Future options for the New Zealand economy: Model, data and futures

Abstract

The New Zealand Government (2011, p. 3) is seeking “an effective, efficient, safe, secure, accessible and resilient transport system that supports the growth of our country‟s economy, in order to deliver greater prosperity, security and opportunities for all New Zealanders”. Consistent with that objective, the Ministry of Transport commissioned the Agribusiness and Economics Research Unit (AERU) at Lincoln University to review the economics literature on approaches to economic development (see Dalziel and Saunders, 2014) and to model plausible futures for New Zealand‟s economic development. This report describes the modelling work that was completed by the AERU. The authors of this report developed what has been termed the Future Options for the New Zealand Economy (FONZE) model. FONZE begins with a baseline analysis of the industry and regional economic structure between 2007 and 2042 that might emerge under certain assumptions drawn from Statistics New Zealand and from the Treasury. It then assesses the impacts on those structures of seven different futures. There is no attempt to prepare a transport demand model; rather the intention is to identify options that should not be closed off without thought. The approach taken in the modelling builds on the review in Dalziel and Saunders (2014) by being based on the neoclassical (Swan-Solow) growth model that identifies economic growth as the result of two factors: population growth and labour productivity growth. The baseline uses Statistics New Zealand projections for regional population growth and Treasury projections for labour productivity growth. The seven futures are then generated by varying some of the assumptions in the baseline analysis.