Developed in the mid 1980s to explain economic processes in New Zealand’ssphere of influence in the Pacific islands, the mirab model has proved applicableacross a wide range of island economies. Identifying features of a mirab economyare heavy reliance on transfer payments, including repatriated factor incomes,to finance current expenditure; a migration process that disperses the members ofethnic groups across geographical space while retaining the organic unity offamilies and communities; and a consequent transnationalization of the society’seconomic activity whenever external niches of economic opportunity becomeaccessible. Production of tradable goods is marginalized by the operation ofmarket forces in the absence of regulation, and policies to promote tradable-leddevelopment have little application. The paper presents macroeconomic data toillustrate three stylized facts for mirab economies: persistent gaps betweennational expenditure and gross domestic product, a combination of large tradedeficits with balanced current accounts (and hence limited debt accumulation),and the long-run stability of per capita aid flows. Some country-specific variationson the basic mirab model in the recent literature are reviewed, along withsome recent economic literature on the microeconomics of transnational networksof kin and community.
