Paradise Lost? Growth, Convergence and Migration in the South Pacific

Information about Asia and the Pacific Asia y el Pacífico

Journal Issue

Volume/Issue:: 1995/28
Series:: IMF Working Papers
Author(s):: Norman Loayza, and Paul Cashin
Publisher:: INTERNATIONAL MONETARY FUND
Published Date:: March 1995
DOI:: http://dx.doi.org/10.5089/9781451844603.001
ISBN:: 9781451844603
ISSN:: 1018-5941
Page:: 42

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.

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Paradise Lost? Growth, Convergence and Migration in the South Pacific