The Economic Reconstruction of Welfare State--The New Zealand Experience

• Main Authors: Shei Wei Chang, 張學尉
• Other Authors: Yin Kann Wen
• Format: Others
• Language: zh-TW
• Published: 1999
• Online Access: http://ndltd.ncl.edu.tw/handle/45434719809114591533

碩士 === 國立東華大學 === 國際經濟研究所 === 87 === The article discussed the valuable experience of economic development of New Zealand from 1960s until 1995 when the economic reform was finished. At the same time, the theory of Swan model was mixed with practical information in order to check the appropriate for the exchange rate and expenditure policies that the New Zealand government took for nearly forty years. Finally, it compared the differences of Taiwan and New Zealand''s policy experiences in order to set up a example of policy planning for us about the process of urging welfare state. For a long time, New Zealand has presented something of an enigma, a developed high income economy with conservative governments, but with bouts of radical law-making resulting in distinctive policies, and by the intervention of governments to address economic, political and social welfare policies. From 1945 until the early 1970s has been a "golden age" of New Zealand. These performances involved increasing government intervention to provide social security and other programmes and thus formed high growth rate, low inflation and productivity grew rapidly. During the period, stable exchange rates and lower trade barriers formed the performances of high growth rate. Obviously, stable high growth rates, together with high tax rates, provided the resources for increased government spending on health, education and welfare policies. However, welfare losses associated with the state interventions suggests that growth rates might have been even higher. By the later 1960s, a disequilibrium economic structure produced many problems, inflationary pressures were beginning to emerge, unemployment rate rose. These effects were magnified by a New Zealand commodity boom during the early 1970s and by Britain''s decision that she would almost certainly join the European Economic Community. The two adverse oil shocks of 1973 and 1979 caused serious deterioration in the terms of trade, negative real interest rates reduced the need for urgent structural adjustment. Low interest rates may have even encouraged bad public investment and industrial projects. There was an inability to recognize the need for structural change to accommodate the new economic reality. During the 1970s, relative to the OECD, the per capita income didn''t improve, unemployment continued to rise and inflation continued to increase. At the same time, the economic policies included a significant increase in agriculture subsidy, extensive wage, price and interest rate controls. They reflected that the policies defied the downward trend in the terms of trade, and by a series of exchange rate devaluation to allow living standards to be preserved. But the result was declining competitiveness, low productivity and slow real economic growth. With the bad performances and an increasing number of people seemed to lose faith in the ability of governments to maintain economic stability, improve income distribution and stimulate growth, so the political innovators managed to convince the electorate that there was a crisis and a need to reform. From 1984 when the Labour Party took power, it took a series of policies, and the main purpose was to decrease the intervention of government. The policies included: the devaluation of New Zealand dollar, the floating of exchange rate, the remove of import restriction, the release of control on wages and prices, the decrease of fiscal deficit and the change of tax policy, such as the decrease of personal income tax and the implementation of add-valued tax. A series of fiscal and economic reforms changed the economic role of the government and the way it preformed its allocative, distributive and stabilization functions. So the factors of New Zealand''s successful experience included a pragmatic culture, an isolated and small population, concentrated political power and pressing economic concerns and the ten year''s reform to achieve a nice performance. The article discussed the process about the reform of New Zealand and the mixture of economic policies, so the valuable experience is a good example for us about urging welfare state, the reconstruction of government and setting up the economic policies.