Time to Stoke New Zealand's Competitive Advantage

5 January, 2004

Time to Stoke New Zealand's Competitive Advantage

New Zealand is losing ground to other countries in the annual Heritage Foundation/Wall Street Journal index of economic freedom, New Zealand Business Roundtable policy advisor Norman LaRocque said today.

'This nation is standing still while other countries move forward," Mr LaRocque said.

New Zealand's overall score in the 2005 index of economic freedom was the same as 2004. However, New Zealand's ranking slipped from third last year to fifth-equal in 2005 - behind Hong Kong, Singapore, Luxembourg and Estonia.

Relative to other top scoring countries, New Zealand did well in all categories except for Fiscal Burden, where our ranking was lower than all but one top ten nation.

"New Zealand's high ranking is commendable. The country's recent economic success owes much to the forward-looking reforms of the 1980s and 1990s - a point recently acknowledged by the government in its December fiscal update," Mr LaRocque said.

"New Zealand cannot afford to stand still. The Heritage Foundation/Wall Street Journal report shows that, over the last nine years, countries that have done the most to improve their economic freedom scores have in general experienced the highest rates of economic growth. According to the report, countries with the largest improvement in economic freedom between 1995 and 2003 had an average GDP growth rate of 4.75 percent, compared to 2.68 percent for those with the smallest improvements in economic freedom.

"Several countries have made significant strides in opening up their economies and lifting economic freedom. These include top-ranked countries such as Australia, Ireland, Luxembourg, Denmark and Estonia.

"If New Zealand policy makers are serious about economic growth, they must ensure that New Zealand's policy settings provide the country with a competitive advantage over its trading partners," Mr LaRocque said.

The Heritage Foundation/Wall Street Journal index of economic freedom 2005 can be found at www.heritage.org/research/features/index/

ENDS

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