PORT MORESBY – A discussion paper just released by the Papua New Guinea National Research Institute proposes that PNG create more jobs by discouraging imports of consumables, or goods for immediate consumption, and expanding exports.
Consumables are goods used by individuals and businesses that need to be replaced regularly because they are used up or wear out.
In a statement, the Institute said that, in theory, international trade should contribute to better employment outcomes.
Yet, despite PNG relying on international trade for much of its economic growth, very few of its young people leaving schools and colleges find paid employment.
In the discussion paper, Dr Francis Odhuno and Dr Diana Ngui investigate the effects of increasing imports and exports on PNG’s formal sector employment.
The two researchers used data collected by the Bank of PNG to show that increasing both the value imports and exports results in increases in formal employment.
This occurs in all sectors of the economy. But, while increasing imports has an immediate effect, it takes some time for the effect of increasing exports to be felt.
Increasing exports can immediately increase formal sector employment in regions where large projects are located.
But these short-term positive effects are reversed in the future as fewer jobs are created in the regions.
The authors conclude that
“PNG needs to increase the amount of domestically processed non-mineral products for domestic and export markets,” the authors write.
“But focusing on exports from labour intensive sectors such as agriculture, forestry, fisheries and manufacturing would also improve employment in formal enterprise sector and in the regions across the country.
“Domestic production in this case should be targeted at the consumables sector.”
This would discourage the import of goods for immediate consumption, strengthen the economy and lead to more job creation.