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