By Eldrede Kahiya*
With the goal of doubling exports over the next 10 years, the National Party’s Boosting Growth Through Trade policy is now central to the coalition government.
The government hopes to achieve this through trade agreements, trade missions and by making India a strategic priority for trade and development.
The benefits of exporting – increased foreign currency earnings, higher paying jobs and better standards of living – explain the coalition’s export goal.
But the reality is that doubling exports is easier said than done. Recent history is not on the government’s side.
A common goal
Ten years ago, then Prime Minister John Key’s government launched the Business Growth agenda.
Within the agenda sat a specific initiative – Building Export Markets. The goal of the initiative was to grow exports to 40% of the gross domestic product (GDP) by 2025 – from NZ$65 billion to $130 billion. But 2025 is here and this target has not been achieved.
Subsequent governments have outlined similar goals. Former Prime Minister Bill English introduced the Trade Agenda 2030 in 2017 and Labour had the 2021 Trade for All agenda.
New Zealand is not the only country to focus on significantly increasing their exports as a pathway to improving the economy.
Under President Barack Obama, the National Export Initiative was tasked with doubling United States’ exports from US$1.5 trillion to $3 trillion over the period 2010–14. The US fell well short of this goal, with exports increasing by less than 50%.
Closer to home, Australia set the goal of doubling the number of exporters between 2001 and 2006.
That didn’t happen either. Austrade – the equivalent of New Zealand Trade and Enterprise across the ditch – has since tried to suggest the goal was only ever aspirational.
The New Zealand government says it wants to double exports within ten years. But recent history has shown just how difficult this can be to achieve. Me dia/Shutterstock.
Slow growth
In 2023, New Zealand’s exports to GDP ratio was 24%, trailing the OECD average of 29%. The under-performance is not new.
Setting aside the nearly 20% reduction in exports in 2021, following the pandemic, average annual growth has hovered around 2%. This is well below the 5–6% growth required to attain the export goal.
Several historical factors – such as low participation rates of businesses in exporting, low productivity and distance to market – and emergent challenges – such as supply chain disruptions, compliance-related costs and non-tariff barriers – have made it difficult for New Zealand to achieve the goal of doubling exports.
A feasible goal?
Considering the failure of New Zealand to achieve the goal of doubling exports, it would be easy to dismiss subsequent governments’ efforts as overly ambitious. It would also be easy to criticise policy makers for ignoring the country’s unique challenges or for disregarding the role of anti-global sentiments, the residual effect of the pandemic and persistent supply chain disruptions.
But there are key considerations the government can make to build and strengthen the export sector.
First, clarity is needed. The government needs to establish growth expectations for individual sectors, industries and regions. While most of our merchandise exports simply cannot double over the next decade, knowledge-intensive, technology, or service exports can.
These expectations need to be aligned with the relevant sectors to enable each sector to develop targets and initiatives which contribute to the overall export goal.
Equally, it is important to establish priorities.
For example, should we grow exports by motivating more businesses to commence exporting? Or should we focus on encouraging current exporters to expand their international operations?
Roughly 12,000 businesses export, a third of which have ongoing export involvement. That means there are 8,000 intermittent, occasional or “uncommitted” exporters that can be nudged to adopt ongoing export status.
Nudging these businesses towards permanent export status requires a good grasp of their unique needs and international pathways.
The task of export promotion should not fall solely on the trade promotion organisation, New Zealand Trade and Enterprise (NZTE).
With trade promotion organisations such as NZTE required to demonstrate impact, there is a preference for supporting a small, carefully curated list of high-growth, high-potential exporters.
But for businesses that miss out on the chance to work directly with NZTE, engaging with the wider network of trade support organisations can be useful. Business councils, chambers of commerce, industry bodies, regional development agencies and shipping ports represent a large untapped resource which can be used for the benefit of exporters.
For exporters, joining chambers of commerce, business councils and other industry bodies remains a valuable way of keeping up with important developments.
Aspirational but not without merit
Maybe doubling exports is aspirational. But there is room for improvement with clarity and buy-in at the sector level, if priorities are spelled out and if we involve the wider network of trade support organisations.
Working on these factors might not lead to a doubling in exports, but they can help build a stronger sector that weathers global economic winds and benefits all New Zealanders.
*Eldrede Kahiya, Associate Professor - Strategy and International Business, University of Canterbury. This article is republished from The Conversation under a Creative Commons license. Read the original article.
