Trade and Economic Development in New Zealand

2966 words (12 pages) Essay in International Studies

08/02/20 International Studies Reference this

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New Zealand is a small island nation that occupies two land masses that are South Island and North Island as well as other islands. The Polynesian ancestors who are currently from today’s Maori, came to New Zealand in the 10th century from Eastern Polynesia. The population of Maori at that time was more than 100,000 when the earliest Europeans came along. Seeking for Antarctica, Abel Tasman sighted New Zealand in 1642 but was dispelled by Maori when he initially ventured to land.  He was the one to name the South Island Nieuw Zeeland after the Dutch province. The Europeans were not involved with New Zealand until 1769 when James Cook reached in his ship. The initial meetings with Maori weren’t pleasant so he navigated away. With time, he chose to support the local Maori. He attempted and continued to map New Zealand and in 1773 as well as 1777, he made two additional trips there. New In 1907, New Zealand was made a Dominion.  During the late 20th century, New Zealand’s relationship with Britain weakened and established closer links with Asia as well as Australia. In 1983, the closer economic relations pact with Australia was signed. Jenny Shipley was the first woman to become prime minister of New Zealand in 1997 and before that, in 1993, proportional representation was replaced with the “first past the post “electoral system.

New Zealand is 35 times little than the size of USA and approximately the same size as California! From north to south, it is roughly 1600 kilometers and over all 268,000 Sq. Kilometers. New Zealand’s landscapes are jaw dropping and consist of the South Island’s southern Alps which tend to be larger in terms of area in comparison to European Alps. The North Island mainly comprises of volcanoes. The similarity that both islands share is having magnificent lakes and rainforests. When it comes to climate, New Zealand has four seasons. Summer lasts December through February, despite that, March is also a pleasant and warm month. The coldest months are June to august. The North of New Zealand is most appropriate for growing fruits because it doesn’t snow there while the South Island is full of snow and glaciers. New Zealand is heavily dependent on international trade and has a market economy. The currency in New Zealand is the dollar, coins hold the value of 10, 20, and 50 cents as well as $1 and $2.  The New Zealand dollar is also used in Pitcairn Islands, Niue, Cooks Islands, and Tokelau which shows a strong sense of Dollarization. Foreign currency is easily exchangeable at New Zealand post shops, some hotels, banks, and certain kiosks.   Wellington is the capital of New Zealand.

Speaking of culture, people from New Zealand come from a variation of diverse backgrounds. The culture is unique because it is influenced by the European and British custom as well as the Polynesian and Maori traditions. People are approachable and enjoy socializing but remain respectful. Food is a strong way of bringing people together and is considered kind to bring wine or food when visiting somewhere. English and Maori are the official languages of New Zealand. Maori is only spoken in New Zealand. Children started being raised in English instead of Maori in 1940 when people moved out of rural areas and into the cities. Sign Language was declared as an official language in 2006 and New Zealand was the first country to do that.

One of New Zealand’s biggest strength is biodiversity and having species that can’t be found anywhere else.  Some of them include:

  • 6,000 beetles
  • 550 mosses
  • 2000 moths and butterflies
  • 5,800 fungi
  • 170 earthworms
  • 38 freshwater fish
  • Seven frogs
  • 1100 spiders
  • Three bats
  • 91 birds that breed and feed on land

New Zealand has noticeable number of industries such as agriculture, horticulture, forestry, mining, fishing, and much more. They are also best known for crops, sheep, timber, manufacturing, energy, and tourism. They have a comparative advantage in abundant land, fertile soil, forestry, natural resources, economic stability, Comprehensive free trade agreements, logic and transport connections, advanced telecommunication infrastructure, research and development, effectiveness for startup businesses,  fisheries, the change in government every three years, pay equity, the native people, zero corruption, one of New Zealand’s companies, “Fonterra” is responsible for 30% of dairy exports in the world and when it comes to  absolute advantage, it is their climate and weather.

There is a free trade agreement between New Zealand and China which was officalized in 2008.During the time period of 2009-2014, trades in good between these two nations doubled in 20 billion NZ dollars and New Zealand exports to china grew 50 percent in the year ended June 2014. In august 2016, “Alibaba” had a proposal for a free trade zone to be made near the airport in Auckland. Free trade minister of New Zealand, McClay said that it would be worth pursuing if it results in good flowing more easily across borders. The New Zealand dollar was part of a broad based deregulation of financial markets since 1985. They came to a decision of what the rate would be by determining the supply and demand in foreign exchange markets. The Policy Targets Agreements of the Reserve Bank of New Zealand have specified clearly since 1989, that in executing monetary policy through a straight inflation targeting, the Bank does not want to deal with redundant unpredictability when it comes to, interest rates, output, and the exchange rate (the Reserve Bank of New Zealand, 2007).

Since 1840, the government in New Zealand put tariffs on tobacco, alcohol and other goods to increase money. Income tax wasn’t introduced until 1891 but tariffs were the main source of revenue until the first world war. Tariffs were not long applicable to unnecessary food items in 1878 for example tea and sugar. Once the depression had ended, the government brought in control on imports that wasn’t likable for British business interests. Because of these controls, it helped New Zealand manage its economy after the second world war. New Zealand was in loss for its main market of exports in 1973 when Britain joined the European economic community. Most of New Zealand’s tariffs were gone by 1999 and they hoped other countries would also remove tariffs, so it would be easier to sell goods for New Zealand overseas but it didn’t happen. New Zealand signed a free trade agreement with china in 2008.

