Landfall, No 199, March 2000, p.54-55.

Keywords: Political Economy & History;

The editor of Landfall invited submissions of 500 words to identify the most important event to influence (in this case) the New Zealand economy in the twentieth century.

The twentieth century New Zealand economy was shaped by its ability to ship refrigerated products to Britain. Its beginnings might be symbolised by the Dunedin leaving Port Chalmers on 15 February 1882 with the first cargo of frozen meat for London. Barriers to trading at a distance were significantly reduced. New Zealand was no longer confined to a low-density population on extensive sheep stations – a Falklands of the South Pacific – as the depletables which sustained the nineteenth century economy – seals, whales, native timber, gold, other minerals – were exhausted. Now there was the possibility of a sustainable settlement based on family-owned farms of crossbred sheep or dairy cattle, supporting towns and, later, cities.

The direction of trade switched from Australia (and so New Zealand missed federation in 1901) to Britain, through which the shocks of the world economy were transmitted. The Great Transformation which ended the stable nineteenth century economy turned into a stagnant 1920s and the hardship of the Great Depression of the 19305. As Britain and the World recovered so did New Zealand, which tried to insulate itself from a further world depression by a heavily controlled economy, a welfare state, and industrial policy which protected people and business. However, exports continued to be but a handful of products (wool, meat, butter and cheese made up 90 per cent of exports, until the second half of the century ), sold in a few markets (65 per cent to Britain as late as the mid 1960s). Relative prices for the exports weakened from the early 1950s, as the demand for food grew slowly, and new producers entered world markets. In late 1966 the price of king wool, then a third of total export revenue, collapsed by 40 per cent, never to recover relative to import prices – except briefly in 1972. The sheep industry contracted, and the external economy broadened into energy, fish, general manufacturing, horticulture, tourism, and wood exports.

It was an extraordinary diversification, the greatest in the OECD in the 19705 – a difficult task further complicated by the diminishing significance of the British markets. By the 1990s Australia, China, Korea, Japan and the US were all larger export markets. But the internal economy remained in a straitjacket of controls, for the politicians were unwilling to challenge a political structure dominated by the pastoral industry and other vested interests (including finance and protected manufacturing industries).

Governments elected after 1984 took radical (and often misguided) measures but even so, the economy and political processes had not fully adjusted to post-pastoralism, with trade strategy in dispute during the 1999 election (at the same time as the Seattle-based world trade negotiations tried to begin). The reverberations of the pastoral political economy, initiated in 1882, lasted through the whole of the twentieth century.

It may be the most important event which shapes New Zealand in the twenty-first century happened in the twentieth: possibly the commercial use of the micro-processor, which brought New Zealand even closer to the rest of the world, further opening it up to both the prospects and perils of globalisation.