New Zealand and the International Economy : from "Fortress New Zealand" to "Open New Zealand"

New Zealand as a geographically isolated country, with few natural resources, has always been highly dependent on trade for her economic prosperity. This has meant that New Zealand has been particularly vulnerable to "external shocks." How New Zealand has responded to this vulnerability has, however, varied across time. From the 1930s onwards, policy-makers sought to insulate the domestic economy from external pressures through controls over imports, overseas investment, prices and wages. This had created by the 1980s a "for-tress New Zealand" - one of the most regulated economies among OECD members. The Labour Government elected in 1984 sought to break down the wall of the fortress with the introduction of a raft of deregulatory and liberalisation measure. Tariffs were eliminated or drastically reduced; restrictions on foreign investment were relaxed; quotas were removed; the financial markets were deregulated. This now made New Zealand's economy one of the most open among OECD members. The expectation of the market liberalisers was that exposure to overseas competition would increase the efficiency of domestic producers. It is true that some New Zealand firms are now very competitive players in world export markets. However, if this is seen as a beneficial consequence of economic openness, there have been many adverse consequences for New Zealand such as the increase in foreign control of assets and the growth of an unskilled, low-paid workforce and all the implications this has for the standard of living of a large number if New Zealanders