Lecture give at James Cook University's "Cairns Institute". Though short-term #PNGs challenges seem challenging long-term the prospects for development are good. First, because structural factors in the economy sustaining above 5% of growth seem good, and secondly because social media activism will push for more inclusive institutions.

1. PNG: failing to develop
or developing to fail?
Lecture delivered at The Cairns Institute, 4
December 2015
Albert Schram Ph.D.
Vice Chancellor
Papua New Guinea University of Technology

2. Contents
1- Long-term development
2- The rise of more inclusive institutions
3- Research agenda for the Pacific

3. Introduction: capital markets in
“the tropics”

4. 1. Long Term Economic
Development - PNG Vision 2050
Development commonly measured as a combination of
income, health and education outcomes.
Economic development expressed in GDP per capita
terms (caveat: measurement issues not trivial).
International institutions commonly use categories: low,
lower middle, upper middle and high income
countries.
Late Prof. Angus Maddison established long-term
GDPpc series for most countries in 1990 PPP US$.

5. PNG Vision 2050
In the last few years, went from low income to
lower middle income category (probably).
How long will it take to make the transition
from lower middle to upper middle income
country? (Vision 2050)
Recent work by Jesus Filipe, Utsav Kumar and
Reynold Galop (ADB, November 2014).

6. PNG Vision 2050
If the last 10 years, mark a change in
structural growth, it will take between 30 and
50 years.

7. PNG Vision 2050
Caveat: Economic development is not
development.
The main challenges are to assure that economic
development is sustainable, and that it
translates into better health and educational
outcomes.
Opportunity: after 1950 the average transition time
went down from over 50 years to less than 25
years.

8. 2. The Rise of More Inclusive
Institutions
"Why Nations Fail" (2011) Daron Acemoglu and
James A. Robinson put politics at the centre of
development debate.
They argue that corruption of the political system,
rather than lack of knowledge about effective
development policies are the root cause of
poverty and lack of development.

9. 2. The Rise of More Inclusive
Institutions
If corruption (the use of public office for private
gain) is addressed, benefits of economic
development would be much more widely
shared.
In a democracy, pressures on the state to deliver
services will eventually lead to more effective
and more inclusive institutions.

10. 3. Research Agenda
Societies in the tropics have little in common,
except that their economies are tiny, and
have a large informal sector (duality).
Social scientist should study the drivers of
economic growth (including aid), and put
the analysis of different growth paths on a
solid statistical basis.
Growth is good.

11. Final Remarks
PNG is not failing to develop: Long term
growth prospects of PNG are good.
PNG is not developing to fail: Emergence of
better educated (and female) leaders, and
possibilities provided by internet and social
media give hope that the transition to
middle income country will be fast and
smooth.