ABSTRACT
This chapter examines the nature and impact of major resources booms and internal policy responses in relation to growth and the sectoral composition of output, and savings behaviour of the Papua New Guinea (PNG) economy. Only major positive shocks in the form of resources booms and their consequences on the PNG economy are analysed over the study period of 1970-94. Construction of the Bougainville Copper Mine brought the first major investment boom to the PNG economy. PNG maintained a very open trade policy regime with primary reliance on market forces to promote industrialisation. In a period of rapid international inflation, the PNG government followed an exchange rate policy designed to help control imported inflation and achieved high level success in this regard as PNG's rate of inflation has been one of the lowest in the world in 1975. The PNG government's undisciplined fiscal policy was a major issue of concern during 1990-94.
