Pacific island countries face unique challenges in raising growth potential and living standards. These countries are particularly vulnerable because of their small populations, geographical isolation and dispersion, narrow export and production bases, high exposure to external shocksincluding natural disasters and climate changeand heavy reliance on foreign aid. The costs of providing public services among many dispersed islands are also high, and financial sectors still at the initial stages of development limit the private sectors access to credit. Microstatescountries with a population below 200,000are even more vulnerable and subject to greater macroeconomic volatility than other Pacific island countries. This book discusses ongoing challenges facing Pacific island countries and policy options to address them. Regional cooperation and solutions and further integration with the Asia and Pacific region will also play a role. In short, unique challenges call for tailored solutio