Māori Export Competitiveness
Areas of New Zealand exporting success
Research has suggested that New Zealand’s export competitiveness could be increased by improving efficiency and innovation in the sectors that we are successfully exporting. We should keep doing what we have been doing, just do it better and smarter, whilst continuing to look for new products and markets.7
This section looks at the successful parts of our export profile and lists some products that could provide opportunities for Māori businesses to explore.
5 OECD (2010)
6 For a comprehensive overview of New Zealand’s export and investment linkages with the rest of world, see the ‘Global New Zealand’ report published every 6 months by Statistics New Zealand and MFAT. This includes our key exports to each of our main markets. The report is available at http://www.stats.govt.nz/browse_for_stats/industry_sectors/imports_and_ exports/global-nz-dec-10.aspx
7 Ballingall and Briggs (2002)
Nesbit (2011) recently analysed the performance of New Zealand’s exports between 1999 and 2007.8 In that analysis New Zealand’s goods exports were grouped into five areas, shown in Table 1:
- Star performers - These are products where New Zealand is gaining global market share and where global exports of these products are out-growing the global exports of all products.
- Potential stars – These are products where New Zealand is losing global market share, but global exports of these products are out-growing the global exports of all products.
- Losers in slow growing markets - These are products where New Zealand is losing global market share and these products are growing slower than the global exports of all products.
- Winners in slow growing markets - These are products where New Zealand is gaining global market share, but these products are growing slower than the global export of all products.
- No comparative advantage - These are products where New Zealand is relatively worse at producing them than other countries.9
Table 1 tells us that while most of New Zealand’s exports are in low-growth products, 20 percent are in high-growth products. Concentrating on improving the performance of these high-growth sectors can go a long way to re-balancing the economy and helping meet the Government’s export goal. The rest of this section will focus on the high-growth products, the star performers and potential stars.
Table 1: New Zealand’s areas of export success
|2007 Value of exports in each area (US$000)||Percentage of total exports|
|Area 1 Star performers – world exports grew faster than average, NZ exports grew even faster||3,932,146||14.6%|
|Area 2 Potential stars – World exports grew faster than average, but NZ exports grew slower than world exports||1,531,484||5.7%|
|Area 3 Losers in slow growing markets - world exports grew slower than average, NZ exports even slower||7,246,254||26.9%|
|Area 4 – Winners in slow growing markets - world exports grew slower than average, but NZ exports grew faster||9,750,909||36.2%|
|Total of the four areas||22,460,794||83.4%|
|No comparative advantage||4,470,140||16.6%|
Source: Nesbit (2011)
8 Note that this analysis was carried out at an industry level, rather than at the firm level. There may be value in identifying Māori businesses in these groups and doing some case studies to show what strategies have helped them to succeed.
9 The world’s largest exporters of products are not always those that have the lowest production costs. What matters is the comparative advantage - that these countries are relatively better at making that product than another, when compared to another trading country.
Star performers are the products where New Zealand has an export advantage, and global demand is soaring. Expanding or finding innovative production methods for our star performers should be the goal of the businesses that make them. Making the most of these chances will help re-balance the economy and lift our export performance.
New Zealand’s star performers, as shown in Table 2, are dominated by food or animal products, manufactured goods, or machinery and transport equipment.
Table 2: New Zealand’s star performing exports
|NZ exports 2007 (US$000)||Percentage of star performing exports|
|Food and live animals||1,763,924||44.9%|
|Beverages and tobacco||60,922||1.5%|
|Crude materials, inedible, except fuels||320,379||8.1%|
|Mineral fuels, lubricants and related materials||
|Animal and vegetable oils and fats||3,870||0.1%|
|Manufactured goods classified chiefly by material||631,468||16.1%|
|Machinery and transport equipment||554,656||14.1%|
|Miscellaneous manufactured articles||159,405||4.1%|
|Other (includes confidentialised items)||200,266||5.1%|
These products typically include some type of processing or development. Some of the more specific examples provided by Nesbit (2011) include:
- Natural milk products.
- Prepared foods.
- Fresh or chilled cuts of sheep meat.
- Lifting machinery.
- Washing machines.
- Hydraulic engines.
- Agricultural machinery.
