Exports are the thing!

Luke Malpass
Insights Newsletter
30 November, 2012

Exports are the thing! At least that is the refrain of many economists, commentators, and observers: we need to export more, we should help exporters, and so on.

These sentiments are fine in themselves, but they raise some kooky policy recommendations such as lowering the dollar and giving subsidies to exporters, R&D, and ‘innovation partnerships.’ The list is long and often undistinguished: knee-jerk calls for government support and lever pulling are all too common, while long term strategic thinking is less evident.

It is timely therefore that Export New Zealand, a division of Business New Zealand, commissioned the New Zealand Institute of Economic Research (NZIER) to write the report Lifting Export Performance: Actions to Drive Growth in Exports, that was released last week.

The beauty of this report is its sceptical approach to government intervention in exports, and arguments for a decent appraisal of government initiatives already in place. New Zealand has been “supporting” exporters in various ways for a century, says the report. It also points out how poor public policy harms exporters; poor fiscal policy particularly acts as a tax on the export sector.

The report also contains a realistic appraisal of the difficulties of scale and distance paced by the export sector. Perhaps the most positive argument in the report is that New Zealand needs more people: Although New Zealand may not be able to do anything about the distance, it can do something about the scale. Export New Zealand is on record saying New Zealand should have 15 million people by 2050.

This is positive and forward looking: New Zealand should be an attractive destination, particularly for Europeans from nations with high levels of skilled unemployment (50% of under 25s in Spain and Greece, for example). It would help add dynamism and diversity to New Zealand economically and socially, and as an added bonus, would help counter the increasing political power of the blue-rinse baby boomer brigade who will continue to vote themselves various benefits.

The Export New Zealand report takes a refreshing national interest approach to the issue of exports rather than a narrow sectoral or firm-level one. After all, an honest and sceptical eye on public policy is what is required, not cheerleading good intentions or arguing for more exports at any cost.

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