Economy of New Zealand
Encyclopedia
New Zealand has a market economy
which is greatly dependent on international trade, mainly with Australia, the European Union
, the United States, China, and Japan. It has only small manufacturing and high-tech sectors, being strongly focused on tourism and primary industries like agriculture. Economic free-market reforms of the last decades have removed many barriers to foreign investment, and the World Bank
in 2005 praised New Zealand as being the most business-friendly country in the world, before Singapore
.
Traditionally, New Zealand's economy was built upon on a narrow range of primary products, such as wool, meat and dairy products. As an example, from approximately 1920 to the late 1930s, the dairy export quota was usually around 35% of the total exports, and in some years made up almost 45% of all New Zealand's exports. Due to the high demand for these primary products – such as the New Zealand wool boom
of 1951 – New Zealand enjoyed high standards of living. However, commodity prices for these exports declined, and New Zealand lost its preferential trading position with the United Kingdom in 1973, due to the latter joining the European Economic Community
. Partly as a result, from 1970 to 1990, the relative New Zealand purchasing power adjusted GDP per capita declined from about 115% of the OECD average to 80%.
New Zealand's economy has traditionally been based on a foundation of exports from its very efficient agricultural system. Leading agricultural exports include meat, dairy products, forest products, fruit and vegetables, fish, and wool. New Zealand was a direct beneficiary of many of the reforms achieved under the Uruguay Round of trade negotiations, with agriculture in general and the dairy sector in particular enjoying many new trade opportunities in the long term. The country has substantial hydroelectric power and sizeable reserves of natural gas, much of which is exploited due primarily to major Keynesian import substitution-oriented industrial projects
(See Think Big
). Leading manufacturing sectors are food processing, metal fabrication, and wood and paper products. Some manufacturing industries, many of which had only been established in a climate of import substitution with high tariffs and subsidies, such as car assembly, have completely disappeared, and manufacturing's importance in the economy is in a general decline.
of the total GDP, which is small compared to many developed nations. However, between 1984 and 2006, net foreign debt increased 11-fold, to NZ$182 billion, NZ$45,000 for each person. The combination of a modest public debt and a large net foreign debt reflects that most of the net foreign debt is held by the private sector. At 31 December 2010, net foreign debt was NZ$253 billion, or 132% of GDP. At 31 March 2011, net international debt was $148.2 billion.
New Zealand's persistent current account deficits have two main causes. The first is that earnings from agricultural exports and tourism have failed to cover the imports of advanced manufactured goods and other imports (such as imported fuels) required to sustain the New Zealand economy. Secondly, there has been an investment income imbalance or net outflow for debt-servicing of external loans. The proportion of the current account deficit that is attributable to the investment income imbalance (a net outflow to the Australian-owned banking sector) grew from one third in 1997 to roughly 70% in 2008.
and later the First Labour Government
introduced both social security systems with for the time very wide-ranging scope (from state pensions to unemployment benefits and free education and health care), while also regulating industry, mandating trade unionism and industrial arbitration
. Imports were also heavily regulated. While called 'welfare statism
' by some, it was accepted that until at least the 1950s, both main parties (Labour and National) generally supported this trend, even though critics pointed to negative effects on the general economy and argued that increasing emigration could be blamed to a large degree on these policies.
By the 1960s, the New Zealand economy's terms of trade began to decline. This was largely due to the decline in export receipts from the United Kingdom, which in 1955 took 65.3 percent of New Zealand's exports. By the year ended June 1973, during which Britain formally entered the European Economic Community, this had fallen to 26.8 percent. By the year ended June 1990 its share had fallen to 7.2 percent and in the year ended June 2000 its share was 6.2 percent.
To a substantial degree, the economic restrictions remained in place or were even sometimes extended in the early second half of the 20th century. However, reforms in the 1980s and early 1990s were then to turn this situation into its opposite.
and has led to considerably higher rates of unemployment than were standard in New Zealand in earlier decades.
