Magazine article International Trade Forum

New Zealand

Magazine article International Trade Forum

New Zealand

Article excerpt

Despite comparative advantages in growing and harvesting animals, fish, crops and trees, New Zealand faces two competitive disadvantages: its distance from major markets, and the scale of its small domestic market. Marketing and distribution costs represent major constraints to broad-based export success.

To counter these built-in disadvantages and to protect local producers from international competition, New Zealand maintained a highly regulated economy up to the mid-1980s.

A balance-of-payments and currency crisis in the mid-1980s led, however, to a major turning point in New Zealand's trade performance approach. The Government embarked on a programme to liberalize the economy to make it more competitive. Import controls were substantially reduced, industries and the labour market were deregulated and the Government's participation in many industries was sold. Costs fell, and an aggressive monetary policy ensured that inflation was almost eliminated, further helping competitiveness.

As a consequence, New Zealand became and remains one of the world's most open economies. Liberalization bred competition, which, in turn, stimulated manufacturers to develop specialist skills and products. Investment in new machinery and technology enabled New Zealand enterprises to compete successfully with larger overseas producers on short production runs requiring rapid re-tooling. This has now become one of New Zealand's major competitive advantages.

It was initially assumed that if macro-economic conditions were put right, New Zealand companies would become more competitive. This did not happen immediately, however, and it was determined that trade promotion strategies should be reviewed to ensure a quick and sustained improvement in export performance.

New Zealand's strategic approach

Create a public-private sector partnership for strategy development.

The public sector initially assumed the lead role in the strategy development and implementation process. Once defined, however, New Zealand has maintained the view that the private sector must drive the strategy.

Establish an institutional structure to facilitate the strategy

In the early stage of defining its approach, New Zealand strategists concluded that the establishment of a public sector focal point was needed to ensure a comprehensive response to the export development objective. …

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