The first theory of specialisation and gains from trade was introduced by Adam Smith to explain the underpinnings of international trade. He called it the theory of absolute advantage. According to this theory, a country should specialize in the good in which it has an absolute advantage. Then, it will gain by exporting that good and importing others. His theory was extended by David Ricardo (1817) who brought the theory of comparative advantage. Here, a country can have an absolute advantage in more than one good, but still gain if it specialises in the good in which it has a comparative advantage. This arises when it produces at the least opportunity cost.
Hecksher (1919) and Ohlin (1933) took the theory of comparative advantage a step further by bringing the factor endowment theory and differences in factor prices across countries (Leamer 1995; Ruffin 1988; Leishman et al, 1999). Here, a country will gain if it specialises in the good for which it has an endowment of resources. Further, Samuelson, Stolper, Vernon and other trade theories have come to explain the internationalization of capital and production. However, specialisation carries a big risk of instabilities. Such instabilities could seriously affect the growth and development of an economy. So, it is important for an economy to have a diversified economic base in order to resist any possible shock arising from any one or two sectors.
Mauritius has a vast sea area and also has comparative advantage in the production of tuna. So, it has the potential to tap such resources and develop a sustainable tuna industry for the long term.
Diversification
A high degree of specialisation is often a result of small economic size and is accompanied by a high degree of dependence on foreign trade, so that fluctuations in export proceeds have a devastating effect on the domestic economy. One of the rationales of diversification of markets and products is that it helps an economy to achieve growth targets and reduce the level of fluctuations in export earnings.
In theory, diversification can be of three forms which are agricultural, economic and export diversification. Instability in commodity prices has adversely affected the performance of developing countries which rely heavily on primary products. Primary products refer to goods obtained from raw materials and that do not involve any manufacturing process such as fish, fruits and oil ( Pettinger, 2011). Markowitz (1952), Tobin (1958) and Samuelson (1972) have all argued that a diversified investment portfolio minimises variance and an optimum level of diversification could lead to a more efficient use of resources. Samuelson's view that diversification pays, originally applied to the macro economy. Hirschman (1958) pointed out the advantages gained from linkage effects of diversified economic base.
In Mauritius, agricultural and economic diversification has been the government policy since the 1980's. Though agricultural diversification has failed, economic diversification has been very impressive. Mauritius has been successful in transforming itself from a low income to a middle income country in less than a decade. Mauritius has embraced sectors, particularly such as offshore banking and financial services, Information and Communication and Technology (ICT) sector, logistic, seafood sector which has enabled it achieve remarkable growth (Ali Zafar, 2011).
2.3 Empirical Review
According to Feder (1982), export help to boost up capacity utilisation, improvement in technology and economies which in turn will contribute to the economic growth of a country. Tuna is one of the major traded products in the world. It constitutes about 4% to 5% of the world fish and fishery products for human consumption. Most of the tuna supply comes from the Pacific Ocean and stood at a whopping of 2.3 million tonnes or about 66% of the total world catch. The Indian Ocean represents 23%, the Atlantic Ocean 12.5% and the Mediterranean and Black Seas 0.8% (Food Exchange Market, 2000).
According to a study by Campbell (2004), Papua New Guinea will benefit from its tuna fisheries if they achieve a balance between foreign and domestic exploitation. The theory of comparative advantage shows that Papua New Guinea can use its fishery to provide market access to other distant water fishing nations. McCoy and Gillett (1997) states that domestication of the tuna fishery will bring along economic benefits in terms of greater employment, technology transfer which will contribute to economic development. The Kiribati government having a large EEZ has a comparative advantage in the production and export of fisheries products. Also, Pacific island countries have a readily available and cheap labour force to work in their fisheries sector.
