Libmonster ID: U.S.-1207
Author(s) of the publication: L. STEFANCHUK

L. STEFANCHUK, Candidate of Historical Sciences


New Zealand is a relatively young country, it appeared on the world map in the first half of the XIX century. It was created as a migrant colony of Great Britain and for a long time was actually its agricultural farm. Today it is a developed industrial and agricultural state with a population of 4 million people, 610 thousand of whom are descendants of indigenous Maori people.

Having passed a seemingly short historical path, New Zealand can serve as an instructive example for other countries, in particular, for Russia. The fact is that in the 80s, or rather in 1984, it began to restructure its national economy. It was initiated by the structural crisis in the country's economy, which during the first half of the 20th century was known as the "welfare state" and ranked 3rd - 5th in the world in terms of per capita income. However, in the 50s, 60s, and especially 70s, the situation is changing: it drops to 19-23 places. New Zealand's long-term crisis was a natural result of the worsening of fundamental internal imbalances in the economy that had accumulated over many decades. In the mid-70s, they were overlaid with the disastrous consequences for the state of the global commodity and especially energy crises of that time.


Many of the negative processes that clearly manifested themselves in the second half of the 70s and early 80s were based on the long lag of the manufacturing industry, as well as the country's dependence on imports of raw materials, materials and components. For many years, New Zealand's main export was agricultural products, up to 30% of which went to the UK, which guarantees New Zealand a stable and capacious market. The entry of England into the EEC significantly reduced and complicated the marketing of traditional New Zealand export goods, in particular meat and dairy products and wool, the demand and price of which were extremely unstable in the mid-70s. The countries of East and South-East Asia, thanks to their cheap labor, have pushed New Zealand in the world markets for simple but labor-intensive products-textiles and leather, radio and electronic devices. Lacking any significant oil reserves, the country was forced to import it, which also worsened its trade and balance of payments. Inflation, production costs, and public debt rose.

The National Party government - and it was mostly in power during the crisis years-tried to make the country's economy more open and competitive, to overcome the difficulties that arose. An energy development plan, large-scale industrial projects were developed, diversification was carried out and the export geography was expanded. However, all the measures taken to improve the economic situation of New Zealand were half-hearted, compromise, opportunistic, and mostly cosmetic in nature. A structural adjustment of the economy was necessary - otherwise, according to the New Zealand researcher S. Franklin, the country was threatened with an "unstable balance of the Latin American type" 1.

The initiators of perestroika in 1984 were the Labor Party that came to power. They have always advocated an active role of the state in the redistribution of national income, seeing it as a guarantee of social security and justice. But there was nothing to be done - New Zealand had to follow the path already taken by many developed European countries, including Great Britain: to limit state intervention in the economic and social life of society, to give greater scope to market mechanisms and private initiative.


Many dramatic economic changes were made in the first months of the 4th Labour Government (1984).-

page 42

1990). It announced a 20% devaluation of the New Zealand dollar, the replacement of currency regulation with a floating exchange rate, and the free movement of interest rates. Tax incentives for exporters and import regulations were cut and then abolished, i.e. control over foreign trade exchange was removed. The government has allowed potential investors to purchase local firms and land plots. By encouraging free competition, it removed a number of barriers in the financial sector in 1987. As a result, the number of banks in the country increased from 4 to 14 in just one year.

All kinds of special privileges and restrictions on certain financial institutions, in particular savings and building societies, were eliminated. Politically motivated interference in the foreign exchange market has ceased, and all operations to balance external payments have been carried out on a commercial basis.

The Labor Party has taken a strong stance on reorganizing the public sector of the economy. By selling state-owned companies into private hands, the government, in addition to increasing labor productivity, also aimed to reduce external debt at the expense of the funds received from the sale.

The Labor Party had high hopes for the reform of the tax system, which was carried out, however, very inconsistently. The high - up to 48% - income tax, which ultimately eliminates the results of labor, was replaced by Labor with a two - tier one-24% and 33%. In 2006, the highest individual income tax rate in New Zealand was 39% (starting at $ 42.2 thousand). and above), on corporations-33% 2. However, the hopes were not fulfilled: entrepreneurs were in no hurry to invest the released funds in production, the level of which continued to fall.