Deregulation created a very business-friendly regulatory framework. A 2008 study and survey ranked it 99.9% in "Business freedom", and 80% overall in "Economic freedom", noting amongst other things that it only takes 12 days to establish a business in New Zealand on average, compared with a worldwide average of 43 days. Other indicators measured were property rights, labour market conditions, government controls and corruption, the last being considered "next to non-existent" in the Heritage Foundation
and Wall Street Journal study.
In its 'Doing Business 2008' survey, the World Bank (which in that year rated New Zealand as the second-most business-friendly country worldwide), ranked New Zealand 13th out of 178 in the business-friendliness of its hiring laws.
The 1990s liberalisations also had a number of significant negative effects for New Zealand. One of them was the leaky homes crisis
, where the liberalisation of building standards (in the expectation that market forces would assure quality) led to many thousands of severely deficient buildings (mostly residential homes and apartments) being constructed over a period of a decade. The costs of fixing the damage has been estimated at over NZ$11 billion.
Although New Zealand enjoyed low unemployment rates in the years immediately prior to the financial crisis beginning in 2007, subsequent unemployment rose and according to Statistics New Zealand
"In seasonally adjusted terms", New Zealand’s unemployment rate stood at 6.8% percent during the December 2010 quarter".
New Zealand's large current account deficit, which stood at more than 6.5% of GDP in 2000, has been a constant source of concern for New Zealand policymakers and hit 9% as of March 2006. The rebound in the export sector is expected to help narrow the deficit to lower levels, especially due to decreases in the exchange rate of the New Zealand dollar during 2008.
" (CER), which allows for free trade in goods and most services. Since 1990, CER has created a single market of more than 25 million people, and this has provided new opportunities for New Zealand exporters. Australia is now the destination of 19% of New Zealand's exports, compared to 14% in 1983. Both sides also have agreed to consider extending CER to product standardisation and taxation policy. New Zealand initiated a free trade agreement with Singapore in September 2000 which was extended in 2005 to include Chile and Brunei and is now known as the P4 agreement
. New Zealand is seeking other bilateral/regional trade agreements in the Pacific area.
U.S. goods and services have been competitive in New Zealand, though the then-strong U.S. dollar created challenges for U.S. exporters in 2001. The market-led economy offers many opportunities for U.S. exporters and investors. Investment opportunities exist in chemicals, food preparation, finance, tourism, and forest products, as well as in franchising. The best sales prospects are for medical equipment, information technology, and consumer goods. On the agricultural side, the best prospects are for fresh fruit, snack foods, specialised grocery items (e.g. organic foods), and soybean
meal. A number of U.S. companies have subsidiary branches in New Zealand. Many operate through local agents, with some joint venture associations. The American Chamber of Commerce is active in New Zealand, with its main office in Auckland and a branch committee in Wellington.
However, as of the 2010s, China
is now New Zealand's second-largest trading partner, behind Australia. On 17 June 2010, Xi Jinping
, China's vice-president, travelled to Auckland
, New Zealand for a three-day visit, along with more than 100 senior business leaders.
New Zealand welcomes and encourages foreign investment without discrimination. The Overseas Investment Commission (OIC) must however give consent to foreign investments that would control 25% or more of businesses or property worth more than NZ$50 million. Restrictions and approval requirements also apply to certain investments in land and in the commercial fishing industry. In practice, OIC approval requirements have not hindered investment. OIC consent is based on a national interest determination, but no performance requirements are attached to foreign direct investment
after consent is given. Full remittance of profits and capital is permitted through normal banking channels.
This free investment by foreign capital has also been criticised. Groups like Campaign Against Foreign Control of Aotearoa
(CAFCA) consider that New Zealand's economy is substantially overseas-owned, noting that direct ownership of New Zealand companies by foreign parties increased from $9.7 billion in 1989 to $83 billion in 2007 (an over 700% increase), while 41% of the New Zealand sharemarket valuation is now overseas-owned, compared to 19% in 1989. Around 7% of all New Zealand agriculturally productive land is also foreign-owned. CAFCA considers that the effect of such takeovers has generally been negative in terms of jobs and wages.