Thailand is the largest tuna exporter and its tuna industry forms an important part in the economy. A study by Kuldilok (2009) has been done to forecast Thai tuna exports for the five years period 2007-2011 with data from 1996-2006. Univariate time series methods were used and the two methods are exponential smoothing and autoregressive integrated moving average (ARIMA) methods. She identified factors affecting demand such as population growth and income growth. The results showed that the best fitting exponential smoothing model is the linear trend and multiplicative seasonal method and the best fitting ARIMA model is ARIMA (0,1,1) (0,1,1)12. The ARIMA model has an upward trend with the highest growth rate in 2008 with 5.5%, decreases slightly during 2009 for 5.2% and to 4.7% by 2011. From the forecasts, the pessimistic average annual growth rate for 2007-2011 is -7.4% and most optimistic at 14.1%. Thailand is presently the world's largest producer of canned tuna (Josupeit, 2008). Over 80 countries import tuna products from Thailand with the biggest market being the US (27%), followed by the European Union (15%), the Middle East (14%), Japan (9%), Australia (8%) and Canada (7%) (Kuldilok, 2009). Fish is an important animal protein source for Thai people. The Fisheries sector provides significant occupations for the Thai people and fisheries accounts for 2.5% of the total GDP (Kuldilok, 2009). The Thai fishing industry is one of the ten largest in the world. In 2006, the value of tuna exports was 24% of the seafood product export earnings. The largest quantity of tuna exports is canned tuna, which comprise 47% of total canned tuna exports of world trade in 2006 (FAO/Globefish, 2006).
The major exporting countries of seafood products have long benefitted from duty-free access to the EU market through a number of schemes, most importantly through the Africa, Caribbean and Pacific (ACP) and the Generalized System of Preferences (GSP)+ regime. The GSP+ is offered to those countries with vulnerable economies and which are not well diversified (Campling, 2008). The free access was made possible due to the substantial investments in tuna canning by some EU countries in the ACP countries (http://ec.europa.eu/trade).
2.4 Economic contribution of the tuna industry
Fish makes a vital contribution to the survival and health of a significant portion of the world's population and is one of the most valuable sources of protein food. It accounts for nearly one quarter of the world's supply of animal protein, and in many countries it is the ideal and traditional supplement to a basic diet of starches (James, 1986).
As stated by the FAO (1995b):
Fish and Fishing are tremendously important to the people of the Pacific Island. Much of the nutrition, welfare, culture, recreation, government revenue and employment are based on the region's living marine resources.
The Pacific islands is the most important tuna fishing area in the world and supplies about a third of all tuna (Managing tuna fisheries, 2000). The tuna catch accounts for 11% of the combined GDP and constitutes around 50% of the total export value from the region (Managing tuna fisheries, 2000). The labour intensive nature of tuna fishing and tuna processing operations, together with scarcity of formal jobs in the region, heightens the relative importance of tuna related employment (The, G. et al., 2000). Employment is generated in direct employment on fishing vessels and in processing operations which amount to nearly 15,000 jobs connected to the tuna industry and indirect spinoff employment resulting from links to other sectors of the economy (The, G. et al., 2000) . Various studies outside the pacific islands (Weber 1994, Swerdloff and Pooley 1979, and Meyer 1987, among them) have been made to estimate the direct and indirect employment opportunities associated with fisheries. Some of these reports have indicated a multiplier effect for employment in fishing and processing and the number of jobs created indirectly (The, G. et al., 2000). Arama (2000) pointed out that the cannery in Levuka has become very important and provide employment and income. In the Pacific islands, governments wish to provide more employment opportunities for women. The canneries in Pago Pago, Levuka, Noro and Madang help to achieve this target by employing over 6500 Pacific islands women The, G. et al., 2000).
