As New Zealand signs up to another alliance to shore up our economic security in the face of fast retreats in economic globalisation, it’s worth taking stock of why New Zealand’s economy is so strong.
As Treasury commentary about this 2022 budget has noted, we have just gone through an economic shock many times worse than the GFC and come out pretty good.
It’s pretty easy to go through what we are bad at and what holds us back. Instead we are going to look at what makes us so strong.
A survey report from MBIE in February this year gives some analysis.
It starts off with the ‘deep roots’ of our advantages:
New Zealand’s comparative strengths often reflect ‘deep roots’ factors. Compared with other countries, New Zealand has strengths and specialisations in research in agriculture and biological sciences, and in products related to agriculture, partly reflecting a climate conducive to agriculture.
Similarly, New Zealand has strengths in tourism, partly reflecting the country’s natural beauty.”
(Just a length warning the report is 70 pages of analysis).
The four sectors of strength for New Zealand Trade and Enterprise are: Advanced Transportation, Food and Beverage, Partnering with Maori, Renewable Energy, Tech and Innovation, Tourism, and Wood Processing.
So it’s pretty consistent on the advantages that build what we produce and export well.
But that’s not the whole story to our survival through crises that have hit us about once every two years for the last two decades. Part of the further answer is in our social cohesion and wellbeing.
Self-reported wellbeing among New Zealanders is comparatively high, as are some other measures of wellbeing. This finding is striking in comparison with standard metrics like GDP per capita for which New Zealand fares less well than many other developed countries. Given that New Zealanders’ wellbeing is the ultimate policy goal, it is important not to lose sight of the factors that likely contribute to this performance.
It hasn’t struck me until this year that we are a nation made of families that are broad and interrelated – so many family groups have broad Messenger apps that keep us constantly connected. This is an economic power as well as a social power, and it runs deep and long. We house each other, hire each other, invest in each other, and do so with multigenerational intent.
As democracies fade and corrode in many parts of the world, compared with other countries New Zealand has performed consistently well in areas such as fundamental institutions, social capital and trust, and other deep foundational platforms.
Similarly, it will only take a couple of years of Matariki and Maori Language Week revivals to recognise a deep strength emerging from Te Tiriti o Waitangi, Maori culture, tikanga and matauranga, Maori corporate development and entrepreneurship, and the specific values and culture derived from Maori and Pacifika, which are both a social strength and in many respects an economic strength. They are, again, deep and long advantages that aren’t going to shift.
Governments will come and go but it is unlikely that any flavour of them will have much impact on the deep roots of our social and economic advantage. There is a persistence in our strengths.
So while Treasury is warning at Budget 2022 that we are in for further years of extreme volatility in the next few years, it is worth putting trust in this country that we will survive and indeed thrive.