Export demand for Tahitian black pearls

Abstract

French Polynesia exports more than 90 per cent of its pearl production, making it the world's largest exporter of Tahitian black pearls. Tahitian black pearl exports are therefore crucial for the Tahitian economy as they accounted for an average of 50 per cent of total export earnings, for the latest data available, for the years 2004, 2005, and 2006. This means that export performance not only plays a major role in determining the profitability of the Tahitian pearl industry, but also in the growth and development process of the local economy. For this reason, knowing the determinants of the external demand for pearl exports remains crucial for all industry players and policymakers.

In terms of export performance, the aims of this paper are (i) to estimate the price and income elasticities for raw pearl exports, (ii) to estimate the substitution relationships between raw, semi-processed and processed pearl exports, and (iii) to identify what product differentiation needs to be considered.

Empirical findings suggest (i) a price inelastic (-0.42) and income elastic (3.53) export demand for raw Tahitian pearl exports, (ii) cross-price elasticity estimates that are inconclusive, and (iii) the need to support the development of product diversification into value-added processing in each product market.

However, the most significant and unexpected finding from this study is the poor quality of industry data available for analysis. A significantly improved data collection is a matter of extreme urgency.