Small States, Large Aid: The Benefits of Benevolence in the South Pacific

Abstract

Papua New Guinea (PNG) and the South Pacific island states are small, relatively isolated and remote from world markets and from each other. They are dependent and unusually open economies and, especially in Melanesia, are dominated by limited monetisation, agriculturally-based subsistence systems and considerable cultural diversity. Overall aid flows into the region are exceptionally high by global standards, especially for the New Zealand associated states of Niue and Tokelau and the American and French territories. The Jackson Report identifies some of the areas in which, it is argued, aid will contribute most directly to economic growth. Economic growth issues are emphasised in the chapter on the small island states whereas, for PNG, where aid is budget support and cannot therefore be targeted towards projects or sectors, but where there is greater growth potential, the report has identified particular welfare needs that should be tackled by the PNG government.

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