Abstract
Papua New Guinea (PNG) managed the mineral booms of 1973–74, 1979–82 and 1987‐89 well compared with other mineral exporting economies. Orthodox macroeconomic policies were one reason for this while the cushion afforded by the slow withdrawal of Australian aid was another. PNG also renegotiated MNC mining contracts in its favour without curbing foreign investment, but it managed its fragile political unity less well. Secession closed a large mine in 1989 while successful rent‐seeking left wage indexation unreformed. Relatively high wages, exchange rate overvaluation and foreign investment controls in non‐mining sectors retarded structural diversification: mineral dependence remains uncomfortably high a generation after the start‐up of the first copper mine.
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