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Dutch Disease and the crime epidemic: an investigation of the mineral boom in Papua New Guinea
Author(s) -
Chand Satish,
Levantis Theodore
Publication year - 2000
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/1467-8489.00102
Subject(s) - new guinea , dutch disease , boom , economics , welfare , revenue , equity (law) , vulnerability (computing) , development economics , natural resource economics , exchange rate , political science , macroeconomics , market economy , sociology , finance , engineering , law , ethnology , computer security , environmental engineering , computer science
Papua New Guinea has pinned its hopes for economic development on its mineral wealth but, so far, this has been a false promise. Given Papua New Guinea’s vulnerability, this raises questions of a Dutch Disease effect. Dutch Disease is dismissed in principle, but an appreciating real exchange rate is considered to have important offsetting economic consequences via its implications for crime. Using a CGE model incorporating crime as an economic activity, the contribution to welfare of a resources boom is investigated. The results confirm that a resources boom will deliver a net welfare benefit, but far smaller than the revenues generated would suggest, and at a cost to equity.