Australian Aid to Papua New Guinea: A Case Study of the Transfer Mechanism

Abstract

[Chapter 1] provides a brief history of Papua New Guinea (P.N.G.), sets out the aims of the dissertation, and describes the essence of the transfer mechanism. Chapter two explains the development of the theory of the transfer mechanism. Chapter three obtains estimates of the balance of payments for P.N.G. from 1947 until 1980. Chapter four derives a multiplier model of the P.N.G. economy, based on the period 1960-1 to 1972-3, to test the size of the transfer, by income changes. Finally, chapter five discusses the effects of dividing the P.N.G. accounts into domestic and expatriate components. ...it needs to be recalled that even though the aid transfer may be fully-effected, this does not mean the aid has been beneficially used. The induced imports could be in the form of consumer luxuries or 'military toys'. Neither of these, I would suggest, add greatly to the welfare of the bulk of the population of a country such as P.N.G. To ascertain the effects of aid on P.N.G.'s development, and of its particular aid relation with Australia, would probably occupy a further masters dissertation.