Economic outcomes in New Zealand: a varieties of capitalism lens

Abstract

This article situates New Zealand in the Varieties of Capitalism literature and then uses this theoretical framework to provide a critical analysis of the country’s recent economic under-performance. It argues that while New Zealand is rightly assumed to reflect a near pure example of a free-market Liberal Market Economy, its historical trajectory has been rather more mixed. This has led some analysts to assume that a shift from a ‘Coordinated’ to a ‘Liberal’ Market Economy has occurred, yet the state played a much heavier-handed role in creating and overseeing such apparently cooperative mechanisms than is the case in true coordinated market economies. When the state removed such support structures as the results of pro-market reforms in the 1980s and 1990s, there was a lack of ‘coordination’ altogether in the New Zealand political economy. Businesses, either on a collective or an individual basis, did not step in to perform functions previously delivered by the state. This analysis is applied specifically to the fields of skills formation, or vocational education and training, and research and development, as illustrative examples of this broader critical line of argument.