US and Australian development cooperation is underway. What’s the best pathway to impact?
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US and Australian development cooperation is underway. What’s the best pathway to impact?

This article originally appeared in Development Intelligence Lab's online blog, The Intel.

Back in July 2020, Australia and the US signed an MOU stating intentions to continue working closely together on international development efforts. Meanwhile, the US is kicking off renewed engagement with the Pacific, and last month, USAID Administrator Samantha Power and Australian Minister for International Development Pat Conroy met.

So as state leaders of both nations pressure Canberra and Washington to get cracking on initiatives, we wanted to get to the crux of what they need to know – and that is, what’s the best pathway to real and lasting impact? To answer this, we put it to the experts from the region.

Maholopa Laveil writes: As increased development cooperation between Australia and the U.S. gets underway, it’s important to remember that where PNG has many socio-economic challenges, perhaps the most pressing is its inability to translate gains from its lucrative resource sector into development.

Under the new development cooperation, in PNG this will no doubt build on existing Australia-U.S. projects, one of which is the $1.7 billion USD ‘PNG Electrification Partnership’ between Australia, the U.S., Japan, and New Zealand, to develop PNG’s electricity sector. Although this partnership is to be lauded, the goal of increasing the share of population with access to reliable electricity from 13% at present, to 70% by 2030, will likely not be achieved.

This is part of a bigger problem of limited resource sector flows into development. When you look at the numbers, in 2019 the resource sector comprised 28% of GDP and 88% of exports.  However, as the sector is largely foreign owned and employs few Papua New Guineans (it employed 17,000 nationals in 2019), its main contribution to development is via government revenue. For all its size, the resource sector contributed only 8% of government revenue in 2019. This glaring disparity is reflected best in non-resource GDP per capita – PNG’s best measure of average living standards – growing by only 0.4% annually between 2014 and 2019.

So what else could Australia and the U.S. do under this cooperation to help PNG achieve its development priorities, and better translate resource gains? Some pathways may include:

  • Support the Connect PNG program – where government intends to work on 16,000km of road over the next 20 years.
  • Support PNG in expanding downstream processing of raw material produced in-country.
  • Support a robust 2023 census – the country’s first chance in more than 20 years to gather complete socio-demographic information.
Areas of expertise: Economics and politics in Papua New Guinea and the Pacific; trade policy; economic history