030_G19_Spotlight_PNG

Global

Spotlight Papua New Guinea A country of contrasts PNG suffers from the ‘paradox of plenty’ – a term economists use to describe the phenomenon whereby countries that have abundant minerals and other natural resources paradoxically tend to see lower economic growth and slower human development than countries with fewer natural resources Kate Bystrova Papua New Guinea (PNG) is a country of contrasts, rich in gold, oil, gas, timber and fi sheries. Its people are strikingly diverse, organised in small, fragmented social groups and speaking many different languages; its economy highly dualistic, consisting of an enclave-based formal sector that focuses mainly on the large-scale export of natural resources, and an informal sector dominated by the subsistence activities of the majority rural population, although a local non-mineral small and medium enterprise sector is now emerging. The World Bank marvels at PNG’s strong macroeconomic management, which has transformed successive positive external income shocks and hefty new investments into the longest stretch of economic growth the country has seen since independence in 1975. But here, a ‘paradox of plenty’ governs, reminding us all that economic growth does not guarantee the equitable trickledown of development benefi ts. In a country rich in mineral and agricultural resources, social development has stagnated in its early stages, hampered by volatile export prices and diffi cult terrain. Home to more than seven million people – a population greater than that of all the other Pacifi c countries combined – and spanning 462,840 sq km, Papua New Guinea holds an immense wealth of natural resources. From gaping mines to titanic gas projects, the extractive industries have seen PNG become a strong and stable economic performer in the region, with revenue from the sector soaring since commercial goldmining fi rst kicked off in 1989, helping the country average seven per cent GDP growth annually. However, this growth has been far from inclusive. PNG suffers from persistently high levels of poverty and social inequality, ranking 156th out of 186 countries in the UNDP’s 2012 Human Development Index. According to estimates, two-fi fths of the population live on less than US$1 a day, while three-quarters of households four 30 l www.global -br ief ing.org th quar ter 2014 global


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