A simulation model for long-term policy formation in Papua New Guinea

Abstract

This study presents a dynamic model of the economy of Papua New Guinea, constructed to assist in the formulation of policies for future development. The government of Papua New Guinea has stated a set of development objectives which emphasises its concern for a greater participation of the population in the process of economic development. Accordingly, the model presented deals with the interactions between changes in the characteristics of the population and the structure of the economy in the course of development. The model is designed specifically for Papua New Guinea and takes into account the special features of its population and economy. Progress towards the achievement of the government's objectives will necessarily take several decades; so the model takes the form of a computer simulation program to generate longterm projections of economic and demographic changes. The model, constructed on the basis of the limited data that is currently available, uses a modular structure which will facilitate subsequent revisions that will be required as additional information becomes available. The use of the model is illustrated by generating a number of long-term projections of the population and the economy under alternative assumptions about government policies and exogenous variables. The concept of a long-term strategy is developed as a consistent, connected sequence of decisions which lead towards the desired long-term objectives. Examples of such strategies are presented, which show how the model can be used to assist the government in choosing from alternative combinations by comparing their effects on a number of important economic and demographic variables. The examples have been chosen to indicate how a wider range of options is possible when the task of planning is viewed from the long-term perspective. It is hoped that the model will provide decision-makers in Papua New Guinea with a useful tool for the formulation and evaluation of strategies to guide the future of their nation.