Papua New Guinea national human development report
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Date
2014-11-10
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Abstract
Papua New Guinea (PNG) stands at a critical moment in its
development. With Gross Domestic Product (GDP) growth of over
20 per cent expected for 2015, following the start of production from
the massive PNG Liquified Natural Gas (LNG) project, the country
has a unique opportunity to leverage significant sustainable and
equitable improvements in levels of health, education, income and
other elements of inclusive human development. At the same time,
the country also faces considerable risks. If poor choices are made,
the impact of the high growth rates will be limited, even detrimental
to the development prospects of Papua New Guineans and the
nation and the lives of people living in poverty. This report aims to
provide information and national as well as international case study
experiences to assist decision-making in the country. The report has
four purposes: (1) Review the extent to which Papua New Guinea’s
revenues from extractive industries have led to practical human
development outcomes; (2) Reveal lessons from other countries
that can be useful for Papua New Guinea; (3) Highlight some
specific innovations from Papua New Guinea’s experience that can
contribute to development in other countries; and (4) Stimulate,
inform and shift the debate in the country to enable leaders to make
appropriate choices for the wellbeing of citizens.
Papua New Guinea’s 40 year history of Independence has been
dominated by the extractives sector. Large-scale mine and oil
production (worth at least K150billion since Independence) has
driven formal sector growth, underpinned budgets that have
improved health and education outcomes, as well as provided
significant improvements in incomes and livelihoods for some. At
the same time however, this production has sparked civil strife,
caused massive environmental damage, arguably distorted the
economy, and brought about a range of negative impacts on
communities. Valuable lessons are being learnt (and have potential
international relevance), but still the risk remains that the existing
model of economic growth in the country will not deliver sustained
improvements in wellbeing for the majority of the population.
The report reviews the state of human development in Papua New
Guinea in terms of the three pillars of sustainable development –
economic, social and environmental – and specifically examines
the ways in which the extractive industries have contributed –
positively and negatively – to these related but distinct pillars.
While there have been some measurable achievements in
terms of improvements in human development (increases in life
expectancy, per capita income and educational achievement),
many of the indicators are less positive. Despite 14 consecutive
years of economic growth, there has been little change in poverty
levels in the country. In fact the level of inequality in the country
has increased.
There is much that is positive about the contribution of the
extractives sector to Papua New Guinea’s development, including
significant revenue flows to government, cutting edge innovations
to enhance revenue and transparency at the national level, as well
as the involvement of some communities in some operational
decision-making. There remains however, considerable scope
for improvement. Other positive impacts include recent initiatives
addressing service delivery, governance, and policy direction that
provide useful guides to future action.
The report reviews the significant amount of national and
international experience and recent policy development throughout
the extractives sector, much of which has been driven by the
realization that mineral and oil wealth has not always been a
positive force for a country’s national development. The term
‘resource curse’ captures the international view that growth based
on a dominant extractives sector can, if not managed well, lead to
a range of negative effects, including stunted economic growth,
corruption, weak institutions, conflict, human rights abuses,
and poor human development outcomes. There is also, however,
experience that suggests the ‘resource curse’ is not inevitable:
that there are particular political, institutional and economic
mechanisms that can be used to better connect resource wealth
with sustainable human development. Papua New Guinea is on the
frontline of innovation in some of these areas, and valuable lessons
can inform international best practice and decision-making.
Based on a review of the state of human development and the
experience of the extractives sector in Papua New Guinea, along
with case studies and lessons from the national and international
experience, the report presents a range of policy options – framed
around a United Nations Development Program’s Strategy on
Extractive Industries and Human Development. This aims to
assist in better translating minerals and oil revenues into more
sustainable and inclusive forms of human development. For this to
happen, countries should seek to capture as much of the resource
revenue as possible through transparent and accountable
systems - without losing the foreign investment - and use this to
boost human development through effective service delivery to
the largely rural-based population, while working to reduce the
negative social, economic and environmental impacts.
Policy options to do this include ways of making policy frameworks
and operation-specific negotiations more effective and more
inclusive, refinements in institutional governance and service
delivery, improvements to transparency and management of
revenue flows (though mechanisms such as the Sovereign Wealth
Fund and the Extractive Industries Transparency Initiative), the
establishment of a formal sector-specific grievance mechanism,
a focus on building economic diversification into non-extractive
sectors (especially agriculture and tourism), novel environmental
management approaches, better integration of corporate
community development contributions, and improvements in data
collection and management processes.
Taken singularly, or preferably as a whole, these options provide
the basis for enhancing the contribution of the sector to sustainable
human development. They are offered as a basis for public and
policy dialogue and debate, which should then form the basis for
action. The report recognises that it is only the timely actions of
stakeholders in the country – governments, leaders, politicians,
non-governmental organisations (NGOs), development partners,
citizens and the private sector – that will make a practical and
real difference to human development outcomes in Papua New
Guinea. Papua New Guinea has a unique window of opportunity
to make some of these decisions now. The country needs to grasp
this opportunity.
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Keywords
Human Development, Papua New Guinea
Citation
Papua New Guinea National Human Development Report, 2014, pp. 9 - 128