Unexpected shocks to the New Zealand economy are endemic. The numerous small ones have been dealt with by the local initiatives inherent in the market economy and by common sense. However, there are a few big shocks where national action has been necessary. Sometimes those actions have been reasonably successful, sometimes they have been less so. There are lessons to be learned from these experiences. The most salient is that every economy is unique and, indeed, that uniqueness changes over time. Among the particular features which characterise the New Zealand economy is that it is small, geographically isolated and has an economic structure different from most comparable affluent economies. Its political arrangements tend to be thinner, which can enable a more flexible response but which, however, often lack the depth of comparable polities. Size means its intellectual resources are thinner. Isolation has been beneficial in the past – for instance, slowing the arrival of pandemics – but with the increasing global connectivity that insulation is diminishing. Nowadays, overseas crises can arrive very quickly – financial crises overnight – and there will be less time to react. However, the disadvantages of isolation – including being at the far end of physical supply chains – remain. Sometimes the experience of other economies can be used with little adaptation; sometimes the experiences and theories that are internationally available need considerable adaptation to be applied to New Zealand. On occasions, New Zealand has failed to adapt such theories when it has been necessary; too often the analysis has been overly imitative of the United States experience. At the very least, New Zealand economics needs to pay more attention to the experiences of other small open affluent economies.
The full paper is here.