New Zealand’s top trade partners include China, Australia, United states, Japan, South Korea, United Kingdom, Hong Kong, Taiwan, Singapore, Malaysia, Indonesia, Thailand, Netherlands, United Arab Emirates, and Vietnam. 76.7% exports were delivered to the above listed partners in 2017. New Zealand had the highest trade deficits with Germany, Thailand, Japan, Singapore, United states, Italy, Malaysia, France, and South Korea. New Zealander deficits grew at the fastest pace from 2016 to 2017 with Singapore, United Arab Emirates, and United states. These cashflow deficiencies evidently show New Zealand’s competitive disadvantages with the countries listed above, as well as show main opportunities for New Zealand to develop country-detailed approaches to reinforce its complete situation in terms of international trade. New Zealand had some of the highest Trade surplus in 2017 with countries such as – Australia: US$863.9 million, Hong Kong: $780.4 million, China: $696.3 million, Philippines: $409.8 million and Algeria: $383.1 million. New Zealand’s trade with China went from -$646.8 million in red ink during 2016 to a $696.3 million surplus. Compared to other trading partners that produce the highest positive trade balances, New Zealander surpluses with Sri Lanka (up 81.1%), Hong Kong (up 61.4%) and Philippines (up 14.6%) grew at the fastest pace from 2016 to 2017.

 Globalization is making New Zealand quickly increase. An example of globalization in New Zealand is the imports and exports. Products are being sold and brought in on a daily basis. For example, in September 2015 they exported 2.0% more beef compared to how much they exported in 2014. Integration with diverse cultures is another example of globalization because people from all around the world are coming to settle down in New Zealand to work as well as study. Multinational companies based in New Zealand is another example. The company “Xero” was is solely based in New Zealand was created in New Zealand. But ever since then, they now have worldwide offices including offices in the United States, United Kingdom and Australia. This is an example of globalization because it is operating at various places across the world on a global scale.

Outsourcing to New Zealand has many benefits. Some of them include- salaries are comparatively lower in major cities of New Zealand compared to Sydney or Melbourne. Other then the fact that the salary is lower, it is also about the value New Zealand brings that make’s it worth it. The labor market in New Zealand is flexible and less unionized compared to Australia and ranks top 10 in he world when it comes to efficiency. Compared to Australia, corporate tax is 28% lower and capital gains tax is limited.

Speaking of sustainable development, urban issues, water qualities, climate change are huge sustainable development problems for New Zealand. Being an urbanized country, with 86% of its population residing in urban areas and one in three New Zealanders living in Auckland. Its cities have the possibility to offer a high quality of life, as well as other advantages that will help New Zealand to interest the expertise people they need. That being said, Cities are important places to develop and increase quality of life and sustainable development. This also is why new infrastructure is needed for growth. Even with reduced or absence of growth, important expenses are crucial to continue and substitute existing infrastructure networks. .One of the biggest needs is to improve the combination of infrastructure establishment, across central government and with longstanding strategic planning procedures in local government. Better connections between transport and public form are crucial and needed. When it comes to air quality, there are a few urban areas where air pollution is noticeably high mainly when wood burners or open fires is the only source of home heating.  Research even shows that people are more likely to die because of air pollution rather than being killed in an accident on the road. Under the Resource management act, which was approved in 2004, which focuses on improving air quality- the 14 standards are:

-          “seven standards banning activities that discharge significant quantities of dioxins and other toxics into the air

  • five standards for ambient (outdoor) air quality
  • a design standard for new wood burners installed in urban areas
  • a requirement for landfills over 1 million tons of refuse to collect greenhouse gas emissions”

The biggest task for New Zealand is to help sustainable economic development as well as defend ecosystems and the quality of the environment. Speaking of sustainable trade, New Zealand has taken a strong position internationally. Frameworks for integrating environment and labor standards and trade approved by Cabinet in 2001 reflect this. It is crucial for trade competitiveness and environmentally that environmental factors aren’t’ used as disguised barriers to trade, and that there are no trade advantages to trading partners due to low environmental standards.

“The Ministry for the Environment has negotiated environmental provisions associated with the Thailand/New Zealand Closer Economic Partnership, and the Trans Pacific Strategic Economic Partnership (Chile, Singapore, Brunei and New Zealand). Negotiations are underway with China, Malaysia and ASEAN/Australia”.

New Zealand’s market economy heavily relies on international trade, mostly with The European Union, China, Japan and The United States. In 2005, world Bank called New Zealand the most business-friendly country in the world and several barriers to foreign investment have been removed due to free market free-market reforms. Dairy products, meat, and wool is what the economy was based on primarily and because of the high demand, there was the New Zealand wool boom in 1951 that resulted in a better and higher standard of living but New Zealand lost its favored trading position with the UK in 1973 since UK joined the European economic Community and commodity prices for these exports declined.

As previously mentioned, the Maori’s first came to New Zealand in the 10th century and Jenny Shipley was the first woman to become prime minister there. New Zealand has many beautiful landscapes and is a great tourist attraction, especially for nature lovers. People from New Zealand are friendly yet respectful. New Zealand is heavily dependent on international trade, has a market economy and most importantly plays a huge role in globalization as well as international business.

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