In the middle 2000s, the national unemployment rate stood at 3.4% (December 2007), its historically lowest level since the current method of surveying began in 1986. This gave the country the 5th-best ranking in the OECD (with an OECD average at the time of 5.5%). The low numbers correlated with a robust economy and a large backlog of job positions at all levels.. Its worth noting, however, that unemployment numbers are not always directly comparable between OECD nations, as they do not all measure voluntary and involuntary separation from the labour market in the same way.
The percentage of the population employed also increased in recent years, to 68.8% of all inhabitants, with full-time jobs increasing slightly, and part-time occupations decreasing in turn. The increase in the working population percentage is attributed to increasing wages and higher costs of living moving more people into employment. The low unemployment also had some disadvantages, with many companies unable to fill jobs.
In the late 2000s, mainly as a result of the global financial crisis, unemployment numbers rose to a 10-year high of 6% in mid-2009, with the job losses being especially hard amongst women. Seasonally adjusted employment levels fell 0.4 per cent to 2.17 million people, while the number of unemployed rose to 138,000 people.
There is an ongoing political debate between left-leaning and right-leaning political parties as to whether further lowering taxes is appropriate. One of the most contentious questions is whether to adjust the relative tax burden of the highest-income earners.
Industrial Production Growth Rate: 5.9% (2004) / 1.5% (2007)
Household income or consumption by percentage share:
Agriculture – Products: wheat, barley, potatoes, pulses, fruits, vegetables; wool, beef, dairy products; fish
Exports – commodities: dairy products, meat, wood and wood products, fish, machinery
Imports – commodities: machinery and equipment, vehicles and aircraft, petroleum, electronics, textiles, plastics
Electricity:
Electricity – Production by source:
Oil:
Exchange rates:
New Zealand Dollars (NZ$) per US$1 – 1.3869 (2005), 1.5248 (2004), 1.9071 (2003), 2.1622 (2002), 2.3788 (2001), 2.2012 (2000), 1.8886 (1999), 1.8632 (1998), 1.5083 (1997), 1.4543 (1996), 1.5235 (1995)
Market economy
A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...
which is greatly dependent on international trade, mainly with Australia, the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, the United States, China, and Japan. It has only small manufacturing and high-tech sectors, being strongly focused on tourism and primary industries like agriculture. Economic free-market reforms of the last decades have removed many barriers to foreign investment, and the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
in 2005 praised New Zealand as being the most business-friendly country in the world, before Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
.
Profile
| Year | Gross Domestic Product (NZ$ millions) |
1 US dollar exchange | Inflation index (2000=100) |
Per capita income (as % of USA) |
|---|---|---|---|---|
| 1980 | 22,976 | NZD 1.02 | 30 | 58.67 |
| 1985 | 45,003 | NZD 2.00 | 53 | 38.93 |
| 1990 | 73,745 | NZD 1.67 | 84 | 55.80 |
| 1995 | 91,881 | NZD 1.52 | 93 | 59.02 |
| 2000 | 114,563 | NZD 2.18 | 100 | 38.98 |
| 2005 | 154,108 | NZD 1.41 | 113 | 62.99 |
Traditionally, New Zealand's economy was built upon on a narrow range of primary products, such as wool, meat and dairy products. As an example, from approximately 1920 to the late 1930s, the dairy export quota was usually around 35% of the total exports, and in some years made up almost 45% of all New Zealand's exports. Due to the high demand for these primary products – such as the New Zealand wool boom
New Zealand wool boom
The New Zealand Wool Boom of 1951 was one of the greatest economic booms in the history of New Zealand, and the direct result of US policy in the 1950–53 Korean War....
of 1951 – New Zealand enjoyed high standards of living. However, commodity prices for these exports declined, and New Zealand lost its preferential trading position with the United Kingdom in 1973, due to the latter joining the European Economic Community
European Economic Community
The European Economic Community The European Economic Community (EEC) The European Economic Community (EEC) (also known as the Common Market in the English-speaking world, renamed the European Community (EC) in 1993The information in this article primarily covers the EEC's time as an independent...
