Māori Export Competitiveness

Why exporting helps

International trade allows New Zealand to move beyond its small size and make the most out of its economic resources. This happens in three main ways:2

  • Access to bigger markets - Businesses that export have the opportunity to sell to a maximum pool of 6.7 billion customers, while those that focus on New Zealand are limited to 4.4 million people. This global pool also provides space for producers with unique products that may not be commercially successful in small markets such as New Zealand. In addition, exporting allows New Zealand firms to tap into regional and global value chains and provides a platform for forming linkages with overseas firms that might result in new opportunities.
  • Spreading risk – Exporting businesses are able to put their sales ‘eggs’ in a number of different baskets. This reduces potential losses to the firm if one basket was to collapse. While this revenue diversification is a positive, exporting firms also face a number of extra risks such as exchange rate fluctuations
  • Benefits from doing what we do best – International trade provides New Zealand with the opportunity to focus on producing what we do best, and then trade with the rest of the world for the other things that we want. Recent New Zealand research into the characteristics of exporting firms found that exporters tend to be larger, more productive, and pay higher wages than non-exporting firms.3 This suggests that by focusing on our strengths and expanding them, our economy can shift away from our less strong areas, become more productive and we will earn higher incomes

The gains from exporting flow across the whole economy as the higher incomes and sales are spent in New Zealand places like supermarkets, cafes and restaurants, clothing stores, and all the other aspects of New Zealand’s economy. In this way the whole country gains from improved export performance.

Exporting is just one part of the international story

While this paper focuses on exports, it is important to be aware that exporting is only one way that New Zealand connects to international markets. The other ways also present opportunities for businesses to grow and become more productive. The other ways include:

  • Importing.
  • Outward and inward foreign investment.
  • Migration and immigration.

How these pathways improve New Zealand’s productivity has been recently discussed by the Treasury.4 They found that connecting with the rest of the world can increase productivity through the three reasons discussed above as well as by accessing high productivity resources such as global supply chains, and applying new international ideas to New Zealand situations such as new production techniques

This suggests that exporting is not the only way that Māori businesses can gain from international connections. Businesses could grow by applying international knowledge and experience to their situation. They could do this in a number of ways including by enticing international experts to move to New Zealand, or by learning from an international partner.

2 Māori Economic Development Taskforce. (2011). Increasing exports. MET Discussion Paper. http://www.tpk.govt.nz/_documents/taskforce/met-increaseexport-2011.pdf

3 Fabling and Sanderson (2009), Saravanaperumal and Charteris (2010)

4 New Zealand Treasury (2009)

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