Papua New Guinea is to become an independent nation within the next few years. This thesis is directed towards examining the present role played by domestic saving in financing economic development and after analysing this, to suggest means of mobilising additional domestic saving to permit the country greater self-reliance and enhance economic growth.
Chapter 1 examines past domestic saving performance in this country and the need for additional saving in the future. Factors affecting the mobilisation of domestic saving are also considered.
Chapter 2 examines the sources of private domestic finance, why it is needed and the means of mobilising it in general terms. The function and role of households, and institutions is considered.
Chapter 3 examines the factors affecting the level and pattern of saving, and includes comments on average and marginal propensities and elasticities to save out of per capita disposable income. Based on these findings measures to promote saving are examined and suggestions made on how domestic saving can be increased.
Chapter 4 examines the role of the public sector in mobilising saving. The use of taxation, borrowing and deficit financing is considered, and in each case suggestions made on how policies can be changed to increase overall domestic saving.
In Chapter 5 the special problems confronting Papua New Guinea are examined the suggestions made on how these problems could be overcome.
The study has an analytical approach and where possible international comparisons are drawn and the experience of other developing countries used as a bases of suggestions of means to enhance saving. The apparent inconsistency between this country's relatively poor performance by international standards as a gross domestic saver with high marginal and average propensities to save out of disposable income for the private domestic sector is examined.
The conclusion is that although private domestic saving is at a level sufficient to generate self-sustained growth if continued, improvement is possible. Such an increase would result in less reliance being placed upon the Australian Grant, and enhance economic self-sufficiency. A brief summary is made of the policy recommendations to increase domestic saving.