Frieda River will be one of the largest copper and gold mines in the Asia-Pacific region.

Situated in rugged country in Papua New Guinea (PNG), the $5 billion project will include a large processing plant, a power station, an airport, roads, a 200-kilometre pipeline to a new port and accommodation camps.

Frieda River is one of a dozen major resource projects (in copper, gold, nickel and petroleum) on-the-drawing-board in PNG.

These projects will greatly assist the budget and exports, improve the lives of surrounding communities and stimulate some local industries.

But how far-reaching will the benefits be?

PNG has a dual economy, comprising the modern sector, centred on resources, and the informal sector, centred on subsistence agriculture.

There is a disconnection between the two, signalled by widespread poverty: an estimated 40% of people live on under US$1 per day.

Mirroring this is a disconnection in policy, centred around foreign aid.  

PNG receives more foreign aid per capita than almost any other country.

But a 2010 Australian government review found that the model of “capacity building through advisers” is not working in PNG.

Or in the more forceful words of Professor Helen Hughes of the Australian National University, foreign aid has boosted, not the lives of villagers, but rather large-scale corruption and the privileges of “cadres of aid officials” and “non-government aid organisations with political agendas”.  

PNG needs another policy model, which will entail standing on its own feet.

Only then will the full potential of the resources boom be realised.