32 Comments
Yes, I dont see how exports are going to double when the previous Govt mandated that 25% of NZ farms were to be shut down. Hopefully NZ pulls out of those climate change agreements that require any such thing (although I believe that this was a self imposed requirement, as the Paris Accord specifically said that food production was not to be impacted).
Indeed they are. Case in point ...
Africa could become the food bowl for the world. Africa can't because all major western countries - especially North America and Europe - subsidize their farmers. Remove these subsidies and Africa would take off economically.
And where would that leave NZ farming? Sadly, it'd be pretty uncompetitive and we'd have far, far fewer farms ... Probably many fewer than 25% less.
"And where would that leave NZ farming? Sadly, it'd be pretty uncompetitive and we'd have far, far fewer farms ... Probably many fewer than 25% less."
This is the comment I was commenting on. As long as we are the lowest cost producer we are fine. I am not saying anything on African cost of production or transport. All I am saying NZ will be fine if NZ is the lowest cost producer.
Africa can’t because it has a host of despotic political leaders who prevent the type of economic stability that fosters investment in supply chains and infrastructure. If EU production collapsed prices would rise - and Africa would be largely be hungrier while unsubsidised producing counties would be better off (or at least those with stable economies not prone to War). Some in Africa might benefit - but not many unless the leadership improves and barriers to inputs/tech/knowledge are addressed.
Focusing on obtaining and signing more trade agreements is a waste of time if the infrastructure isn't there in the first place.
We need better transport facilities, a more highly educated population, tax incentives that favor operating businesses over property speculation, and identifying niche industries that we can be competitive in.
Until then we'll just continue to pull tits, grow some logs, and own a whole lot of run down overvalued property.
"tax incentives that favor operating businesses over property speculation"
Here we go again ...
"tax incentives" work - but only at the beginning to get new stuff into place. Leave them there for too long and they become economically distortionary subsidies.
Want enduring change?
Simple! The whole f##king tax system needs an overhaul.
Exporting education to foreign students also came up in also part of NZ government's plan. We need to learn from the mistakes of other countries' failed ambitions in this sector.
Meanwhile in Canada, 50k international students (20k from India) reportedly never showed up to the education institutions they enrolled at after arriving into the country in 2024. The Canadian immigration agency suspects most headed straight to work in low-skilled jobs or illegally cross the border into the US. Some are reported to have applied for asylum.
Unless you are teaching globally relevant subjects in a globally relevant way, foreign students are only ever going to come to NZ for a backdoor work visa. A NZ degree is becoming worthless overseas. That's why there are a million foreign students currently in Australia, and just 50k in NZ. I do not see the NZ Universities ever changing course in order to rejoin the rest of the western world. Meanwhile, companies like Crimson Education are busy getting NZ's best and brightest students into overseas Universities, for the exact same reason.
Out of Australia today - the most applied for course in Australia is medicine. I suppose at least there everyone has a fair and equal chance of getting into Med School, unlike in NZ. NZ is behind in so many ways, its impossible to figure out where to start.
https://www.afr.com/work-and-careers/education/gen-z-know-what-they-wan…
"Medicine is such a popular choice with NSW school-leavers that four of the top 10 most sought-after courses were a medical degree."
NZ hasnt even cottoned on to the fact that medicine is not just about training GPs. Australia has a huge biotech industry, with giants like Cochlear and CSL. Along with other billion dollar companies like Telix, Mesoblast, Clarity, Polynovo, Neuren, Sonic .... Thats how you double exports - and it starts by training ALL of the best and brightest, instead of excluding them due to them having the wrong skin colour, and forcing them to go overseas to train so they are lost to NZ for good.
IT was massive pre Covid , both during there and after there 2 year Business diploma courses they went to low paid jobs (2 years and you could apply for residency) I know several people who employed them in IT roles on condition they paid back 1/2 there salaries.... as soon as residency off to Aussie.
All those second rate buildings full of them along Hobson and Nelson streets, students sharing a $9 lunch at he pop up Indian hole in the wall takeaways.
Its why the Auckland apartment market collapsed over Covid. We did this ourselves during Labours rule.
I work in the service sector. I have a niche where I can create opportunities to work with overseas customers. Some could start a branch in NZ. But trying to get those customers a NZ bank account from say Kiwibank takes the fun out of life. Actually removes the will to live. We are burdened with overpaid underperforming managers who are not incentivised to be either systematic nor entrepreneurial. Their setting is “no”. Meanwhile, in the real world, we have Trump coin.
Back to the point of this article, to get real export growth will require wholesale changes and I just see platitudes. Talk is cheap.
