Subsistence economies and unsustainable development and trade: Some simple theory

Abstract

Three possible development patterns for subsistence economies with a restricted range of resources are explored in this paper. The models may be particularly relevant to small island countries, for example in the Pacific Ocean. In the first model, it is shown that neither international trade nor an advanced sector is sustainable in the long run in the type of subsistence economy envisaged. Both international trade and ‘advanced’ sectors eventually disappear as population levels increase. In the second model, the possibility is explored that export opportunities may foster unsustainable development. It may sustain population levels that cannot be maintained should the demand for exported goods collapse. There is a high risk of such a collapse in small subsistence economies with their restricted resource basis. The third case (which has similarities with the previous one, except that collapse comes about by exhaustion of supply rather than deterioration in demand) is development made possible by the export of a non‐renewable resource that is eventually exhausted.