Pacific Economic Bulletin Volume 25 Number 1

With the host of comments being aired lately about development, thought I’d share two articles from the Pacific Economic Bulletin that I’m reading at the moment:

1. Economic Surveys: Parting with the past: is Papua New Guinea poised to begin a new chapter towards development?

By Jonathan Gouy, Joe Kapa, Alfred Mokae and Theodore Levantis

“Papua New Guinea has entered its sixth year of solid economic growth. Understanding the constraints to growth and reviewing the changes that have taken place in the past few years shed light on this unprecedented outcome. A giant liquefied natural gas project has been confirmed, giving Papua New Guineans tremendous optimism that they are on an accelerating growth trend, but serious challenges remain. One relates to management of resource rents. Existing mechanisms are unable to cope, resulting in considerable fiscal instability. Another challenge is the economy’s capacity constraint. Shortages in skilled labour and urban property are examined in detail. Other issues explored are aid effectiveness and the declining importance of foreign aid.”

(Pacific Economic Bulletin Volume 25 Number 1 © 2010 The Australian National University) Download Report Here.

2. Policy Dialogue: Preconditions for economic growth: a PNG perspective

By Donald Gumbis, Lecturer in Political Studies in the Social Science and Commerce Department, Faculty of Humanities, University of Goroka, Papua New Guinea.

“During the past 34 years, Papua New Guinea has experienced a growth process ‘from the Stone Age to the space age’.1 The trajectory of this process is discussed within the framework of Walt Rostow’s theoretical stages of economic growth and development (http://en.wikipedia.org/wiki/Walt_Rostow, accessed 18 April 2009). This theory points to the many preconditions that Papua New Guinea must establish in order to achieve economic, social and infrastructural growth.

This article first highlights the major points of Rostow’s stages-of-economic-growth theory. Second, it presents key points about Papua New Guinea’s current economic status. Third, we discuss several of the important preconditions for economic development and where Papua New Guinea presently stands with respect to these.
Rostow’s theoretical stages of economic growth

In 1960, Rostow (1916–2003), an American economist and political thinker, prominent for his staunch opposition to communism and belief in the effectiveness of capitalism and free enterprise, developed the Rostovian take-off model of economic growth, one of the major theories of economic growth (http://en.wikipedia.org/wiki/Walt_Rostow, accessed 18 April 2009). The model argues that economic modernisation and economic growth occur with five basic stages of varying lengths:

1. Traditional society
2. Preconditions for take-off
3. Take-off
4. Drive to maturity
5. High mass consumption.”

(Pacific Economic Bulletin Volume 25 Number 1 © 2010 The Australian National University) Downlaod Report Here

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4 thoughts on “Pacific Economic Bulletin Volume 25 Number 1

  1. I read the Rostow article further (http://www.mtholyoke.edu/acad/intrel/ipe/rostow.htm) and it is one of the best description of the stages of development. Thanks Donald for pulling that out, and putting in the PNG perspective; some issues makes sense in my head now.
    Without all due respect,Mr Gumbis, I would have liked to read more quantitative analysis of the Rostow model on the PNG situation. Rostow actually has time-scales for each stages. The time-scales by Rostow definitely cannot apply to the PNG story because of differing cultures, and socio-economic development etc. However, the article has enough information on how each stage progressed – if those can be pulled out then collect the relevant PNG data – models can be built on those numbers for the PNG story. It will be very interesting to see the numbers. The numbers will be subjected to debate but that is just the nature of models. And the more debate on the numbers; the more we talk about the preconditions for development – the more our minds expand and hopefully solutions will emerge.

    1. Thanks Tanya,

      I will provide a extended reply to you later but for now, yes the different [Rostovian] stages are influenced by many variables.Time is not a factor because if changes were to occur, they would have started on Day One of Independence and should have progressed on a continuum.

      In brief details, PNG is financially capable to effect an holistic change to everything. I need not go into the variables for you to see e.g. financial institution, bureaucratic mechanism, a productive workforce, an educated population and many others. You mentioned one variable which is cultural diversity. It is never that difficult – the main challenge I see is in the literacy level as a Human Development Index which PNG highly lacks. I strongly believe that with an educated population and a strong employment sector, PNG’s population will greatly appreciate that cultural diversities can exist alongside and in perpendicular to developmental issues. We can have growth in the economy, we can have surplus in our foreign reserves but if the population is not educated [meaning that the masses still remain culturally conscious], they will not be healthy, they will have poor ideals and rationale about political, social, educational, cultural, spiritual and citizenship.

      In my next article [hopefully to be published in the same bulletin], I will discuss some of these issues. I think that I have let the ‘cat out of the bag’ for you now.

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