. Partly as a result, from 1970 to 1990, the relative New Zealand purchasing power adjusted GDP per capita declined from about 115% of the OECD average to 80%.
Liberalisation
Since 1984, the government of New Zealand has undertaken major economic restructuring, moving an agrarian economy dependent on concessionary British market access toward a more industrialised, free market economy that can compete globally. This growth has boosted real incomes, broadened and deepened the technological capabilities of the industrial sector, and contained inflationary pressures. Inflation remains among the lowest in the industrial world. Per capita GDP has been moving up towards the levels of the big West European economies since the trough in 1990, but the gap remains significant. New Zealand's heavy dependence on trade leaves its growth prospects vulnerable to economic performance in Asia, Europe, and the United States.New Zealand's economy has traditionally been based on a foundation of exports from its very efficient agricultural system. Leading agricultural exports include meat, dairy products, forest products, fruit and vegetables, fish, and wool. New Zealand was a direct beneficiary of many of the reforms achieved under the Uruguay Round of trade negotiations, with agriculture in general and the dairy sector in particular enjoying many new trade opportunities in the long term. The country has substantial hydroelectric power and sizeable reserves of natural gas, much of which is exploited due primarily to major Keynesian import substitution-oriented industrial projects
Heavy industry
Heavy industry does not have a single fixed meaning as compared to light industry. It can mean production of products which are either heavy in weight or in the processes leading to their production. In general, it is a popular term used within the name of many Japanese and Korean firms, meaning...
(See Think Big
Think Big
The New Zealand Prime Minister Robert Muldoon and his New Zealand National Party government in the early 1980s sponsored Think Big as an interventionist state economic strategy. The Think Big schemes saw the government borrow heavily overseas, running up a large external deficit, and using the...
). Leading manufacturing sectors are food processing, metal fabrication, and wood and paper products. Some manufacturing industries, many of which had only been established in a climate of import substitution with high tariffs and subsidies, such as car assembly, have completely disappeared, and manufacturing's importance in the economy is in a general decline.
Outlook and challenges
The New Zealand economy has recently been perceived as successful. However, the generally positive outlook includes some challenges. New Zealand income levels, which used to be above much of Western Europe prior to the deep crisis of the 1970s, have never recovered in relative terms. The New Zealand GDP per capita is for instance less than that of Spain and about 60% that of the United States. Income inequality has increased greatly, implying that significant portions of the population have quite modest incomes. Further, New Zealand has a very large current account deficit of 8–9% of GDP. However, despite this, its public debt stands at only 21.2% (2006 est.)of the total GDP, which is small compared to many developed nations. However, between 1984 and 2006, net foreign debt increased 11-fold, to NZ$182 billion, NZ$45,000 for each person. The combination of a modest public debt and a large net foreign debt reflects that most of the net foreign debt is held by the private sector. At 31 December 2010, net foreign debt was NZ$253 billion, or 132% of GDP. At 31 March 2011, net international debt was $148.2 billion.
New Zealand's persistent current account deficits have two main causes. The first is that earnings from agricultural exports and tourism have failed to cover the imports of advanced manufactured goods and other imports (such as imported fuels) required to sustain the New Zealand economy. Secondly, there has been an investment income imbalance or net outflow for debt-servicing of external loans. The proportion of the current account deficit that is attributable to the investment income imbalance (a net outflow to the Australian-owned banking sector) grew from one third in 1997 to roughly 70% in 2008.
