Summary
The primary sector has performed well in the past…
The growth of New Zealand’s primary sector has been strong relative to the whole economy over the last 25 years. This strong growth is driven largely by the performance of agriculture, and reflects natural comparative advantage, sustained productivity increases, favourable terms of trade, the development and application of new technology, exploitation of economies of scale, and the benefits of increasingly stable macroeconomic settings, high quality institutions and clear price signals.
…and is well placed to meet future challenges…
Looking to the future, the primary sector has a generally positive growth outlook. Some of the key factors that will influence the sector’s future performance include international trade conditions, environmental constraints (in particular water and climate change), property rights, biosecurity threats and human capital issues.
…though there is still a role for government to play.
The future performance of the primary sector will largely be determined by the response of the individuals and firms in the sector to the external environment in which they operate. That said, the government can provide an underpinning for growth by providing a business-friendly environment (through, for instance, strong institutions, clearly defined property rights, clear price signals and low levels of regulation), by continuing to promote freer international trade, and by managing environmental impacts carefully.
