Is remoteness a cause of slow growth in the Pacific? A spatial-econometric analysis

Abstract

While geography is sometimes recognised as a constraint to growth in the Pacific island countries, this hypothesis has never been systematically examined. Measures of economic remoteness show that the Pacific island countries face a growth penalty for being amongst the most remote in the world. But these countries could have grown faster as their remoteness potentially diminished following the shift in world economic activity toward the Pacific. The results show that standard cross-country growth regressions give biased estimates of how slowly the Pacific island economies have grown. The observed pattern of growth spill-overs emphasises the need for regional solutions to growth problems