OECD Economics Department Working Papers
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
Structural Policies to Overcome Geographic Barriers and Create Prosperity in New Zealand
New Zealand’s living standards remain well below the OECD average. This is entirely attributable to persistently low labour productivity, which in turn is related to economic geography as well as structural policy factors. The small size and remoteness of the economy diminish its access to world markets, the scale and efficiency of domestic businesses, the level of competition and proximity to the world’s technology frontier. This points to the need for a “New Zealand policy advantage”, that is, a set of structural policies attractive and welcoming enough to overcome the geographic handicap and attract the drivers of prosperity – investment, skills and ideas – to New Zealand. The reforms of the 1980s and 1990s laid much of the groundwork for creating this advantage and for a pick-up in productivity growth. But in recent years, New Zealand has lost ground relative to its OECD peers. The reform focus shifted away from growth and the government introduced much often poor quality regulation. Policies should be refocused around the productivity goal in a number of areas, beginning with those covered in this paper, namely international trade, the business climate for domestic and foreign investment, public sector efficiency, infrastructure, innovation and natural resources management. This paper also evaluates the recently legislated emissions trading scheme through a productivity lens. This Working Paper relates to the 2009 OECD Economic Survey of New Zealand (www.oecd.org/eco/surveys/nz).
Keywords: economic geography, infrastructure, taxation, investment, foreign investment, regulation, emissions trading scheme, innovation, living standards, productivity growth, regulatory, ETS, productivity, natural resources, water, standard of living
JEL:
O38: Economic Development, Innovation, Technological Change, and Growth / Innovation; Research and Development; Technological Change; Intellectual Property Rights / Technological Change: Government Policy;
O16: Economic Development, Innovation, Technological Change, and Growth / Economic Development / Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance;
O24: Economic Development, Innovation, Technological Change, and Growth / Development Planning and Policy / Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy;
O56: Economic Development, Innovation, Technological Change, and Growth / Economywide Country Studies / Economywide Country Studies: Oceania;
O43: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Institutions and Growth
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