Australian Aid to PNG - AusAID

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In looking for the sources of growth in total GDP and non-mining GDP, it ispossible to rule out increased capital investment and government consumption.Both have remained reasonably stable over the period in real terms. Therecorded increase in GDP is instead shown to be a result of rising exports andprivate consumption (see Figure 3.1(b)).Figure 3.1 The Growth Performance(a) Real GDP and non-mining GDP(b) The Components of Real GDPMillion kina in real terms (1983 Prices)4,0003,0002,0001,00001975 1981 1987 1993 1999Million kina in real terms (1983 Prices)2,5002,0001,5001,00050001975 1981 1987 1993 1999GDPPrivate consumptionNon-mining GDPGovernment consumptionInvestmentExports(c) Real per capita non-mining(d) Real per capita value-added by sectorKina in real terms (1983 Prices)7006506005505004501975 1981 1987 1993 1999K per person in real terms (1983 Prices)40030020010001975 1981 1987 1993 1999Expenditure dateReal Agricultural output per capitavalue-added dataReal industry output per capitaReal services output per capitaSources:Bank of Papua New Guinea, 1998, Money and Banking in Papua New Guinea, Bank of Papua New GuineaQuarterly Economic Bulletin, various quarters, Government of Papua New Guinea, 2002, Economic andDevelopment Policies, Volume 1 of the Budget Papers, various years, World Development Indicators (population).Much of the increase in exports is a result of increased mining and oil activity.While most of the income earned by the sector flows overseas, the expansion inmining and oil exports does have important flow-on effects for the non-miningsector as it increases Government revenue, provides payments to landownersand stimulates some supporting economic activity (eg, in transport or thefinance sector).16 The Contribution of Australian Aid to Papua New Guinea’s Development 1975–2000
The estimated increase in private consumption can be seen to be predominantlya result of population growth. However, some contribution was also providedby an improvement in agricultural exports over the 1990s and from the flowoneffects of expansion in other sectors.If the effect of population growth is removed, it becomes clear that the growthperformance has been weak. Population growth has roughly matched GDPgrowth, and there has been little change over 25 years in both per capita GDPand non-mining GDP. While interpretation of the per capita estimates of GDP iscomplicated by data problems, the key point is that there has been little or nooverall growth since independence on a per capita basis (see Figure 3.1(c)).The data point to a stable or declining level of real per capita incomes to thelate 1980s before a large rise in the 1990s. The noticeable rise over the 1990s islargely attributable to the benefits of booming mining and oil sectors. Howevermuch of the gains seen over the 1990s have recently been lost as the economyhas contracted. This contraction can in turn be traced back to passing of the oilboom as reserves at Kutubu quickly declined, the unwinding of a dutch diseasetype problem (as discussed further below) and the adverse effects of a relaxationof fiscal responsibility and deteriorating physical infrastructure (eg roads). Theadverse effects of the underlying constraints to development, such as discussedin Section 2, have also played an important role in the poor growth outcome.On a per capita basis there has been a trend decline in investment andgovernment consumption. This was partially compensated for by the rise inexports and private consumption. As noted, much of the increase in exportscan be attributed to the increase in the mining and oil sectors. On a per capitabasis, the real value of agricultural output remained fairly stable in real terms,although the sector showed some signs of improvement over the 1990s (seeFigure 3.1(d)). The real value of industry and services output on a per capitabasis trended down from independence to the late 1980s, and has since alsoshown some signs of improvement as overall economic growth has improved.3.3 Explaining the Determinants of PNG’sGrowth PerformanceDrawing on the established international framework for analysing growth, it ismeaningful to categorise the underlying determinants of economic growth aslikely to be –• Growth in the stock of physical capital.• Growth in the stock of human capital, both the quantity and quality.• Technological change.• The policy environment.• The institutional environment.The Contribution of Australian Aid to Papua New Guinea’s Development 1975–2000 17
Page 5 and 6: BOXESBox 3.1 The Dutch Disease in P
Page 7 and 8: FOREWORDAs part of a broader focus
Page 11 and 12: programs to improve living standard
Page 13 and 14: sector since independence, 65% has
Page 15 and 16: 1 INTRODUCTIONThis report provides
Page 17 and 18: Figure 2.1 Real GDP per capita in P
Page 19 and 20: 1985 1990 1995 2000PNG HPC LIC LMC
Page 21 and 22: significant strain on the budget an
Page 23 and 24: • Improved central coordination a
Page 25 and 26: Connell (1998, pp. 311-2) highlight
Page 27 and 28: y the successful mobilisation of cu
Page 29: 3 INTERPRETING THE DEVELOPMENT ANDG
Page 33 and 34: 3.4 Reconciling the Growth and Deve
Page 35 and 36: 3.5 Implications for AidTo summaris
Page 37 and 38: Although the precise extent of the
Page 39 and 40: program saw a decline in the overal
Page 41 and 42: criticism that the withdrawal of Au
Page 43 and 44: Ministerial Forum found that real p
Page 45 and 46: management for Papua New Guinea, ov
Page 47 and 48: 5 THE IMPACT OF AUSTRALIAN AID INPA
Page 49 and 50: • Improved retention rates at sch
Page 51 and 52: • Achieved operational efficienci
Page 53 and 54: policing are being introduced, alon
Page 55 and 56: deliver community and public servic
Page 57 and 58: BOX 5.5 HEALTH IMPACTS OF AUSTRALIA
Page 59 and 60: also improved 24 , and there is evi
Page 61 and 62: 5.5 Renewable ResourcesIn total, Au
Page 63 and 64: Land Use Management• Established
Page 65 and 66: New Guinea needs donor financing fo
Page 67 and 68: only assist within the context of t
Page 69 and 70: Both within sectors and more broadl
Page 71 and 72: However, it seems reasonable to arg
Page 73 and 74: useful to document the findings of
Page 75 and 76: ANNEX A EVOLUTION OF AUSTRALIAN AID
Page 77 and 78: ANNEX B SECTOR BREAKDOWN OF AUSTRAL
Page 79 and 80: 8 REFERENCESAhai, N., 1988, The Dev
Page 81 and 82:
Garnaut, R., and Baxter, P., 1984,
Page 83 and 84:
Growth Strategy, Final Report, prep
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