The global measure of a nation’s prosperity is gross domestic product per head of population, or GDP per capita – the total value of the goods and services a country produces, divided by the total population.
It gives a good idea of how wealthy a country’s people are, on average.
Successful exporting countries generally have high GDP per capita and a standard of living to match. Wages are high and people enjoy good health and education and can afford the luxuries of life – modern cars, nice houses, overseas holidays, leisure goods and other comforts.
In the days when New Zealand had a cosy trading relationship with Britain, supplying all their meat, butter and wool, New Zealand had one of the highest GDPs per capita in the world.
But during the past 30 years the country has been buffeted by trading patterns that have caused its position to deteriorate.
In 1960, our GDP per capita was six percent higher than the average for OECD countries. By 1997 it was 29 percent lower.
During that same period GDP per capita across the entire OECD grew by 139 percent, while New Zealand’s only managed to increase by a relatively sluggish 60 percent.
If the growth in exports from New Zealand from 1960-1997 had matched that of OECD countries generally, we would have enjoyed a 247 percent increase in GDP rather than 153 percent. That would have translated into a higher standard of living, more jobs and better pay.
We have lost ground against the rest of the developed world, and it’s largely because our export performance hasn’t kept up.
An immense expansion of world trade has taken place in recent decades, but New Zealand hasn’t fully participated in it. It’s almost as if there’s been a riotous party going on and New Zealand has been standing outside, watching enviously through the window.
Economists say it’s not too late to join the festivities, but we must lift our game.
If we could apply to exporting the same focus and commitment that has made New Zealand such a great sporting country, able to punch well above its weight in everything from rugby to rowing, yachting and horse riding, we would claw our way back into the elite ranks of exporting countries.
For more information visit: www.exportnz.org.nz.
The CPTPP factor
BusinessNZ is lauding the newly signed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), saying many sectors will benefit from the trade agreement.
Chief executive Kirk Hope says gains can be expected across most of New Zealand’s exportfacing industries.
“Meat exports will be boosted through inclusion of countries in the CPTPP which have until now imposed steep tariffs, reducing the amount New Zealand meat producers can earn. “Horticulture exports will also be boosted, improving the returns from export items like kiwifruit and apples.
“New Zealand’s many emerging, fast-growing tech companies will also find a more welcoming reception in CPTPP partner countries.”
Kirk says the benefits from inclusion in the newly-minted trade deal would be spread widely across New Zealand export sectors, and would result in more jobs and prosperity here in New Zealand.
ExportNZ executive director Catherine Beard says in the context of US protectionist moves and threats of global trade wars, the CPTPP is an exemplar of countries working together for open and free trade.
“One thing the US actions have done is get the rest of the world to focus on the benefits of trade, and the CPTPP is a concrete example of everyone moving forward together. Here in New Zealand, the benefit will be felt in terms of jobs.”
Catherine says the agreement has successfully dealt with some remaining public concerns around investor dispute settlement, intellectual property protection and the operation of Pharmac, which will be business as usual.
“At the same time, core elements of the deal around tariff reduction and non-tariff barriers have been retained. The agreement represents significant additional income and opportunity for exporters, which will also lead to new jobs – many of which will be in the regions (e.g. dairy, horticulture, seafood, meat processing, and timber).
“New Zealand being part of the CPTPP agreement will ensure our businesses are competitive and have access to markets on a level playing field, not only with regard to our goods exports, but also with regard to services.
“Our businesses will be able to win business on the basis of the quality of their goods or services and not be disadvantaged due to tariff and nontariff barriers.
“With the likelihood of the CPTPP coming into force this year, we look forward to ongoing trade gains thereafter.”