Structural Policies to Overcome Geographic Barriers and Create Prosperity in New Zealand

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Structural Policies to Overcome Geographic Barriers and Create Prosperity in New Zealand

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Yvan Guillemette

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Yvan Guillemette

Abstract

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).

Les politiques structurelles requises pour surmonter les obstacles géographiques et promouvoir la prospérité en Nouvelle-Zélande
Les niveaux de vie en Nouvelle-Zélande restent bien inférieurs à la moyenne de l’OCDE. Cet écart est entièrement attribuable à une croissance durablement faible de la productivité du travail, qui s’explique pour sa part par la géographie économique ainsi que par des facteurs liés à la politique structurelle. La petite taille et l’éloignement de l’économie limitent son accès aux marchés mondiaux ainsi que l’échelle et l’efficacité des entreprises intérieures, et influent sur le degré de concurrence et la situation par rapport à la frontière technologique mondiale. Il faut, dans ces conditions, élaborer des politiques qui représentent un avantage pour la Nouvelle-Zélande, c’est à dire un ensemble de politiques structurelles suffisamment attrayantes pour surmonter le handicap géographique et attirer dans le pays les moteurs de la prospérité – investissements, compétences et idées. Les réformes des années 80 et 90 ont largement préparé le terrain à la mise en oeuvre de telles politiques et à un redressement de la croissance de la productivité dans les années à venir. Ces dernières années, cependant, les autorités ont grignoté une partie des progrès réalisés durant la période de réformes, notamment en introduisant de nombreuses réglementations, souvent mal conçues. Les politiques devraient être recentrées autour de l’objectif de productivité dans plusieurs domaines, à commencer par ceux couverts dans la présente étude, à savoir le commerce international, les conditions de l’investissement national et étranger, l’efficacité du secteur public, l’infrastructure, l’innovation et la gestion des ressources naturelles. Le système d’échange de droits d’émissions, qui a récemment fait l’objet d’un texte de loi, est aussi examiné ici dans l’optique de la productivité. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Nouvelle-Zélande 2009 (www.oecd.org/eco/etudes/nz).

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Paper provided by OECD, Economics Department in its series OECD Economics Department Working Papers with number 696.

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Date of creation: 30 Apr 2009
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Handle: RePEc:oec:ecoaaa:696-en

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Find related papers by JEL classification:
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy
O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
O56 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Oceania

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-05-16 (All new papers)
NEP-REG-2009-05-16 (Regulation)

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