In Philippines, fishing contributes about 4% of the country's GNP (National Industry Cluster Capacity Enhancement Project, 2012). Over one million people are employed and gain their livelihood in this sector (National Industry Cluster Capacity Enhancement Project, 2012). The Philippines is ranked 7th in terms of production of fresh, canned and fresh tuna compared to the top tuna producing countries. It is ranked 2nd after Thailand. (National Industry Cluster Capacity Enhancement Project, 2012)
In West African countries, the fishing industry is important for the socio-economic development. Even if fishing does not represent a large portion of GDP, artisanal fishing sector creates satisfactory employment. Also, fish is considered as an important domestic food security and fish consumption is above global averages. (Neiland, 2006)
In Ghana, the fisheries sector contributes significantly to the national economy in terms of food security, employment, poverty reduction, GDP and foreign exchange earnings (Mensah, 2010). It was highlighted by the Minister of Fisheries of Ghana that it is the fourth largest tuna producing country in the world (Ghanain Times, 2007). According to the Western Regional Director of Fisheries Commission, Mr. Alex Sabah, the fishing sector in Ghana contributes about 4.5 % of the GDP (VibeGhana, 2010). For a long time, Ghana has been dependent on fish as being the cheapest source of animal protein (Aggrey-Fynn, 2001). Export of fish and fish products generates high inflow of foreign currencies for the government (Mensah, 2010). The government has proposed various policies to help to further boost this sector and position it as a sustainable foreign exchange earner. It is estimated that a total of 500,000 fishermen, fish processors, traders and boat builders are employed (Bank of Ghana, 2008). Many poor and vulnerable people rely on the fisheries sector either directly or indirectly for their livelihood.
Senegal has one of the largest and most developed fishing industries in West Africa. In 2002, the fisheries sector contributed 2.3% of total GDP. It has a highly developed tuna fishery. Skipjack and yellowfin tuna are the most important species caught by Senegalese fishermen (Marine Fisheries Review, 1981). Almost all the tuna landed and processed are exported mainly to France (Marine Fisheries Review, 1981). The fishing sector in Senegal is important to the economy and the continuous increase in employment will lead to economic stability. Also, seafood provides a large part of dietary protein and continued production is necessary for food security of the country.
The Indian Ocean contributes about 23% of the world's tuna production (Ministry of Agro Industries and Fisheries, 2007). 70% to 80% of tuna is caught in the Western Indian Ocean sub region (WWF/WIOMSA Western Indian Ocean Tuna Challenge, 2011). The biggest fishing industry in this region is Seychelles (McConnell, 2010). There, the fisheries sector accounts for more than 2% towards GDP. The economy's growth in 2000 was due to the tourist industry and the strength of the fishing sector mainly tuna fishing. (African Economic Outlook, 2012). Employment creation in the fishing industry is significant in Seychelles and they are accounted as formal employment (Cerf Island Resort Seychelles, 2010). A number of indirect employment is created through the multiplier effect in downstream sectors such as boat building, mechanical repairs, fishing suppliers, transport activities, distribution and export logistic. Fish consumption in Seychelles is widely believed to be one of the highest per capita in the world. Also, the continuous development in the fisheries sector has caused the amount of foreign exchange to increase especially at the start of canned tuna export (Cerf Island Resort Seychelles, 2010).
A study carried out on the 'Trend analysis in all-India marine products export using statistical modelling techniques', three statistical models such as the polynomial function fitting approach, non-linear mechanistic growth modelling approach and the ARIMA model were adopted to determine the trend in the export of India's marine products and to make forecast. However, the polynomial function fitting approach as well as the non-linear mechanistic growth modeling approach did not show reasonable estimates of the parameters and hence did not provide accurate data. Moreover, the growth models did not converge. Thus, amongst the three models, ARIMA was chosen as it was the most appropriate to show the marine export data for the year 1960-61 to 1994-95. An ARIMA model of (1,1,0) was found to be the most suitable to apply to the data of the marine export. The results showed that the when the time series was differenced once, the export in a given year was related to the export in the previous year which means that the export of any year is a weighted function of the export of the last two years. Moreover, the last two observations of the results were analysed to test the accuracy of the model and it was noticed that the predicted values were more or less than the observed values.
From a study conducted in Bangladesh, it was found that fisheries comprise a major sector. Though, export of shrimp and other frozen food yielded high earnings for the country, it was less than expected. Thus, it was found that it was necessary to forecast the export earnings of shrimp and frozen food which can help to develop that sector. The ARIMA model was thus developed to forecast the export earnings of shrimp and frozen food in Bangladesh and a five years forecast was generated using his model.
