Effect On GDP: Trade Analysis Effect On Tuvalu Assessment Answer

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Question :

any Small country with less population and GDP have been benefited with trade

- Industries

- Effect on GDP/Standard of living

- Use facts and figures/statistics to support your analysis

(600 words)

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Answer :



Gross Domestic Product or GDP is the measurement of the overall economic activity of a country.  GDP is important for a country by which health of the economy of a country is determined. Tuvalu is a small Polynesian island country within the British Commonwealth. As per the viewpoint of Taupo (2017), the main industries of Tuvalu are tourism and finish industry. In addition, Tuvalu exports small quantities if the copra. Copra is the dried meat of coconut from which oil can be extracted. From a recent study, it is found that the growth rate of industrial production of Tuvalu is -26.1% in the year 2018 (Worldbank.org, 2019).  In addition, the rate of exports amount is $1 million. Therefore, it is deduced that industrial perspectives and economy of Tuvalu are not so much wealth and growth rate of the business is also lower. On the other hand, as commented by Ceccarelli (2019), sub-sectors of Tuvalu are handicrafts, timber processing. Import goods of Tuvalu are mineral fuels, food, animals, manufactured goods and machinery.

Table 1: Annual GDP rate in Tuvalu

(Source: Worldbank.org, 2019)

From the above table, it is seen that the growth of GDP is decreased from year 2015. However, enhanced GDP of this country has affected the economy, industries, and trade policies. From a recent report about Tuvalu, it has been found that GDP per capita of this country was 3,549.97 in year 2017 (Worldbank.org, 2019). The growth rate of GDP is 3.2% (Ourworldindata.org, 2019). However, the GDP rate of Tuvalu is increased by 3.2% than in 2016 (Ourworldindata.org, 2019).

Aparer4b from the fisheries and oil industry, Tuvalu has different types of public sector enterprises like 

  • National bank of Tuvalu
  • Tuvalu Philatelic Bureau
  • Tuvalu Maritime Institute

In order to mitigate the low economic growth in Tuvalu, Tuvalu Trust fund had been established in the year 1987.

Effect on GDP/Standard of living 

Tuvalu is one of the poorest countries in the world. It has been found that an average employee or worker in this country makes only $1000 in a year (Worldbank.org, 2019).  The population of this country is nearly 11, 287 people in the year 2018 (Ourworldindata.org, 2019). Therefore, it is seen that this low GDP rate of Tuvalu has failed to leave a positive impact on the economy of the country. 

 GDP rate in Tuvalu

Figure 1: GDP rate in Tuvalu

(Source: Worldbank.org, 2019)

In order to enhance the economic growth of Tuvalu, this nation had joined the International Monetary Fund in the year 2010.

 As commented by Ceccarelli (2019), Tuvalu is isolated and it is entirely dependent on the imports especially fuel as well as food. Economical perspectives of Tuvalu are largely dependent on the fishing industry. It has been found that total number of fisheries of Tuvalu is 3,000 and gross income of these fisheries is $43,773,582 US in a year (Ourworldindata.org, 2019). However, among the economic perspective of Pacific island countries, it is seen that the economic growth rate of Tuvalu is the highest as compared to 1996 to 2018 (Ourworldindata.org, 2019). 

The climate change of Tuvalu also opposes the development of Tuvalu. As per the opinion of Ceccarelli (2019), rising sea level of Tuvalu poses a significant challenge to the development. The rate of poverty in Tuvalu is 26.3 % and these people live below the national poverty line (Worldbank.org, 2019). Regarding this poor GDP rate and the poverty rate, Tuvalu is regarded as the least developed country in world. It has an overall effect on the employment rate and economic rate of this nation. Among the 11, 287 people, only 1, 5000 among them are employees and live moderately healthy lifestyles (Ourworldindata.org, 2019).  However, public sector in this country has now dominated the economic activity of Tuvalu.