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Papua New Guinea and the Natural Resource Curse

Author

Listed:
  • Nayda Avalos

    (Department of Economics, University of Central America, Bulevar Los Próceres, La Libertad, El Salvador)

  • Veronica Gonzales Stuva

    (Inter-American Development Bank, 1300 New York Avenue, N.W. Washington, D.C. 20577, USA)

  • Adam Heal

    (United Nations ESCAP, United Nations Building, Rajadamnern Nok Avenue, Bangkok 10200, Thailand)

  • Kaoru Lida

    (Ministry of Finance, 3-1-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8940, Japan)

  • Naohito Okazoe

    (Fisheries Agency of Japan, 1-2-1 Kasumigaseki, Chiyoda-ku, Tokyo, 100-8907, Japan)

Abstract

Several empirical studies have found that countries experience slower rates of economic growth when exports are concentrated in natural resources (NRs). Various potential channels for this relationship have been identified including: Dutch disease; volatility in the terms of trade; and impacts on governance. This paper explores whether Papua New Guinea (PNG), a resource-rich state in the South Pacific, displays signs of suffering from the ‘NR curse’. PNG displays some evidence of Dutch disease in the decline of local manufacturing in the past decade alongside exchange rate appreciation. This may be further exacerbated by large-scale exports of liquefied natural gas in future years. Extractive industry governance is a pressing challenge for PNG and the paper makes suggestions for reform in revenue management and spending.

Suggested Citation

  • Nayda Avalos & Veronica Gonzales Stuva & Adam Heal & Kaoru Lida & Naohito Okazoe, 2015. "Papua New Guinea and the Natural Resource Curse," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 57(2), pages 345-360, June.
    • Handle: RePEc:pal:compes:v:57:y:2015:i:2:p:345-360
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    Citations

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    Cited by:

    1. Christopher A. Hartwell & Roman Horvath & Eva Horvathova & Olga Popova, 2019. "Democratic Institutions, Natural Resources, and Income Inequality," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(4), pages 531-550, December.
    2. Yuanyuan Zhu & Xiaoqi Zhou & Yilin Gan & Jing Chen & Ruilin Yu, 2021. "Spatio-Temporal Differentiation and Driving Mechanism of the “Resource Curse” of the Cultivated Land in Main Agricultural Production Regions: A Case Study of Jianghan Plain, Central China," IJERPH, MDPI, vol. 18(3), pages 1-17, January.
    3. Sara Busilacchi & James R. A. Butler & Ingrid Van Putten & Yiheyis Maru & Joseph Posu, 2018. "Asymmetrical Development across Transboundary Regions: The Case of the Torres Strait Treaty Region (Australia and Papua New Guinea)," Sustainability, MDPI, vol. 10(11), pages 1-18, November.
    4. Chala Amante Abate & Dagim Tadesse Bekele & Belisty Bekalu Ayenew & Adisu Abebaw Degu, 2023. "The Relationship Between Natural Resource Rent and Economic Growth in Nigeria," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 13(4), pages 3-25.
    5. Aman Saggu & Witada Anukoonwattaka, 2015. "Commodity Price Crash: Risks to Exports and Economic Growth in Asia-Pacific LDCs and LLDCs," Trade Insights Series 6, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    6. Rohan Fox & Marcel Schröder, 2018. "After Papua New Guinea's Resource Boom: Is the Kina Overvalued?," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 5(1), pages 65-76, January.

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