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

_IMF Working Papers, March 1, 1995_

## Source details

**Canonical URL:** [Paradise Lost? Growth, Convergence and Migration in the South Pacific](https://www.imf.org/en/publications/wp/issues/2016/12/30/paradise-lost-growth-convergence-and-migration-in-the-south-pacific-1076)

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## Bibliographic details
- Authors: Norman Loayza, Paul Cashin
- Published: March 1, 1995
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451844603.001

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### Overview and scope
- Examines determinants of growth for nine South Pacific countries during the period 1971-93.
- Uses the analytical framework of the Solow-Swan neoclassical growth model.
- Applies Chamberlain’s II-matrix estimator to:
  - account for unobserved country-specific heterogeneity in the growth process, and
  - control for errors-in-variables bias in calculations of real per-capita GDP.
- Controls for the regional effects of net international migration.

### Key empirical findings
- The speed of convergence of South Pacific countries to their respective steady-state levels of per-capita GDP, after controlling for net international migration, is estimated at a relatively fast 4 percent per year.
- Private and official transfers emanating from regional donor countries have kept the dispersion of real per-capita national disposable income constant over the period.
- This stability in disposable income dispersion occurred despite a significant widening in the regional dispersion of real per-capita GDP.

### Methodology and data notes
- Sample: nine South Pacific countries.
- Sample period: 1971-93.
- The study employs Chamberlain’s II-matrix estimator to manage:
  - unobserved country-specific heterogeneity, and
  - errors-in-variables bias for real per-capita GDP calculations.
- Analytical framework: Solow-Swan neoclassical growth model.
- Regional factor explicitly modeled: net international migration.

### Policy-relevant implications (as presented in the paper)
- Net international migration materially affects measured convergence rates and should be controlled for in regional growth analyses.
- Private and official transfers from regional donor countries play a stabilizing role for real per-capita national disposable income across the region.

### Publication and metadata
- Authors: Norman Loayza, Paul Cashin
- Date: March 1, 1995
- Pages: 42
- Series: Working Paper No. 1995/028
- Issue: 028
- DOI: https://doi.org/10.5089/9781451844603.001
- Stock No: WPIEA0281995
- ISBN: 9781451844603
- ISSN: 1018-5941
- Subjects: Disposable income, Expenditure, Migration, National accounts, National income, Personal income, Population and demographics, Public expenditure review
- Keywords: Australia and New Zealand, Disposable income, growth rate, II-matrix estimation procedure, island economies of the South Pacific, Island economy, Migration, National income, per-capita GDP, per-capita income, Personal income, procedure consist, Public expenditure review, rate of growth, time series, WP

*International Monetary Fund — Paradise Lost? Growth, Convergence and Migration in the South Pacific (IMF Working Paper No. 1995/028).*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/paradise-lost-growth-convergence-and-migration-in-the-south-pacific-1076_