The tsunami that hit the Republic of Maldives on December 26, 2004 caused widespread
destruction, including significant damage to Maldives? two primary industries – tourism and
fisheries. Since that time, international organizations and the Government of Maldives (GoM)
have been working overtime to channel aid into reconstruction efforts. While the speed and
dedication with which stakeholders have reacted to this catastrophe are commendable, the
urgency of the situation has left little time to evaluate the long-term needs of Maldives before
projects are begun.
This paper argues that it is necessary to ask whether simply rebuilding what has been lost is in
the best interests of future economic growth and stability in Maldives. It concludes that the
answer is “no.” The fisheries sector, especially, has limited potential for sustainable growth.
From this point, the question becomes “what industries would best promote economic
development and stability?”
To identify better investments, we initially evaluate the preexisting problems with the Maldivian
economy, which are twofold. First, significant income and standard of living disparities exist
between the capital, Malé, and the outer atolls. Second, the country is extremely vulnerable to
exogenous shocks, both to the economy and the environment. In addition, new investments have
to contend with serious barriers to growth. Specifically, Maldives? geographical remoteness and
dispersion, resource poverty, and shortage of skilled labor limit the potential of many industries.
To address Maldives? weaknesses, we lay out twelve goals. These goals, as follow, provide a
framework for our appraisal of successful industries in other small island and South Asian
countries for their suitability in Maldives. A “good” investment should tackle as many of these
goals as possible.