Story: International economic relations

Page 8. Socialist bloc, the Middle East and New Zealand

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First, second and third worlds

In the second half of the 20th century the principal Western economies, including Japan, accounted for most of the world’s trade and economic output, despite having only 20% of its population. The socialist bloc – the Soviet Union and its European satellites – and China stood outside the framework of the Western system. Countries of the developing, or third, world had more dealings with the West.

The rich developed countries dominated New Zealand’s economic dealings with the rest of the world. But socialist countries and some developing countries had significant economic links with New Zealand, especially in the 1970s and 1980s.

Soviet Union and China

Soviet bulk-purchasing organisations negotiated many contracts for the purchase of dairy produce, wool and mutton, especially in the 1980s. In some years the total exceeded $350 million – around 5% of New Zealand’s exports.

China’s main interest was in wool – in 1984/85 China was the single largest purchaser of New Zealand wool, and when wool was at its height 80% of New Zealand’s exports to China were wool.

Oil states

Oil-rich Middle Eastern countries did not stand outside the capitalist world to the same extent as the Soviet Union and China. Their wealth derived from sales of petroleum to developed countries – New Zealand bought approximately three-quarters of its crude oil from the Persian Gulf region.

From purchases of $3 million in 1970/71, Middle Eastern states became significant markets. In 1980 Iran bought more from New Zealand than any other country, after Australia, the US, Japan, the UK and West Germany. Middle Eastern states bought $840 million of New Zealand produce, especially lamb, in 1985.

How much influence?


In July 1980 the New Zealand Broadcasting Corporation decided not to screen the British television programme Death of a princess, about the execution of a member of the Saudi royal family, to which Saudi Arabia had taken strong exception. The NZBC said there were valid grounds for the claim that the film misrepresented and distorted Saudi values. The government welcomed the decision.


Waning importance

Growth in Middle Eastern markets levelled off in the 1980s, in part due to the long Iran–Iraq War. Centrally controlled economies could shift course abruptly – China took only 7% of New Zealand’s wool in 1987/88, but then returned to more substantial purchases in the following year. With the deconstruction of the Soviet Union, bulk state importing ceased. The New Zealand Dairy Board made its last major sale there in 1990.

After 1990 most second- and third-world economies adopted more market-oriented policies – the world formed a common economic space to a greater degree. In the early 2000s China increased in economic significance to New Zealand.

How to cite this page:

Malcolm McKinnon, 'International economic relations - Socialist bloc, the Middle East and New Zealand', Te Ara - the Encyclopedia of New Zealand, (accessed 23 July 2024)

Story by Malcolm McKinnon, published 11 Mar 2010