This week marked a big milestone for the South Pacific nation of Papua New
Guinea (PNG). ExxonMobil, a US energy producer, announced that it has begun
to pump gas from its production site deep in the southern highlands. The project
will have a transformative effect on the country's 7.3m people. GDP has been
growing at over 7% a year during construction. In 2015, PNG will be ranked among
the world's fastest-growing economies, as gas exports propel real GDP growth to
14.7% over the year.
The history of big resource projects in small countries is not great. PNG is hoping to avoid Dutch disease, corruption and an overemphasis on short-term gains by using a sovereign wealth fund that can invest only in foreign assets. But concerns over its implementation loom large. There is also the question of where the new wealth will go, given that few skilled jobs for locals will be created. Sierra Leone and Mongolia, among others, face similar issues.
Having experienced the natural and cultural wonder that is PNG myself in 2012, I'm hoping the usual pitfalls can be avoided, but it will be tough. What would your advice be to a small resource-rich country? Let me know on Twitter @Baptist_Simon or via email on simonjbaptist@eiu.com.
The history of big resource projects in small countries is not great. PNG is hoping to avoid Dutch disease, corruption and an overemphasis on short-term gains by using a sovereign wealth fund that can invest only in foreign assets. But concerns over its implementation loom large. There is also the question of where the new wealth will go, given that few skilled jobs for locals will be created. Sierra Leone and Mongolia, among others, face similar issues.
Having experienced the natural and cultural wonder that is PNG myself in 2012, I'm hoping the usual pitfalls can be avoided, but it will be tough. What would your advice be to a small resource-rich country? Let me know on Twitter @Baptist_Simon or via email on simonjbaptist@eiu.com.
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