Story: Economic history

Page 12. Economy in the early 2000s

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Transformed economy

The New Zealand economy which entered the 21st century was very different from that which had entered the 19th century, or even the last quarter of the 20th century. In 1975 the economy was still heavily regulated by the government, and the export sector remained dependent upon pastoral exports to the British market. Many saw the economy as inflexible, prone to inflation and slow to respond to technological opportunities. It was also growing more slowly.

Some conclude that by 2000 many of these weaknesses had been addressed. Economic growth accelerated from about that time. Critics say that was due to an increasing number of workers rather than greater productivity. This was a time of world economic growth, and domestic economic growth was in part the result of heavy overseas borrowing.

World recession

As the world economy entered a major recession in 2008 New Zealand was once more confronted with the fact that its success depended on activities offshore over which it had little control. In that respect things had hardly changed over 200 years.

Sustainability

In the early 2000s the New Zealand economy faced a question over sustainability. This was a theme which ran through its history. Past economic growth had depended upon quarrying of limited resources like gold and oil. Even the success of pastoral farming in the 20th century depended on offshore quarries to provide phosphate and other minerals for fertiliser, and oil for energy. Neither was available in unlimited quantities.

Local production had degraded the quality of water, land or air, and contributed to global warming. Such reductions in environmental quality are not included in conventional measures of output, such as gross domestic product (GDP).

More attention was paid to environmental issues in the first years of the 21st century than at any previous time; and some remediation occurred. The change may have been because the environmental challenges were more urgent, or it may have been that affluence enabled greater concern with non-economic issues.

During the 20th century real incomes and spending power had risen about eightfold. People were healthier and lived longer, had more consumer power and life choices, better education, and better working conditions with shorter hours and greater security. All were palpable gains, but some people questioned whether the objective of economic policy and the measure of economic performance should be just more production and consumption.

How to cite this page:

Brian Easton, 'Economic history - Economy in the early 2000s', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/economic-history/page-12 (accessed 19 October 2017)

Story by Brian Easton, published 11 Mar 2010