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The Pacific Speed of Growth

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Author Info

  • Yongzheng Yang
  • Hong Chen
  • Shiu raj Singh
  • Baljeet Singh
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    Abstract

    This study aims to test within a relatively homogeneous group of small states what differentiates the growth performance of Pacific island countries (PICs) from their peers. We find that PICs are disadvantaged by distance and hampered by lower investment and exports compared with other small island states, but greater political stability, catch-up effects from lower initial incomes, and slower population growth have helped offset some of these disadvantages. On balance, policy-related factors, together with geography-related disadvantages, have led to growth rates in PICs that are much lower than in other small states. We also examine how real exchange rate appreciation, unfavorable developments in the external trade environment, and rising international transport costs may have contributed to PICs’ slower growth over the past decade.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 13/104.

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    Length: 44
    Date of creation: 09 May 2013
    Date of revision:
    Handle: RePEc:imf:imfwpa:13/104

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    Related research

    Keywords: Economic growth; Pacific Island Countries; Investment; Exports; Small states; Economic models; convergence; remoteness; volatility; aid; investment exports; trading partners; output volatility; trade openness; exchange rate regime; trade preferences; transport costs; regional trade; external shocks; export performance; import demand; trade deficit; exchange rate policy; external trade; trade arrangements; fixed capital formation; reciprocal trade preferences; export sector; trade volumes; export earnings; domestic market; trade barriers; world trade; domestic prices; export growth; increasing investment; international trade; trade restrictions; world prices; commodity exporters; commodity prices; domestic production; current account deficit; trading costs; intermediate inputs; export market; per capita income; world market; increased trade; export markets; oil exporters; merchandise trade; terms of trade; neighboring countries; trade patterns; international transport; partner countries;

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    References

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    1. Armstrong, H W & Read, R, 2000. "Comparing the Economic Performance of Dependent Territories and Sovereign Microstates," Economic Development and Cultural Change, University of Chicago Press, vol. 48(2), pages 285-306, January.
    2. Edgardo M. Favaro, 2008. "Small States, Smart Solutions : Improving Connectivity and Increasing the Effectiveness of Public Services," World Bank Publications, The World Bank, number 6416, October.
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    7. R A Read & H W Armstrong, 1998. "Trade and growth in small states: the impact of global trade liberalisation," Working Papers 539452, Lancaster University Management School, Economics Department.
    8. Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
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    12. Bowman, Chakriya & Chand, Satish, 2007. "Size Matters: The Impact of Aid on Institutions," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    13. David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
    14. Rao, B. Bhaskara & Sharma, Kanaiah Lal & Singh, Rup, 2007. "Estimating aid-growth equations: the case of Pacific Island countries," MPRA Paper 4554, University Library of Munich, Germany.
    15. Read, Robert, 2004. "The Implications of Increasing Globalization and Regionalism for the Economic Growth of Small Island States," World Development, Elsevier, vol. 32(2), pages 365-378, February.
    16. Joern Kleinert & Julia Spies, 2011. "Endogenous Transport Costs in International Trade," IAW Discussion Papers 74, Institut für Angewandte Wirtschaftsforschung (IAW).
    17. Jonathan C. Dunn & Matt Davies & Yongzheng Yang & Yiqun Wu & Shengzu Wang, 2011. "Monetary Policy Transmission Mechanisms in Pacific Island Countries," IMF Working Papers 11/96, International Monetary Fund.
    18. Mosley, Paul, 1980. "Aid, Savings and Growth Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 42(2), pages 79-95, May.
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