International trade plays a significant role in the economic development of small pacific island countries.
This region is mostly dependent on imported goods and services, mainly for foodstuff, and exports are limited. Still, exports are the proper source of cash income generation, foreign exchange earnings, and even employment and growth. High trade GDP from this region makes the economy more open.
In the vast area of the Pacific Ocean, 22 island countries of the South Pacific region are scattered, which differ significantly in size, and rapid population growth is visible mainly in the areas of Papua New Guinea, Solomon Islands, and Vanuatu with increasing demands of food grains and items likewise.
Papua New Guinea, together with Solomon Islands, Fiji and New Caledonia themselves are rich in natural resources, arable land for tropical agriculture & forestry production and exports are carried out for Sugar from Fiji, Palm oil from Solomon islands & Papua new guinea, and several producers of coconut and its based products are also present.
On the other hand, for economic growth, Pacific island countries face many difficulties too, such as common barriers imposed from specific main trading centers if these tensions are kept aside,
This region has established good trade relations mainly with Australia, New Zealand & France.
The trade patterns across the islands are characterized by narrow exports sectors and high dependence on imports as discussed earlier.
Mainly for Small Island countries such as Tuvalu and Kiribati that lack both agricultural & industrial base and Exports are mostly of natural resource-based products for both processed & unprocessed goods and one of the most dominant categories for import is food, Australia, France, USA, Japan & New Zealand mostly lead its supply in the region as the import demand had visibly grown in recent years.
Imports over Exports have created a situation of trade deficit for the pacific island countries over the last decade except for Nauru. All the countries registered a trade deficit according to data.
In the recent period, large island countries have achieved fair export expansion & diversification more than the smaller nations as a result of sometimes weak prices of traditional staples and the necessary constraints imposed by limited resource endowments.
Thus, it is essential for these island countries too develop realistic trade policies and have a more balanced approach for its exports, as well as imports as the trade as well as trade relations, can provide a powerful advantage for countries' economic growth.