New Zealand economic development : a brief overview of unbalanced industry growth

Abstract

Over a very long period of time, New Zealand's structural policy has devoted a low priority to the export sector. Up till the 1960's, New Zealand seemingly got away with the strategy for the agricultural segment of the export sector at least, as a result of rapid technical change. After this, the impediments to growth became more obvious. Attempts were then made to partially offset protection for imports with more protection (assistance) for export industries (SMP's, export incentives etc.). This is technically known as tariff compensation. The general conclusions that emerge from this discussion are:

i) A clear picture of the structure, conduct and performance of major industries and policies with the notable exception of the farm sector is not available. As a result it is very difficult to design a balanced restructuring programme. It is even more difficult to convince the public that the approach being taken is worthwhile, reasonable and equitable.

ii) The inertia and vested interest in the status quo makes it most likely that the past policy cycle will repeat itself at a large cost to society as a whole and particularly to the farm sector.

iii) Regardless of the trade policy settings chosen in the future (and they are crucial) there are a wide range of policy changes required to ensure that regulation and other distortions do not compound the bias against the export sector of the economy, including agriculture. These include stabilisation and exchange rate policies marketing policy, quality assurance and information policy.