Economist and academic Professor Biman Prasad has stressed the need to see the important link between political stability and economic growth.
With GDP growth dropping from 5.5 per cent in the 1970s to less than 1 per cent in the past five years, Professor Prasad said we seem to have ignored the real reasons why we continued to fail as an economy. He spoke at the Fiji Fuel Retailers Association annual general meeting on Wednesday at the Warwick Fiji Resort.
"While we made progress in terms of changing the thrust of our economic policy from an inward looking strategy to an outward-looking export-oriented strategy for growth, we failed to create the political environment conducive to growth," he said.
Attorney-General and Trade and Industry Minister Aiyaz Sayed-Khaiyum agreed that political stability was important for economic growth. However, he added it was also important to address the fundamental issues that caused instability, which the Bainimarama government was doing.
In the same way, Mr Sayed-Khaiyum said it was also important to address the "inherent assymetrical relationships within an economy" such as monopolies or duopolies. He said the government with the assistance of the International Monetary Fund and the World Bank was looking at the calculation of our GDP, which had not fully captured some sectors of the economy such as telecommunication.
Professor Prasad acknowledged government efforts in some areas which had been useful for the economy such as the telecommunications sector.
"However, there have been numerous decrees which have created new layers of regulations and bureaucracy. This has not only led to an increase in the cost of doing business but has also created uncertainty and lack of confidence. We have to guard against overregulation in the economy. In fact we need to do a cost-benefit analysis to see how these regulations are inhibiting or supporting investment," he added.
Professor Prasad said confidence in the economy would be boosted with the removal of decrees such as the Essential National Industries (Employment) Decree and the Media Industry Development Decree.
Mr Sayed-Khaiyum challenged Professor Prasad to substantiate his comments and provide the evidence that these two decrees actually increased the costs of doing business and contributed to the lack of confidence in the economy. If anything, he said the Essential National Industries (Employment) Decree provided certainty and it had also allowed the industries to solve their differences without the involvement of a third party who may not be as well versed with a particular industry.