The shape of the New Zealand economy in 1980

Abstract

The purpose of this paper is to present, in broad outline, some projections for around the end of the next decade, of the shape of the New Zealand economy. By shape of the economy we mean not only the level of the main macro variables such as consumption investment, Government expenditure, exports, imports, labour force etc., but also the break up of these macro magnitudes as between the various important sectors of the economy and particularly the relative accent on traditional exporting industries based on primary production compared with new import substituting and exporting sectors such as manufacturing and tourism. The projections of the shape of the economy which we present are of course no more than reflections of assumptions adopted with respect to exogenous variables on the one hand; and of the type of model setting out the relationships between endogenous variables on the other. The projections do not purport to be anything other than the end result of using a specific set of assumptions and a specific model or set of relationships. The major virtue of such an exercise is that it forces us to concentrate our critical attention on these assumptions on this model, and this I hope is what will happen in your discussion of this paper.

Given the acceptability of the assumptions and the model, the results give some idea of what the economy could look like in 1980 or in the years round about that date. In the next section we discuss very briefly the type of projection model used and then go on to a discussion of the assumptions used especially those rating to future traditional export prices which are of critical importance. A further detailed discussion of the model used is then followed by the projections for 1980. In Section VI we give the results from varying the assumptions and we conclude by asking some questions about optimisation rather than projection. The results we give stem from a long term research programme in the Agricultural Economics Research Unit under the general heading of the Structural Development of the New Zealand Economy. This programme was accelerated for use by the Targets Committee of the National Development Conference and many of the deliberations of that Committee have been taken into account in writing the present paper. However, because the research programme has been accelerated for this purpose the results must be regarded as highly provisional at this stage.