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

Abstract

This paper examines the growth experience of nine South Pacific countries during the period 1971-93, using the analytical framework of the Solow-Swan neoclassical growth model, panel data, and Chamberlain's II-matrix estimator. 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.