New Zealand Economic Growth: An Analysis of Performance and Policy

Published 22 April 2004

This paper is one of a series of ongoing contributions to the development of Treasury's understanding of New Zealand economic growth and the development of policy advice on economic growth. It was prepared in response to Treasury Senior Management Group (SMG) commissioning a synthesis of Treasury's work on New Zealand's economic growth performance and the policy issues that are raised by that analysis.

The paper provides a review of Treasury's current understanding of New Zealand's historical growth performance, the determinants of economic growth as adduced from the international literature and New Zealand empirical research, and the strengths and weaknesses in New Zealand's policy settings as they apply to economic growth.

This paper, which was completed in November 2003, was primarily written with an internal Treasury audience in mind. We are releasing this paper to share our findings with a wider audience and to add to public debate on this important policy area.

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Preface I. Introduction and Summary II. New Zealand’s Economic Growth Performance Introduction Measuring economic growth New Zealand’s absolute growth performance Proximate sources of New Zealand’s economic growth Relative performance: per capita GDP growth Relative performance: per capita GDP level Relative performance: labour productivity and labour utilisation growth Decomposition of New Zealand labour productivity growth New Zealand per capita GDP ranking Moving up the OECD per capita GDP rankings Summary III. Review of the Economic Growth Literature and Explanations forNew Zealand’s Growth Performance Theoretical Literature Empirical Literature Institutions Economic Policy Economic Geography Economic Shocks Convergence Explanations for New Zealand’s Economic Growth Performance Institutions Economic Policy Distance from Markets and Market Size Economic Shocks Convergence Reforms, Sequencing, Learning and Lags Summary IV. New Zealand Policy Priorities Introduction Macroeconomic framework and stability Public sector management Saving, investment and financial markets Infrastructure Human capital Labour markets Enterprise and innovation Summary References	economicgrowth.pdf(384 KB) pp. 84

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Preface

I. Introduction and Summary

II. New Zealand’s Economic Growth Performance

Introduction
Measuring economic growth
New Zealand’s absolute growth performance
Proximate sources of New Zealand’s economic growth
Relative performance: per capita GDP growth
Relative performance: per capita GDP level
Relative performance: labour productivity and labour utilisation growth
Decomposition of New Zealand labour productivity growth
New Zealand per capita GDP ranking
Moving up the OECD per capita GDP rankings
Summary

III. Review of the Economic Growth Literature and Explanations forNew Zealand’s Growth Performance

Theoretical Literature
Empirical Literature
- Institutions
- Economic Policy
- Economic Geography
- Economic Shocks
- Convergence
Explanations for New Zealand’s Economic Growth Performance
- Institutions
- Economic Policy
- Distance from Markets and Market Size
- Economic Shocks
- Convergence
- Reforms, Sequencing, Learning and Lags
Summary

IV. New Zealand Policy Priorities

Introduction
Macroeconomic framework and stability
Public sector management
Saving, investment and financial markets
Infrastructure
Human capital
Labour markets
Enterprise and innovation
Summary

References

economicgrowth.pdf(384 KB) pp. 84

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