Does New Zealand economics have a useful past? The example of trade policy and economic development

Abstract

ABSTRACTWe examine the history of economic thought on trade policy in New Zealand from the 1920s to the early 1980s. The focus is upon the different doctrinal perspectives taken by academic economists in New Zealand. Throughout the period under review policymakers supported an inward-looking trade and development regime buttressed by extensive interventionist trade policy. Appeals to the employment argument for industrialization through import substitution lent their policies a veneer of economic respectability. Most economists were not persuaded; they argued against quantitative import controls, discriminatory tariffs and cumbersome export incentive schemes and offered, in vain, constructive alternatives that relied on price signals rather than administrative rules. One of our main findings is that most of the early work exposited here anticipated the rent seeking explanation for the configuration of trade policy.