By liberalizing the capital market, Labor began to deregulate the labor market, which in New Zealand was centralized and regulated. Negotiations between the Government and entrepreneurs on wage rates were conducted at the national level, and the implementation of the decisions taken was strictly mandatory. The Labor Party, which began rebuilding, went much further than the National Party, which had previously repealed the New Zealand law on compulsory trade union membership, which, according to the then Minister, J. P. Morgan, was a major step forward. Bolger, it was only possible when."..New Zealand existed in a cocoon of protectionism and believed that it could stay out of external events." In 1984, arbitration was abolished; in 1987, legislation on labor relations was adopted, which simplified the procedure for registering new trade unions and allowed direct wage negotiations between them and entrepreneurs.

Thus, in a relatively short period of time, New Zealand managed to make the country's economy more open, liberalize the markets for goods and services, labor and capital, and achieve certain economic successes.


But Labour has failed to move the country out of its structural crisis and onto a "path of prosperity." In 1990, after two terms in power, the Labour Party suffered a severe defeat in the parliamentary elections. The reason for the failure was that the majority of the population, and above all the workers who represent its main traditional electorate, did not feel any noticeable improvement in living standards (suffice it to say that in the election year, economic growth was zero). Unemployment rose, which, according to official data, reached 7.9% of the amateur population (before perestroika-less than 5%). In addition, representatives of the national bourgeoisie voted against Labor, saying that they did not want to "sell out the motherland." They have previously opposed the acquisition of shares in national enterprises by foreign companies. Many claims to the Labor Party were made by the middle strata of the population, which was hit hard by the new tax policy. The left intelligentsia was concerned about the "anti-humanization" of society, the increased social division. Most farmers were suffering from higher interest rates on loans and excessively high rates of unemployment.

page 43

in their opinion, the exchange rate of the national currency.

The Labour government has been criticized from both the right (for its lack of pace and firmness in implementing reforms) and the left (for its departure from tradition). There was also no unity in the Government itself. A political battle ensued between then-Prime Minister David Longy and his closest ally, Finance Minister Roger Douglas. Longy feared that a quick turn to the market would plunge the country into chaos; Douglas believed that procrastination only served to delay stability.

Business representatives who support " rogernomics "(similar to "Reaganomics", after the creator of a similar policy in New Zealand, Roger Douglas) were disappointed, because they did not get what they expected. Trade unions, in turn, expressed dissatisfaction with the denationalization of state-owned enterprises and the deregulation of the labor market. On the crest of this discontent, a new party emerged from the left wing of the Labour Party, advocating full employment, limiting foreign participation in business, more progressive taxation, support for trade unions, and even, if necessary, state control over the private sector - in other words, for traditional Labour economic and social policies.

The defeat of Labour in the 1990 election meant a crisis of confidence in them. The population voted not so much for the National Party, whose economic and social course was not much different from the platform of Labor, but against the latter, who recklessly promised the people rapid changes for the better.

The defeat of the Labor government was also facilitated by external factors, to which New Zealand, as a small country with a dependent economy, is particularly sensitive: the stock market crisis of 1987 in the United States, falling export prices for agricultural products, the economic downturn in its main partners - Australia, Japan, the United States, the Middle East crisis, events in Eastern Europe, etc.

As for the root causes of the Labour Party's defeat, this is not only the result of their 6-year rule - it is the result of the country's development over the past 20 years. An analysis of the country's socio-economic development over this period provides more general lessons.


More than 10 years have passed since the beginning of radical reforms in the country. Now we can definitely say that both the economic situation of the country and the living conditions of the population have improved. This is evident from such basic indicators as natural population growth, life expectancy, infant mortality, etc. So, if in 1980-1990 the average annual population growth rate was 0.8%, then in 1990-2005. they reached 1.2%. Life expectancy increased from 75 years in 1990 to 80 in 2005. Infant mortality, which remained almost unchanged during the 1980s (10-12 deaths per 1000 newborns), decreased to 8 in 1990 and to 5 in 2005. GDP growth rates (recall that in 1990 they were zero) for the period from 2000 to 2005. amounted to 3.1%. Unemployment, which covered 10.4% of the self-employed population in 1990-1992, was estimated at 3.9% in 2000-2005.3

The success of the New Zealand state on the path of perestroika is undeniable. They are considered excellent by experts of the OECD, the World Bank and other institutions. Businessmen, scientists, and journalists urge their governments to follow the experience of New Zealand. According to Reserve Bank of New Zealand Vice-President Marret Sherwin, the study of New Zealand's reforms by experts from different countries has taken on a truly "industrial scale". And here it is appropriate to recall that back in March 1993, the then Prime Minister of the country, J. R. R. Tolkien, said: Bolger said at a meeting with then Russian Vice President Alexander Rutsky: "New Zealand has implemented a comprehensive structural adjustment program, and some aspects of its experience can be used in the course of reforms in Russia."

