This report employs the Global Identification and
Facilitation Framework to the Solomon Islands,
aiming to reveal latent comparative advantages
and propose targeted national policies. By
analyzing the factor endowments, the paper argues
that due to abundant natural resources and limited
capital formation, the Solomon Islands should
focus on developing labor-intensive light
manufacturing and resource-based manufacturing.
In light of potentials and feasibilities, the paper
identifies China as a benchmark country that
could serve as a reference and provide industrial
transfer opportunities, given its industrialization
trajectories and relocation possibilities of light
manufacturing sector. The identified key
constraints to the recommended specialization
include low accessibility of electricity, high
transportation, and labor cost. Therefore, to
stimulate structural economic transformation in
the Solomon Islands, the report highlights the need
for the government to actively seek external
funding for infrastructural improvement and
gradually raise the reserve ratio to reduce the real
exchange rate and avoid “Dutch disease”.
01 March 2024