If it wasn’t for ag, where would we be today? Do we see policies to promote ag? My conclusion is before we go for the pie in the sky, we look after our existing goose.
Pretty weak tea, as it suffers from a lack of unity, and subjugates responsibility to current exporters. Perhaps if you are going to be aspirational, have a target that is a little more ethereal? Something like every great celebration has a little Kiwi magic? this could be wine, butter, a service app, or even just old Jonny who spent a year as a student in NZ and knows we are the rightful originators of the Pavlova? Can we not recruit some of our Kiwi Diaspora living offshore to help fly the flag as well?
Unless you work in an industry where being seen as being a bit backwards is considered charming (eg. you worked on Flight of the Concords) then most people are probably trying hard to not be seen as a New Zealander, but rather trying to assimilate into their new home as an Australian/American/Brit etc in order to be taken seriously and hopefully promoted.
IMHO its impossible to double the existing sectors, as we are mainly price takers.
The new cool things like Rocket Lab will keep moving offshore for equity and security or access to market reasons, we are capable of delivering amazing cool industries in high tech BUT we will NEVER manage to hold onto them, high tech has no intrinsic tie to NZ and will move to the US equity markets , perhaps Aussie.
Position yourself and your Financial affairs appropriately.
The positive takeout is your KiwiSaver Aggressive is mostly international equities based, as as NZD collapses you will reap this international exposure via FX movements
Once again we see another article about exporting more.
How about importing less?
Let's start with our energy systems. If we generate far more electricity we get a double win:
- We import less fossil fuel
- We go back to the days where NZ businesses derived competitive advantage from cheap electricity
There are two ways to increase the bottom line: 1) sell more and/or 2) cut input costs
Public debate on cutting input costs are non-existent. Why? Vested interests !!!
The Greens object to new dams due to a few almost extinct spotted dottery squirrels etc
The Greens object to offshore wind farms harming dolphins and whales.
The Greens object to onshore wind farms harming the visual environment or birdlife
The Greens object to oil and gas power plants
We needed the aluminum exports $$$ re balance of payments account.
Getting a new Geothermal requires that the Iwi do not object.
NIMBYs object to solar farms.
I agree with your intent Chris, how do we make a lot more power or reform the auction system so the power we have is cheaper.
You can blame The Greens, or TPM, or Iwi, if you want too.
But focus on this thought ... The other Parties outnumber them by a factor of 3 to 1.
The big issue here is that none - and I mean absolutely none - of the big parties bring specific project based policies to voters. And when they do, e.g. The NZ Battery Project (Lake Onslow) or the Cook Strait ferries, petty party politics takes over.
These types of issues should be referendum items at every election!
New Zealand could double it's exports by adopting the Chinese model, artificially depressing exchange rates (and holding interest rates higher to compensate) to make exports more competitive. However most New Zealander likely wouldn't welcome this approach.
I'm starting to think this will likely be a one term government. The problem was that they launched without any meaningful economic plan thinking austerity would solve all their problems, instead it's exacerbated them.
I'm starting to think this will likely be a one term government. The problem was that they launched without any meaningful economic plan thinking austerity would solve all their problems, instead it's exacerbated them.
They asked us to believe that we could turn NZ around by simply cutting out the waste of a few Labour policies. That was always BS but resonated with those who hated the non delivery of Labour.
They had no economic plan that would withstand scrutiny pre election so they never presented one.
The economy has crashed due to the crash on the Property Ponzi, but they cannot acknowledge this, least it makes it worse.
Our PM has exited Property knowing this... smart players got out earlier.
While Labour had no plan, and even if they had one seemingly had no ability to deliver anything apart from lockdowns and mandates. It appears to me that National have not even admitted that they have lost the golden goose (Ponzi Profits) and that they have no clue how to replace. A huge % of the manufacturing we had was related to building products for the Ponzi.
New Zealand as fallen off the foils.
Very sticky spot NZ finds itself in! I'd assume the remaining commodity markets (ag) is maxed out, with spot prices having some but moderate upward swing. Fonterra have tried most strategies yet here we are still on the cows teet! IT...some options for sure, 8/11 will fail and limited seed Capital. Aquaculture....anyone checked Pacific Salmons share track? I'm at -70%, taken years to get resource consent for an open water pen while climate hammers inshore. Bizarre culture and racial slur has overtaken the MSM, about as foreign as a three eyed alien to mass motivation of our aspiring youth! Like many countries, beaurecrats outnumber and overburden the entrepreneur class. Lots to fix. Maybe we find and can access high value minerals before the Coalition is turfed?
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