According to Fisheries research made on modelling and forecasting fisheries catches, the efficiency and accuracy of different forecasting techniques (Naive models, Winters', ARIMA, dynamic regression, harmonic regression, vector autoregression) were evaluated to forecast the commercial landings of 16 species on a monthly basis. ARIMA models showed a better forecast in terms of MAPE for six monthly series. The ARIMA forecasting generated the lowest error values compared to the others. The sum of average ranks showed that ARIMA ranked first compared to the other models in terms of fitting and forecasting.
2.5 State of Tuna in the world and sustainability
The World Commission on Environment and Development (WCED) was the first to tackle the issue of sustainable development in 1987(International Centre for Trade and Sustainable Development, 2006)
According to Ogunji et al. (2003), the commission was engaged to observe the problems faced by the environment and hamper development and provide necessary actions to solve them.
According to Clifton (2009), the term sustainability has acquired different connotations and is a highly contested issue in new political discourse. It is defined by Brundtland as the ability to satisfy present needs without foregoing the needs of the future generations (Sneddon et al, 2005 p4). It is acknowledged by many scholars that sustainable development ensures the environmental, economic, and social security of both the present and future generations. Sustainable development has been defined by the FAO as the effective control and protection of the marine environment through progressive technological innovation in order satisfy the needs of both the present and future generations. A sustainable fishery is one where the fisheries management regime allows the resource (fish) to renew itself at a predetermined level.
According to some workshops organized by the FAO (30,31), the elements below are essential to achieve sustainability in fisheries:
Good governance
This is a prerequisite to achieve sustainability in fisheries. The absence of a proper governance system has led to many fisheries of the world to be managed in a non-sustainable manner. Thus, in order to benefit from successful fisheries management system, transparency and the involvement of the different stakeholders of the fisheries sector is important.
Reducing demand for limited resources
The demand, fishing capacity and productive capacity of resource are often negatively related. The removal of subsidies and providing incentives can therefore be used to achieve stability. However, this reduction in demand involves costs such as a rise in unemployment.
Improving Knowledge of Complex Ecosystems
Poorly managed ecosystems usually results in non-sustainable ecosystems while a properly managed ecosystem with availability of appropriate data ensures the sustainability of the ecosystem.
Appropriate incentives
The demands of the fishermen depend on the system of fishery. In case of open access, fishermen want bigger fishing vessels due to the high surge for fish. On the other hand, in dedicated access fisheries, fishermen are not able to catch more fish with larger boats. As a result, reduction in costs, better quality products and measures to improve fisheries management are the possible incentives.
Interactions of the Fisheries Sector with Other Sectors and Environments
Fisheries management agencies are often interrupted by government bodies through subsidies and poor regulations which in turn adversely affect the proper management of fisheries sector and also the marine environment
Sustainability is a contentious issue that has gained much impetus since recent year. Almost every country wants to promote sustainable development, with the MSC being the benchmark for sustainability certification whilst the Greenpeace and WWF encouraging healthy practices and sustainable consumption in the world. According to Ansell and Vogel (2006), the EU is very much concerned about the quality of food they import. This has led to the setup of GlobalGAP and the Global Food Safety Initiative (GFSI) which regulate the safety of food in the EU. According to Marsden (2004b), the 'battlefield of quality' has urged many retailers to consider their use of standards necessary to maintain quality (Konefal et al., 2005). According to Henson (2007), sustainability has brought about measures to improve the quality of food and other standards that differentiate one product from the other in order to meet the requirements of the European markets. Quality standards in food is used as a benchmark to determine whether the product has been produced from a sustainable source (Busch and Bain, 2004; Ponte and Gibbon, 2005; Hughes et al., 2008). By applying sustainability standards in the regulatory framework of Europe along with the WWF Aquaculture Dialogues have made the sustainability subject a hotly contested issue in current political discourse. Retailers are becoming equally concern and want to achieve sustainability 'insurance'. Sustainable tuna has become of paramount importance in international trade, given that it is a penultimate fishery product in many UK and US markets. One good example is UK where there is an increase in demand from pole-and-line and/or FAD-free tuna (John West, 2012).