One of the main sources of New Zealand's economic achievements is the government's rejection of any restrictions on the economy that hinder its development. By ivf index-

page 44

According to the Fraser Institute's Survey of Economic Freedom in 1993-1995, New Zealand ranked 2nd, behind only Hong Kong (scored 8.5 points out of a possible 10). According to the international rating of 2007, it was in the 5th place (ahead of Hong Kong, Singapore, Bahrain, Australia); Russia - in the 120th place. And, importantly, New Zealand, unlike Russia, has the lowest level of corruption of government officials in the world, which undoubtedly also contributes to the country's economic success. There is not or almost not, as Russian researchers wrote at the beginning of the 20th century, "a cohesive, voracious as locusts, and wild as a leech, inveterate in the routine of the disgusting caste of bureaucrats" 4.

The example of New Zealand also shows that the implementation of structural reforms is a long and painful process, even for a country with a small population, where the size of the economy is not so large. Moreover, market reforms cannot be implemented in a short period of time in such a huge country as Russia.

The implementation of structural reforms in the Russian Federation is delayed due to the conflict between economic imperatives and social requirements and considerations. After all, any radical economic restructuring can be associated with an increase in unemployment and a temporary decrease in the standard of living of significant groups of the population.

In New Zealand, which for many years was known as the "welfare state", there was a pension system that guaranteed citizens social protection, as they say, from cradle to grave. This system has persisted for decades. Becoming more burdensome on the budget every year, it was a trump card for winning the votes of older voters.

Reformers have encroached on the" inner sanctum " of New Zealand society by raising the retirement age for men from 60 to 65, while simultaneously cutting benefits payments and tightening the terms of their provision. The government abandoned the "principle of universality", encouraging people to take care of themselves and their old age. The same trends have also been observed in the areas of health and education: the role of the state has also decreased and the role of the private sector has increased. While improving the efficiency and competitiveness of social institutions, the reforms also led to an increase in social inequality, ethnic polarization, and racial tension.

It should be noted, however, that the social reforms in New Zealand were not as drastic and were not carried out as ruthlessly towards the population as was the case in Russia. And the tax on individual income there is still differentiated, and the rich do not pay 13%, which the Russian government was forced to do, signing off on its complete impotence to ensure full tax collection from the rich.


Both in New Zealand and in Russia, a stable social psychology of the masses has developed over the years, related to the attitude towards the state as a body that provides a certain subsistence minimum for working and non-working people, and their comprehensive social protection. Moreover, in Russia, unlike in New Zealand, the ability to engage in entrepreneurial activity and any personal initiative were not only discouraged, but suppressed. That is why the costs of conservative, dependent psychology and the desire for egalitarianism in Russia are particularly noticeable and difficult to eradicate.

The rejection of hothouse conditions and the transition to competitive struggle for existence is almost inevitably accompanied by a decline in the popularity of the ruling party, a narrowing of its social base.

And at the same time, as shown-

page 45

As New Zealand's experience shows, the negative effects of change do not necessarily translate into an immediate "alienation" of voters from reformers. Trust and hope may persist for a while, as evidenced by the 1987 parliamentary election, when Labour was elected for a second term. However, the excessive delay in implementing unpopular measures tires and disappoints the population, and increases their negative reaction. Fluctuations in the implementation of the chosen course are also fraught with growing discontent and criticism of the government from both the left and the right. In a large multinational state, firmness in carrying out radical changes is especially necessary, because political and economic vacillation from side to side brings instability to the already difficult situation in the country.

The population of both New Zealand and Russia reacted painfully to the turn to the market and the deepening of social inequality. As a result of reforms in New Zealand, a long-standing democratic country with a stable two-party political system, the latter was replaced by a multi-party one. The reforms initiated in the USSR led to its collapse, the creation of the Commonwealth of Independent States (CIS), and the emergence of a rudimentary civil society in the Russian Federation. In the future, in New Zealand, as in Russia, in order to prevent a sharp confrontation of group interests, it is necessary to carefully adjust the "market" and introduce elements of social planning into economic policy. The whole difficulty is only in correctly determining the ratio of both.

