Abstract
Timor-Leste began its independence as one of the poorest nations in the world. Substantial progress has been made thereafter but the challenges for future development are numerous. High population growth and modest growth of GDP means that per capita income is declining and that the extent of poverty is increasing. For this situation to change, income opportunities other than those provided by subsistence agriculture are needed. Considering the low level of education and the keen competition for skilled personnel this, however, is difficult. So far, it seems that most skilled workers are being absorbed by the public sector and that this is pushing up the already high skilled wage level. That, in turn, affects the competitiveness of the private sector negatively and acts as an obstacle to the creation of employment opportunities outside agriculture.