1900s–1970s – Regulation and welfare state
Historically, New Zealand had a highly protected, regulated and subsidised economy. This stemmed at least partly from trends started in the first half of the 20th century, when the First Liberal GovernmentFirst Liberal Government of New Zealand
The First Liberal Government of New Zealand was the first responsible government in New Zealand politics organised along party lines. The Government formed following the founding of the Liberal Party and took office on the 24 January 1891, and governed New Zealand for over 21 years until 10 July...
and later the First Labour Government
First Labour Government of New Zealand
The First Labour Government of New Zealand was the government of New Zealand from 1935 to 1949. It set the tone of New Zealand's economic and welfare policies until the 1980s, establishing a welfare state, a system of Keynesian economic management, and high levels of state intervention...
introduced both social security systems with for the time very wide-ranging scope (from state pensions to unemployment benefits and free education and health care), while also regulating industry, mandating trade unionism and industrial arbitration
Arbitration
Arbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
. Imports were also heavily regulated. While called 'welfare statism
Statism
Statism is a term usually describing a political philosophy, whether of the right or the left, that emphasises the role of the state in politics or supports the use of the state to achieve economic, military or social goals...
' by some, it was accepted that until at least the 1950s, both main parties (Labour and National) generally supported this trend, even though critics pointed to negative effects on the general economy and argued that increasing emigration could be blamed to a large degree on these policies.
By the 1960s, the New Zealand economy's terms of trade began to decline. This was largely due to the decline in export receipts from the United Kingdom, which in 1955 took 65.3 percent of New Zealand's exports. By the year ended June 1973, during which Britain formally entered the European Economic Community, this had fallen to 26.8 percent. By the year ended June 1990 its share had fallen to 7.2 percent and in the year ended June 2000 its share was 6.2 percent.
To a substantial degree, the economic restrictions remained in place or were even sometimes extended in the early second half of the 20th century. However, reforms in the 1980s and early 1990s were then to turn this situation into its opposite.
1980s–1990s – Reform and liberalisation
Since 1984, government subsidies including those for agriculture have been eliminated; import regulations have been liberalised; exchange rates have been freely floated; controls on interest rates, wages, and prices have been removed; and marginal rates of taxation reduced. Tight monetary policy and major efforts to reduce the government budget deficit brought the inflation rate down from an annual rate of more than 18% in 1987. The deregulation of government-owned enterprises in the 1980s and 1990s reduced government's role in the economy and permitted the retirement of some public debt, but simultaneously massively increased the necessity for greater welfare spendingWelfare state
A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those...
and has led to considerably higher rates of unemployment than were standard in New Zealand in earlier decades.
Deregulation created a very business-friendly regulatory framework. A 2008 study and survey ranked it 99.9% in "Business freedom", and 80% overall in "Economic freedom", noting amongst other things that it only takes 12 days to establish a business in New Zealand on average, compared with a worldwide average of 43 days. Other indicators measured were property rights, labour market conditions, government controls and corruption, the last being considered "next to non-existent" in the Heritage Foundation
Heritage Foundation
The Heritage Foundation is a conservative American think tank based in Washington, D.C. Heritage's stated mission is to "formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong...
and Wall Street Journal study.
In its 'Doing Business 2008' survey, the World Bank (which in that year rated New Zealand as the second-most business-friendly country worldwide), ranked New Zealand 13th out of 178 in the business-friendliness of its hiring laws.
The 1990s liberalisations also had a number of significant negative effects for New Zealand. One of them was the leaky homes crisis
Leaky homes crisis
The leaky homes crisis is an ongoing construction and legal crisis in New Zealand, in which many thousands of newly constructed houses and apartment buildings built in the 1990s and early 2000s suffered from severe weathertightness problems...
, where the liberalisation of building standards (in the expectation that market forces would assure quality) led to many thousands of severely deficient buildings (mostly residential homes and apartments) being constructed over a period of a decade. The costs of fixing the damage has been estimated at over NZ$11 billion.
2000s – Recent trends
Economic growth, which had slowed in 1997 and 1998 due to the negative effects of the Asian financial crisis and two successive years of drought, rebounded in 1999. A low New Zealand dollar, favourable weather, and high commodity prices boosted exports, and the economy is estimated to have grown by 2.5% in 2000. Growth resumed at a higher level from 2001 onwards due primarily to the lower value of the New Zealand dollar which made exports more competitive. The return of substantial economic growth led the unemployment rate to drop from 7.8% in 1999 to 3.4% in late 2005, the lowest rate in nearly 20 years.Although New Zealand enjoyed low unemployment rates in the years immediately prior to the financial crisis beginning in 2007, subsequent unemployment rose and according to Statistics New Zealand
Statistics New Zealand
Statistics New Zealand is the national statistical office of New Zealand.-Organisation:New Zealand's Minister of Statistics is Maurice Williamson who serves as a member of the New Zealand House of Representatives and holds several other posts within government...