A change in a country's leadership - as can be clearly seen in the case of New Zealand-does not necessarily produce the desired results and can create confusion in its public life. Changing the main political line, program, and slogans is dangerous, since the population loses the correct orientation and a clear understanding of the government's course, which negatively affects labor activity and leads to a decrease in its productivity.

Reasonable smoothing of contradictions among party leaders is especially important in Russia, where a stable political system has just begun to take shape. Favorable external factors, trade and financial relations with other countries are important for overcoming the crisis phenomena inside the country. The economic situation in New Zealand is painfully affected by the decline in prices for agricultural products on world markets and, consequently, an increase in energy prices, while Russia, on the contrary, is interested in raising prices for energy and mineral raw materials. A sound international policy is also a prerequisite for successful transformation within the country.

New Zealand is a small and not very visible country on the world map. Nevertheless, in our opinion, its mistakes and achievements in the course of a thorough restructuring of the economy and its transition to fully market-based rails should be taken into account when developing Russia's socio-economic strategy and tactics. Excessive "pride" - they say, what can a "world giant" learn from such a "dwarf", which can not be found and distinguished on any map - is inappropriate here. For despite all the differences in geographical, historical and cultural properties, as well as the specific, individual characteristics of each of these two countries, it is not difficult to identify common problems in the implementation of market reforms. Their study and analysis will allow us to avoid repeating mistakes and use the positive experience of a distant island country in the interests of the Russian people and the Russian State.

Franklin S. N. 1 Trade Growth and Anxiety. Wellington. 1978, p. 380.

2 2007 World Development Indicators. Washington, 2006, p. 285.

3 New Zeland Official Yearboork. Wellington, 2002, p. 108; 2007 World Development Indicators. Washington 2006, p. 41, 57, 117, 191.

Tagansky M. 4 The Democratic Republic and New Zealand. St. Petersburg, 1906, pp. 9-10.


Permanent link to this publication:

Similar publications: LUnited States LWorld Y G


Peter NielsenContacts and other materials (articles, photo, files etc)

Author's official page at Libmonster:

Find other author's materials at: Libmonster (all the World)GoogleYandex

Permanent link for scientific papers (for citations):

L. STEFANCHUK, ECONOMIC REFORMS IN NEW ZEALAND // New-York: Libmonster (LIBMONSTER.COM). Updated: 30.06.2023. URL: (date of access: 13.06.2024).

Found source (search robot):

Publication author(s) - L. STEFANCHUK:

L. STEFANCHUK → other publications, search: Libmonster USALibmonster WorldGoogleYandex


Reviews of professional authors
Order by: 
Per page: 
  • There are no comments yet
Related topics
Peter Nielsen
New-York, United States
175 views rating
30.06.2023 (349 days ago)
0 subscribers
0 votes
Related Articles
9 hours ago · From Ann Jackson
10 hours ago · From Ann Jackson
10 hours ago · From Ann Jackson
SOME ASPECTS OF FDI (Foreign direct investment) INFLOWS TO AFRICA
10 hours ago · From Ann Jackson
Yesterday · From Ann Jackson
Yesterday · From Ann Jackson
Yesterday · From Ann Jackson
Yesterday · From Ann Jackson
Yesterday · From Ann Jackson
Yesterday · From Ann Jackson

New publications:

Popular with readers:

News from other countries:

LIBMONSTER.COM - U.S. Digital Library

Create your author's collection of articles, books, author's works, biographies, photographic documents, files. Save forever your author's legacy in digital form. Click here to register as an author.
Library Partners


Editorial Contacts
Chat for Authors: U.S. LIVE: We are in social networks:

About · News · For Advertisers

U.S. Digital Library ® All rights reserved.
2014-2024, LIBMONSTER.COM is a part of Libmonster, international library network (open map)
Keeping the heritage of the United States of America


US-Great Britain Sweden Serbia
Russia Belarus Ukraine Kazakhstan Moldova Tajikistan Estonia Russia-2 Belarus-2

Create and store your author's collection at Libmonster: articles, books, studies. Libmonster will spread your heritage all over the world (through a network of affiliates, partner libraries, search engines, social networks). You will be able to share a link to your profile with colleagues, students, readers and other interested parties, in order to acquaint them with your copyright heritage. Once you register, you have more than 100 tools at your disposal to build your own author collection. It's free: it was, it is, and it always will be.

Download app for Android