The 1982 - 84 review of export assistance : problems with paradigms

Abstract

For some time now, export incentives to non-traditional exports have been an essential part of the Government's development strategy to restore sustainable levels of growth to the economy. New Zealand has had an indifferent record of growth in the 1950s and 1960s and over the last half decade of the 70s, growth has averaged less than 1% per year or under a third of the OECD average. This persistently bad record was not because governments of the day gave growth little priority in their programmes.

It has been long thought that the major barrier to economic growth is the balance of payments or foreign exchange constraint. The term 'foreign exchange constraint' alludes to the supposedly critical dependence of New Zealand on imports of raw materials (especially oil:) and capital equipment to increase the productive capacity of domestic producers. Too often it seemed, economic growth grounded to a halt as payments for imports pushed ahead of export earnings. This leads to the suggestion that the main way to raise growth performance is to raise the rate of growth of exports and thereby relax the balance of payments constraint...