"In seasonally adjusted terms", New Zealand’s unemployment rate stood at 6.8% percent during the December 2010 quarter".
New Zealand's large current account deficit, which stood at more than 6.5% of GDP in 2000, has been a constant source of concern for New Zealand policymakers and hit 9% as of March 2006. The rebound in the export sector is expected to help narrow the deficit to lower levels, especially due to decreases in the exchange rate of the New Zealand dollar during 2008.
Foreign business relations
New Zealand's economy has been helped by strong economic relations with Australia. Australia and New Zealand are partners in "Closer Economic RelationsCloser Economic Relations
Closer Economic Relations is a free trade agreement between the governments of New Zealand and Australia. It is also known as the Australia New Zealand Closer Economic Relations Trade Agreement and sometimes shortened to...
" (CER), which allows for free trade in goods and most services. Since 1990, CER has created a single market of more than 25 million people, and this has provided new opportunities for New Zealand exporters. Australia is now the destination of 19% of New Zealand's exports, compared to 14% in 1983. Both sides also have agreed to consider extending CER to product standardisation and taxation policy. New Zealand initiated a free trade agreement with Singapore in September 2000 which was extended in 2005 to include Chile and Brunei and is now known as the P4 agreement
Trans-Pacific Strategic Economic Partnership
The Trans-Pacific Partnership , also known as the Trans-Pacific Strategic Economic Partnership Agreement, is a multilateral free trade agreement that aims to further liberalise the economies of the Asia-Pacific region; specifically, Article 1.1.3 notes: “The Parties seek to support the wider...
. New Zealand is seeking other bilateral/regional trade agreements in the Pacific area.
U.S. goods and services have been competitive in New Zealand, though the then-strong U.S. dollar created challenges for U.S. exporters in 2001. The market-led economy offers many opportunities for U.S. exporters and investors. Investment opportunities exist in chemicals, food preparation, finance, tourism, and forest products, as well as in franchising. The best sales prospects are for medical equipment, information technology, and consumer goods. On the agricultural side, the best prospects are for fresh fruit, snack foods, specialised grocery items (e.g. organic foods), and soybean
Soybean
The soybean or soya bean is a species of legume native to East Asia, widely grown for its edible bean which has numerous uses...
meal. A number of U.S. companies have subsidiary branches in New Zealand. Many operate through local agents, with some joint venture associations. The American Chamber of Commerce is active in New Zealand, with its main office in Auckland and a branch committee in Wellington.
However, as of the 2010s, China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
is now New Zealand's second-largest trading partner, behind Australia. On 17 June 2010, Xi Jinping
Xi Jinping
Xi Jinping is a high ranking politician of the People's Republic of China. He currently serves as the top-ranking member of the Secretariat of the Communist Party of China, the country's Vice President, Vice-Chairman of the Central Military Commission, President of the Central Party School and the...
, China's vice-president, travelled to Auckland
Auckland
The Auckland metropolitan area , in the North Island of New Zealand, is the largest and most populous urban area in the country with residents, percent of the country's population. Auckland also has the largest Polynesian population of any city in the world...
, New Zealand for a three-day visit, along with more than 100 senior business leaders.
New Zealand welcomes and encourages foreign investment without discrimination. The Overseas Investment Commission (OIC) must however give consent to foreign investments that would control 25% or more of businesses or property worth more than NZ$50 million. Restrictions and approval requirements also apply to certain investments in land and in the commercial fishing industry. In practice, OIC approval requirements have not hindered investment. OIC consent is based on a national interest determination, but no performance requirements are attached to foreign direct investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...
after consent is given. Full remittance of profits and capital is permitted through normal banking channels.
