The Challenge of Structural Change in APEC Economies (WP 07/06)

Abstract

Improving New Zealand’s economic performance is one of the key outcomes driving the work of the New Zealand Treasury and international connections are an important means of achieving that. The promotion of sustainable economic growth and improved living standards in the Asia-Pacific region through enhanced trade and economic integration lies at the heart of APEC’s mission. While APEC’s focus has traditionally been on trade and investment liberalisation and facilitation, it is increasingly turning its attention also to the role played by “behind-the-border” policies in enabling or impeding regional economic integration (also commonly referred to as “structural policies” or “structural barriers”). This paper surveys the theoretical and empirical literature on economic growth and income convergence processes in the Asia-Pacific region. The review suggests that structural policies are impeding growth and convergence, and that structural policy reforms could bring about large economic gains to the region. The paper also looks at the role that APEC can play in promoting and managing the challenges of structural change in the region. It concludes that structural change is an important challenge facing the Asia-Pacific region, and APEC provides New Zealand and other member economies with an important forum to promote improvements in economies’ domestic structural policies.

Acknowledgements

An earlier draft of this paper was presented at a conference sponsored by the Australian APEC Study Centre held at Monash University, Melbourne, 20 April 2007.  For their helpful comments and suggestions, we would like to thank participants at that conference and John Ballingall, Mary-Ellen Fogarty, Gary Hawke, Rupert Holborow, Nathan McLellan, Rory McLeod, Carmen Mak, Anthony Simpson, Robert St Clair, Wayne Stevens, and Kam Szeto.

Disclaimer

This document was commissioned by the New Zealand Treasury.  However, the views, opinions, findings and conclusions or recommendations expressed in it are strictly those of the authors, do not necessarily represent and should not be reported as those of the New Zealand Treasury or the New Zealand Government.  The New Zealand Treasury and New Zealand Government take no responsibility for any errors, omissions in, or for the correctness of, the information contained in this Paper.