Fish around the world is under severe pressure and this is an issue of growing concern for the fisheries sector. This has resulted mainly due to an improvement in technology which makes fishing boats more efficient. According to Pauly (2009) the "technology creep" makes fishing vessels more efficient by 2-3% each year thereby increasing fishing efforts. Others factors contributing to the decrease in stock include use of destructive fishing gears such as purse seine when the seine pays out the net around the tuna school (Appendix) and increase in fishing effort in terms of more fishing vessels and fishing time. An insatiable desire for tuna has sprouted growth in the number and capacity of tuna fishing vessels. According to Couper and Smith (1997), the problem of overcapacity accrued mainly due to an increase in the number of distant water fleets and flag of convenience registrations driven by globalisation. The marine environment is at a critical juncture due to an emerging 'race for fish which has exacerbated the overexploitation of fish stocks across the world. Overcapacity in fishing poses threats to the health of marine ecosystems when it pollutes and degrades critical coastal habitats. Ultimately, such alterations can reduce fish stocks (Kimball, 2003). It was argued by Arbo and Hersoug (1997) that the surge for fish has disrupted employment in Norway as well as making fishing capital owners less responsible towards their environment.
Developing countries are faced with a highly vulnerable fisheries sector (Iheduru 1995; Thorpe, Ibarra, and Reid 2000). The emergence of 'footloose' Distant Water Fleets (DWFs) further affected the stock of fish which were already at a stake. It was highlighted by the FAO (2000) that the proliferation in fishing activities put the sustainability issue into consideration. Due to a persistent rise in industrial fishing capacity, resource sustainability and economic development have emerged as major impediment to the long term sustainability in the Pacific countries (Western and Central Pacific Fisheries Commission Scientific Committee, 2007). The yellowfin and bijeye tuna are already overexploited (Greenpeace International, 2013). In addition, though a large proportion of tuna are caught within their EEZ, Pacific islands have not been able to manage their fishing industries profitably (Grafton et al. 2003; and Vankurepe et al. 2003). According to the International Centre for Trade and Sustainable Development (2006), overfishing is considered to be the main barrier that prevents the fishing industry from achieving long term sustainability. Almost all fishing grounds in the world and fishery resources are adversely affected by overfishing (FAO, 2004a; Pauly et al., 2002; Stone, 1997). As noted by the FAO (2004), 75% of fisheries have already been exhausted or been overfished. FAO (1995) highlighted that there should be effective utilisation of resources or appropriate measures should be enforced. Government has thus started paying more attention to the future availability of fish as many people in the coastal region depend on fishing for their livelihood.
In order to make the fishery maintain its nutritional, economic and social value in the long run, this sector needs to be managed efficiently (FAO 1997a). It is widely acknowledged by many fisheries' scientists that in order to benefit from a sustainable fishery there is need to have a reduction in fishing capacity and exploitation rates, abundance in fish stocks, use of less destructive fishing gears and appropriate monitoring and surveillance system to protect the marine environment.
Buyers in major markets are insisting on sustainable sources. Over 20 years ago, the Earth Island Institute (EII) started initiatives to improve tuna fishing methods and protect dolphins (John West, 2012). In 2008, global industry members discussed the concept of creating an organization which will focus on the sustainability of seafood products. By March 2009, the International Seafood Sustainability Foundation (ISSF) was formed with Princes as a founder member (Greenpeace, 2012). Its main function is to "undertake science based initiatives to ensure long term conservation and sustainable use of fish stocks, reducing by-catch and promoting ecosystem health" (ISSF, 2012). In 2008, Greenpeace became more active around tuna sustainability. They ranked brand owners and retailers on sustainability credentials. From then, significant changes began in the EU canned tuna market. There is increased demand for skipjack only, for pole-and-line and FAD free tuna (Princes, 2012). More EU retailers state that they will completely switch to skipjack only, from pole-and-line or FAD free fisheries (Greenpeace, 2008). When tuna is caught using FAD technique, juvenile tuna, sharks, turtles and other animals are also scooped up, resulting in a huge waste of marine life (Greenpeace, 2012). In this context, Greenpeace is in talk with several retailers so that they do not sell FAD-caught products in the near future (Greenpeace, 2008).