- Metals including iron, steel or aluminium
Ballingall and Briggs (2002) suggest focussing on products where New Zealand is losing market share in high growth markets. These products should be stars if their performance could be improved.
New Zealand already shows an export advantage in these products. It should be simpler to build on these existing strengths than develop exports in entirely new products. The high demand growth for these products also suggests that there is plenty of space for New Zealand producers to expand
Nesbit (2011) provides some specific examples of these products, and as with the star performers, they involve some processing beyond raw materials. Examples include:
- Fresh cheese.
- Preserved shellfish.
- Fresh or chilled vegetables.
- Machinery and transport equipment.
- Electric conductors.
- Machines to crush or grind stone, ores and minerals.
Producers of these, or related products, need to review their production methods to make sure they are keeping up with the technological frontier. Any new or innovative approaches could be implemented in New Zealand.
While they are not comprehensive, the examples of the potential and star performers do show that there are opportunities for growth across both the primary and manufactured sectors.
As Figure 1 showed, New Zealand’s services exports represent about 20 percent of our total exports. Figure 2 shows that while New Zealand’s services exports as a percentage of GDP are higher than Japan, the United States and Australia, they are low when compared to most other OECD countries. This difference suggests that our services exports are under-developed and present a growth opportunity for New Zealand – and Māori - producers.
Figure 2: OECD members’ services exports
Exports as a percentage of GDP, Luxembourg on RHS, 2008 Source: OECD
Services trade data are notoriously difficult to source, however, Nesbit (2011) does analyse the available data and finds that New Zealand has an export advantage in the following sectors:
- Business travel.
- Legal, accounting, management consulting, and public relations.
- Personal, cultural, and recreational services.
While this list is not exhaustive due to the lack of data, it does highlight some areas where New Zealand is doing well, and could have the potential to do better. Businesses in these sectors that focus only on the New Zealand market, could be in a good position to consider entering foreign markets.
Potential areas of Māori exporting strength
The potential areas of Māori exporting strength are likely to be in the sectors where Māori businesses are already successful. This section identifies some broad areas in the Māori economy that could be star performers.
Official information on the size and make-up of the Māori economy is scarce. Estimates of Māori exports by sector are not available. A number of studies have estimated the size and industrial make-up of the Māori economy (NZIER 2007, BERL 2008, BERL 2011). The most recent of these estimated Māori GDP to be $10.3 billion in 2010, with an asset base of $36.9 billion
Figure 3: Industry contribution to Māori GDP, 2010
Note: Primary includes agriculture, forestry, fisheries, and mining. Other services includes health, community, cultural, recreational, personal and other services. Source: BERL (2011)
Figure 3 shows that the largest industries in the Māori economy are other services (including health, community, cultural, recreational, personal and other services), property services, the primary sector (including agriculture, forestry, fisheries, and mining), and manufacturing. The primary and manufacturing sectors are trade-exposed and thus present ample opportunities for Māori businesses to engage internationally.
Figure 4 shows that Māori assets are spread out across a diverse range of sectors. There is a significant amount of asset ownership in the primary sector. Other significant assets are held in property and other services.
The estimates from BERL (2011) are broad and indicate that Māori businesses operate across the whole of the economy. This suggests that there could be opportunities for Māori businesses across the star performing and potential star products discussed above.10
Many of New Zealand’s star performers and potential stars were sourced from the primary sector. The high level of asset ownership in, and the large contribution to GDP from, the primary sector suggests that Māori businesses could be well positioned to take advantage of the primary sector export opportunities.
Figure 3 shows that Māori have a strong presence in the services sectors that were shown by Nesbit (2011) to have an export advantage. Specifically mentioned were tourism, education, and personal, cultural and recreational services. Many of these services are tradable, and developing international sides to Māori businesses in these areas would deliver benefits to the entire economy.
10 See Māori Economic Development Taskforce (2011) for a brief commentary on the uniqueness of Māori exports – namely tikanga Māori and understanding the importance of relationships in conducting international business.
Figure 4: Māori assets by industry, 2010
Note: Primary includes agriculture, forestry, fisheries, and mining. Other services includes health, community, cultural, recreational, personal and other services Source: BERL (2011)