Learning from New Zealand's Reform Lessons

The economic policy has always been curious and interesting. Especially because of numerous policy advisors that endorse normative judgements as policy assets. Also, many advisors often cite case studies of particular countries that are known for wise solutions. However, policy copying has never been very successful, but lessons from the episode of economic reforms and their understanding are crucial to policy creation and implementation. Ireland, for instance, had not been copying anyone during its decade of a growing prosperity and high economic growth. Instead, Irish Competitiveness Council found deep inspirations for economic reforms in Michael Porter's book called The Competitive Advantage of Nations. Several days ago, I came across the article published at Hoover Institution, written by Rupurt Darwall, comprehensively describing the outcome of pro-growth reforms in New Zealand. The article can be read here.


In a past decade, New Zealand's policymakers pursued a set of economic reforms such as market liberalization, product market deregulation, welfare system reform and a comprehensive tax reform by introducing a push from income tax to consumption-based tax. The evolution of market reforms in New Zealand emerged from various aspects of economic theory such as public choice and transaction cost theory which are, by any means, crucial to effective decision-making in economic policy. In mid-1990s, New Zealand's average economic growth rate was 4 percent and the deregulation of the labor market resulted in a robust productivity growth.