East Timor Assignment

Term 4 Economics Essay –Jack Stickley East Timor is a country surrounded by a picturesque and untouched landscape that has inhabited people for centuries. In today’s society however, East Timor has been economically left behind in comparison to other western world super powers. As the country attempts to rebuild its national identity following their separation from the Indonesia regime, certain obstacles threaten to stop their progress to become a developed nation.

Least Developed Countries (LDC’s) can be commonly categorized by their lack of infrastructure and residential development, and visibly through the contrast to well developed countries of the Western world. The United Nations use the following criteria to identify LDC’s. Firstly, a low-income criterion based on a three-year average estimate of the GDP per capita, East Timor’s is under the required amount of $750 at $500. Secondly, a human resource weakness criterion involving a composite Augmented Physical Quality of Life Index (APQLI), currently in East Timor the adult literacy rate is at 58. % a meek figure in comparison to Australia, a developed country, whose figure is 99%. Finally, there is an economic vulnerability criterion focusing on the instability certain factors including exports and agriculture. East Timor’s trade is out of balance with exports reaching $10 million as apposed to a large import figure of $202 million and, while the Timorese use their land effectively there is only 8. 2% of land area considered to be arable land for agriculture.

These figures display that East Timor has the characteristics of a LDC as they continue to be economically undeveloped. East Timor is struggling to emerge onto the global stage as the country has been troubled by past incidents that interfere with the nations attempt to develop economically. The country faces immediate obstacles including agricultural difficulties, the lack of infrastructure due to their previous destruction and political unrest and corruption.

There is a significantly small amount of skilled Labor in East Timor especially in the urban areas, which is why it is difficult to rebuild many parts of the country destroyed at the end of the Indonesian regime. The country is divided by different religions, traditions and language spoken making it difficult to have an equal economic system. Although primarily an agricultural country, in the past 30 years the economy has been structured to be dependant on external transfers, even for food.

East Timor has serious problems of illiteracy; malnutrition and disease, problems that will be intensify in the future due to the anticipated rapid population growth of this youthful population. 70% of the population support themselves by subsistence agriculture including crop farming and fishing, meaning much of the exchange is in the form of barter. Due to East Timor’s relatively poor and fragile soils, constant population relocation and disruption due to colonial laws, production is low but marginally within the bounds of sustainability.

East Timor is now faced with the challenges of the decrease in the flow of foreign direct investment (FDI) to developing countries, the decrease in global official development assistance (ODA) and the decrease in trade preferences. A major dilemma for East Timor is to regain an adequate standard of living and with a greater degree of self-sufficiency; a rather difficult task. For East Timor the challenge of achieving economic stability and development is certainly a daunting prospect.

When taking steps forward economically it is essential that innovative strategies are produced and an alternative non-western development culture is created. With the world gripped by oil shortage The Timor Sea Treaty, which is split 90% to 10% in favour of Timor, will be useful in the development of the country. Accessing income is currently difficult for workers and therefore they don’t have the capacity to invest or save what they do earn, but income can be earned and received through providing services and withholding this income from third parties that may interfere. East Timor is in desperate need of foreign dollars.

A dependence on aid in the short term with an increased reliance on services in the medium to long term rather than the export of agricultural and manufactured commodities may be an optimum strategy for East Timor. Entrepreneurial skills need to be developed through a strong education system. Continued external support is required as the building blocks for East Timor to develop economically. The Government also has a significant role to play as it is crucial that the country adopts Macroeconomic policies which also generate productive work and income opportunities to develop sustainable livelihoods.

It is important that the poor are assisted in their efforts to improve their farming and commodity production. East Timor is currently a country with economic, social and political difficulties and is a country that is fighting back following a difficult phase in the countries political life. However, if assistance is gained from other supporting countries, service and non-production activities gain majority in the economy the nation should be able to develop and be considered as a developed country.