This free investment by foreign capital has also been criticised. Groups like Campaign Against Foreign Control of Aotearoa
Campaign Against Foreign Control of Aotearoa
The Campaign Against Foreign Control of Aotearoa is a research and lobbying organisation combatting what it considers the sell-out of New Zealand companies and assets to overseas interests.-Economic criticism:...
(CAFCA) consider that New Zealand's economy is substantially overseas-owned, noting that direct ownership of New Zealand companies by foreign parties increased from $9.7 billion in 1989 to $83 billion in 2007 (an over 700% increase), while 41% of the New Zealand sharemarket valuation is now overseas-owned, compared to 19% in 1989. Around 7% of all New Zealand agriculturally productive land is also foreign-owned. CAFCA considers that the effect of such takeovers has generally been negative in terms of jobs and wages.
Unemployment
Prior to the economic shocks which occurred upon Britain's joining the EEC in the 1970s and closing as a primary New Zealand export market, measured unemployment in New Zealand was very low. In 1959 and 1960, for example, the country was officially at full employment. One Labour party representative recently joked in a speech that the Prime Minister of the day knew the name of every unemployed person.In the middle 2000s, the national unemployment rate stood at 3.4% (December 2007), its historically lowest level since the current method of surveying began in 1986. This gave the country the 5th-best ranking in the OECD (with an OECD average at the time of 5.5%). The low numbers correlated with a robust economy and a large backlog of job positions at all levels.. Its worth noting, however, that unemployment numbers are not always directly comparable between OECD nations, as they do not all measure voluntary and involuntary separation from the labour market in the same way.
The percentage of the population employed also increased in recent years, to 68.8% of all inhabitants, with full-time jobs increasing slightly, and part-time occupations decreasing in turn. The increase in the working population percentage is attributed to increasing wages and higher costs of living moving more people into employment. The low unemployment also had some disadvantages, with many companies unable to fill jobs.
In the late 2000s, mainly as a result of the global financial crisis, unemployment numbers rose to a 10-year high of 6% in mid-2009, with the job losses being especially hard amongst women. Seasonally adjusted employment levels fell 0.4 per cent to 2.17 million people, while the number of unemployed rose to 138,000 people.
Taxation
As of 2010, New Zealand had the second-lowest personal tax burden in the OECD, once all compulsory effects (such as superannuation and other mandatory deductions) were included in the tax-take. Only Mexico's citizens had a higher percentage-wise "take home" proportion of their salaries.There is an ongoing political debate between left-leaning and right-leaning political parties as to whether further lowering taxes is appropriate. One of the most contentious questions is whether to adjust the relative tax burden of the highest-income earners.
Corruption Perceptions Index
New Zealand is the lowest ranked (i.e. least corrupt) country on the Transparency International Corruption Perceptions Index (CPI) of 2009.Other indicators
Household income or consumption by percentage share:
- Lowest 10%: 0.3% (1991)
- Highest 10%: 29.8% (1991)
Agriculture – Products: wheat, barley, potatoes, pulses, fruits, vegetables; wool, beef, dairy products; fish
Exports – commodities: dairy products, meat, wood and wood products, fish, machinery
Imports – commodities: machinery and equipment, vehicles and aircraft, petroleum, electronics, textiles, plastics
Electricity:
- Electricity – consumption: 34.88 TWhTWHTWH or twh could refer to:*Tennessee Walking Horse, a breed of horse* Toronto Western Hospital, a hospital in Toronto, Canada* TWH Bus & Coach, a bus company in Romford, England* Terrawatt-hour, measure of electrical energy, 1012 watt-hours...
(2001) / 37.39 TWhTWHTWH or twh could refer to:*Tennessee Walking Horse, a breed of horse* Toronto Western Hospital, a hospital in Toronto, Canada* TWH Bus & Coach, a bus company in Romford, England* Terrawatt-hour, measure of electrical energy, 1012 watt-hours...
