The government, exporters and economic growth in New Zealand

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Abstract
In this paper a number of growth equations derived from the multi‐sector production model [originating with Feder (1983)] are estimated for the New Zealand economy for the period 1968–91. The one that best explains the variation in the economy's growth rate comprises two production sectors: exporters of manufactures and services and ‘the rest’ of the economy. A three sector model comprising the government, (total) exporters and ‘the rest’ appears to be inappropriate in the New Zealand context. This suggests, contrary to the apparent expectations of New Zealand policy‐makers, that the government sector has not had a negative effect on the rate of growth of the economy. Furthermore, exports of manufactures and services appear to have had a greater effect on recent economic growth than exports of primary produce and raw materials.

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