and Visiting Research Fellow

Many Pacific Island economies have found it difficult to achieve sustained economic growth and hence sustained improvements in living standards. But what is required to establish whether the Pacific Island economies are growth failures is a valid counterfactual. In this paper, matching methods based on the propensity score are used to find the most appropriate set of comparator countries for the Pacific Island economies. The paper also pays close attention to geography as a fundamental growth constraint facing Pacific Island countries since they are some of the most remote in the world. The results show that ignoring spatial autocorrelation, whereby economic growth rates depend on the growth rates of neighbouring countries, biases estimates of how slowly the Pacific Island economies have grown conditional on other growth determinants. The propensity score matching methods also emphasis the fragility of empirical claims about a significantly slower growth of Pacific Island economies