Social investment in New Zealand

29/03/2012 § 2 Comments

Crooked Timber had a recent post on social investment policies, sparked by a conference and a couple of books:

Many countries have moved in recent years to go beyond ‘passive’ social transfers and to ‘activate’ their labour force. But there are many different ways of doing this. The interesting thing is that the policies that are the most socially equitable are now turning out to be the most economically effective too.

The New Zealand government is obsessed with economic growth. Regardless of the party in power, the government focuses on beating Australia or getting to the top half of the OECD, trying to make ours bigger than theirs.

The CT post goes on to say:

the countries that invest heavily in early childhood education, in continuous education opportunity, in high-quality training schemes, and in making it easier for women to take part in the workforce,  have both higher growth and productivity rates and less inequality and poverty.

Running down that list, we seem to do a lot of these things. Sure, sometimes the effort is half-hearted (or half of some other body part). But still, we do them. ECE reforms — check. Continuous education — we have open university entry for older students. Training — mmm, there have been some problems there. Women in the workforce — yep, see ‘ECE reforms’.

Has the country benefited from these efforts? Absent a New Zealand from a parallel universe, it’s hard to run the counterfactual. But, if we just look at GDP growth (total GDP, expenditure measure, constant US$, OECD data), we see that the country isn’t doing too badly.

This suggests a research project: have the social investment efforts in New Zealand achieved the same results as in other countries? Compare, contrast, discuss.


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§ 2 Responses to Social investment in New Zealand

  • Michael Reddell says:

    Except that the expenditure measure of GDP is not the preferred one in NZ, and there is at present an unexplained gap between the expenditure and (preferred, low) real production series.

    Looking at productivity growth, the story also isn’t attractive. From the Conference Board data, GDP per hour worked over 2001-11 rose:

    NZ 9 per cent
    Australia 11 per cent
    US 16 per cent
    France 10 per cent
    Germany 10 per cent
    Finland 17 per cent
    Italy 0 per cent

    • Bill says:

      Thanks for producing these other measures of GDP growth. They make the questions even more intriguing. If social investment policies have improved both equity and growth in other countries, why haven’t they done the same for New Zealand? Have we not done enough, or is the way we’ve done them, or is the success elsewhere overstated?

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