences show, governments need to actively get involved in building trade and the economy in general. Donors can help. This is particularly the case in small island developing states.

Even those who agree that governments should be interventionist don’t always tailor their policies to the Pacific. Industrialisation like in East Asia just isn’t going to happen. The world’s not going to make its computers in Kiribati. But there are lots of unique things that the Pacific can trade in: like its natural environment. And it doesn’t matter where you are online — Apia or London — you can still sell certain services online.

Anyway, thanks again for the comment.

That said, the issues involved in growing exports are not all to do with ‘supply-side capacity’. There is considerable room for improvements in market access to Australia and New Zealand. Improving the rules of origin requirements of SPARTECA, expediting the quarantine assessment of Pacific fruit and vegetables entering the Australian market, and continuing to expand labour mobility schemes for Pacific workers would all be good for economic growth in the Pacific.

A standard FTA is however, as you say, likely to have few benefits and considerable costs.

In my view, the best political economists have used historical and empirical information from real situations rather than solely basing their arguments on the deduction of results from abstract models. Adam Smith famously derived his notion of the division of labour from the workings of the pin factory. Hume had strong views on the importance of history and made detailed notes on historiography. Marx made history central to his political economy. Veblen, using an evolutionary approach, criticised the neoclassicists for aping their physicist contemporaries. Keynes worked as much on policy as on economic theory, developing the idea of effective demand partly in response to observation of the great depression. Keynes, incidentally, viewed Jan Tinbergen’s econometrics as ‘a mess of unintelligable scribblings’. Hirschman opposed the exclusive use of mathematical models, changing his views according to what he observed in different situations.

Finally, few would say that models should be entirely realistic. In ordinary everyday reasoning we all regularly use unrealistic assumptions to draw out a feature of behaviour to which we want to draw attention. The problems start when the assumptions of a model become so unrealistic as to make the answers irrelevant, when the focus is on complexity of technique rather than usefulness, and when apparent ‘laws of behaviour’ are deduced on the basis of these techniques. The real world is complex, messy and changeable; and answers can vary according to context.