(2006) - Electricity – production: 38.39 TWhTWHTWH or twh could refer to:*Tennessee Walking Horse, a breed of horse* Toronto Western Hospital, a hospital in Toronto, Canada* TWH Bus & Coach, a bus company in Romford, England* Terrawatt-hour, measure of electrical energy, 1012 watt-hours...
(2004) / 42.06 TWhTWHTWH or twh could refer to:*Tennessee Walking Horse, a breed of horse* Toronto Western Hospital, a hospital in Toronto, Canada* TWH Bus & Coach, a bus company in Romford, England* Terrawatt-hour, measure of electrical energy, 1012 watt-hours...
(2006) - Electricity – exports: 0 kWh (2006)
- Electricity – imports: 0 kWh (2006)
Electricity – Production by source:
- Hydro: 55.6% (2010)
- Geothermal: 9,9% (2010)
- Wind: 2,9% (2010)
- Fossil Fuel: 28.2% (2010)
- Nuclear: 0% (2010)
- Other: 3.4% (2010)
Oil:
- Oil – production: 42160 barrels (6,702.9 m³) 2001 / 25880 barrels (4,114.6 m³) 2006
- Oil – consumption: 132700 barrels (21,097.6 m³) 2001 / 156000 barrels (24,802 m³) 2006
- Oil – exports: 30220 barrels (4,804.6 m³) 2001 / 15720 barrels (2,499.3 m³) 2004
- Oil – imports: 119700 barrels (19,030.8 m³) 2001 / 140900 barrels (22,401.3 m³) 2004
- Oil – proven reserves: 89.62 Moilbbl January 2002
Exchange rates:
New Zealand Dollars (NZ$) per US$1 – 1.3869 (2005), 1.5248 (2004), 1.9071 (2003), 2.1622 (2002), 2.3788 (2001), 2.2012 (2000), 1.8886 (1999), 1.8632 (1998), 1.5083 (1997), 1.4543 (1996), 1.5235 (1995)
See also
- Agriculture in New ZealandAgriculture in New ZealandAgriculture in New Zealand is the largest sector of the tradeable economy, contributing about two-thirds of exported goods in 2006-7. For the year ended March 2002, agricultural exports were valued at over $14.8 billion...
- Communications in New ZealandCommunications in New ZealandCommunications in New Zealand are fairly typical for an industrialised nation.- Telephones :*Country calling code: 64** The same code is also used to reach Scott Base in Antarctica and the United States base McMurdo Station nearby....
- Energy in New ZealandEnergy in New ZealandDespite a comparatively small population and abundant natural resources, New Zealand is a net importer of energy, in the form of oil products. Approximately 35% of primary energy is from renewable sources. Energy consumption is 4.53 TOE per capita, just less than the OECD average of 4.67...
- Transport in New ZealandTransport in New ZealandTransport in New Zealand, with its mountainous topography and a relatively small population mostly located near its long coastline, has always faced many challenges. Before Europeans arrived, Māori either walked or used watercraft on rivers or along the coasts...
- Reserve Bank of New ZealandReserve Bank of New ZealandThe Reserve Bank of New Zealand is the central bank of New Zealand and is constituted under the Reserve Bank of New Zealand Act 1989. The Governor of the Reserve Bank is responsible for New Zealand's currency and operating monetary policy. The Bank's current Governor is Dr. Alan Bollard...
- New Zealand Electricity MarketNew Zealand Electricity MarketNew Zealand's electricity market is regulated by the Electricity Industry Participation Code administered by the Electricity Authority . The Authority was established in November 2010 to replace the Electricity Commission and its publication explains how the market works.- Overview :Until 1987,...
- Economy of OceaniaEconomy of OceaniaThe economy of Oceania comprises more than 14 separate countries and their associated economies.On a total scale the region has approximately 34,700,201 inhabitants who are spread among 30,000 islands in the South Pacific bordered between Asia and the Americas...
- Ministry of Economic Development (New Zealand)
Further reading
- Harcourt, T. (2005). Closer Economic Relations. Australian Trade Commission Website