This paper examines the determinants of growth for nine South Pacific countries during the period 1971-93, using the analytical framework of the Solow-Swan neoclassical growth model. Chamberlain’s II-matrix estimator is used to account for unobserved country-specific heterogeneity in the growth process, and to control for errors-in-variables bias in calculations of real per-capita GDP. The speed of convergence of South Pacific countries to their respective steady-state levels of per-capita GDP, after controlling for the important regional effects of net international migration, is estimated at a relatively fast 4 percent per year. In addition, private and official transfers emanating from regional donor countries have kept the dispersion of real per-capita national disposable income constant over the period, despite a significant widening in the regional dispersion of real per-capita GDP.
Remittances are large and have grown substantially over the past decade in the Pacific region. This primarily reflects the impact of emigration due to low growth and limited employment prospects at home. Many Pacific emigrants settle abroad with their families for long periods, but maintain close links with their relatives, villages and churches. The paper finds that the altruistic motive for remittances remains much stronger in the Pacific region than in the rest of Asia, where investment considerations increasingly appear to predominate, especially for the large share of single citizens working abroad for limited periods.
This Selected Issues paper analyzes the effect of international migration on unemployment in New Zealand. The empirical results in this paper suggest that net migration inflows give rise to a fall in the unemployment rate. The paper estimates a system of equations including the unemployment rate, real wage, net migration rate, and labor force participation rate, taking into account the interdependence of the variables. It also examines the impact of exchange rate volatility on export firms’ decisions to hedge foreign exchange exposure.
This Selected Issues paper presents an empirical comparison of New Zealand’s growth performance with that of Australia during the post-reform period. The paper shows that most of the divergence in income per capita between the two countries has been the result of lower accumulation of capital per hour worked, and to a lesser extent, lower efficiency in utilizing resources in New Zealand. The paper also examines how migration has affected the income and welfare of New Zealand nationals.
This 2001 Article IV Consultation highlights that since early 2001, domestic demand growth has recovered in New Zealand and contributed to sustain GDP growth in the wake of weaker net exports, owing to the economic slowdown in the rest of the world. The sharp rise in economic activity pushed the economy to a high level of resource use, as capacity utilization rates rose markedly in 2001. An improvement in business and consumer confidence in the first months of 2002 suggests that domestic demand is likely to maintain its momentum in the first half of 2002.
As labor has become more mobile in today's world, it is important to understand the income and welfare of nationals regardless of their residence. This paper develops two key concepts, gross migration-corrected product (GMP) and welfare cost of migration, and calculates them using New Zealand data. Growth performance measured by New Zealanders' income has been clearly better than suggested by the GDP. The welfare cost associated with a marginal change in the tax rate appears quite high.
WHEN MIGRANTS send home part of their earnings in the form of either cash or goods to support their families, these transfers are known as workers’ or migrant remittances. They have been growing rapidly in the past few years and now represent the largest source of foreign income for many developing economies.
This paper considers the long-run evolution of the world economy in a model where countries' opportunities to develop depend on their trade with advanced economies. As developing countries become advanced, they further improve trade opportunities for the remaining developing countries. Whether or not the world economy converges to widespread prosperity depends on the population growth differential between developing and advanced economies, the rate at which countries develop, and potentially on initial conditions. A calibration using historical data suggests that the long-run prospects for lagging developing regions, such as Africa, likely hinge on the sufficiently rapid development of China and India.
the analytical framework of the Solow-Swan (1956) neoclassical growth model, this paper examines the growth performance of nine South Pacific nations over the period 1971–93.
These nine countries include seven developing island economies—Fiji, Kiribati, Papua New Guinea, Solomon Islands, Tonga, Vanuatu, Western Samoa—and their developed neighbors, AustraliaandNewZealand. 1 The latter two economies are included because of their close economic links to the island economies in the areas of trade, exchange rate management, private and public transfer payments
but live among the general population result in a more proficient and higher-earning immigrant population. Such policies have been successful in AustraliaandNewZealand. Policies that encourage permanent, rather than back-and-forth, migration—perhaps by encouraging immigration of entire families, promoting citizenship, or facilitating employment of the primary migrant’s spouse—can enhance family income and discourage return migration.
Encouraging immigrant flows among migrants with exposure to the destination culture and language, such as residents of former