International Business: SPOTLIGHT ON NEW ZEALAND : THE NEW ZEALAND ECONOMY

For trade and commerce, this tiny country of about 3.5 million people has traditionally dependent on Australia and Britain, from which it gained independence in 1947. It recently began expanding its reach, aggressively seeking trade ties with and investment from North America and the booming Asian countries.

The Economy

In the late 1980s and early 90s, New Zealand experienced its worst recession since the Great Depression of the 1930s. The economy has picked up in recent years, although unemployment was about 10% last year. The government has radically changed economic policy in this decade, including slashing state spending and dismantling what was considered one of the world’s extensive welfare states. The government also privatized state companies, deregulated many industries and ended government subsidies.

Agriculture

Agriculture, including forestry, hunting and fishing, remains an important segment, though it accounts for only about 6.8% of gross domestic product. But New Zealand is a major exporter of wool and derives significant export earnings from meat and dairy products. Other major crops are barley, wheat, maize and fruit (kiwi, apples and pears.) About 10.5% of the work force is employed in the sector.

Manufacturing

This sector is about 17.5% of gross domestic product with food products the largest category in terms of the value of goods. Wood and paper products, chemicals, metals, machinery and transportation equipment are among other strong manufacturing segments. About 17% of the work force is employed in manufacturing.

Trade

New Zealand’s most important trading partners are Australia, Japan and the United States. The three nations receive nearly half of New Zealand’s exports and are the source of more than half of the goods entering the country. New Zealand is a member of the Asia-Pacific Economic Cooperative and is seeking to expand trade with Pacific Rim states in East Asia and Latin America.

Labor

The labor force is well educated, comparable to Western standards. The literacy rate is 99%, reflecting compulsory schooling for children aged six to 16. The nation has a history of active trade unions, but the National Party, in charge of the government in 1984 banned closed shop agreements which permitted workers to choose whether to join a union. Average weekly wages were about $555 last year.

Sources: Bank of America World Information Services, Europa Publications, The Information Consultancy Group