Geography Matters

As part of the research by the Agribusiness and Economics Research Unit funded by the Endeavour Fund and by the Our Land and Water National Science Challenge, Caroline Saunders and Paul Dalziel wrote an article entitled Geographical matters for small advanced economies: Implications for economic strategy. The paper was coauthored with Andrew McCallum, Principal Advisor, Economic Strategy and Insights, at the Ministry of Business, Innovation and Employment.

The article was published in the Australasian Journal of Regional Studies (Volume 27, Number 2) in 2021. It received the John Dickinson Memorial Award for Best Paper in the journal that year. The Abstract for the article is as follows:

New Zealand is a small advanced economy in the South Pacific Ocean. Policy advisors often compare New Zealand’s economic performance with those of other successful small advanced economies. These comparisons generally recognise that New Zealand is uniquely distant from the world’s largest and highest-income markets. Nevertheless, it has become commonplace for policy advisors to say “Geography is not destiny: New Zealand can do better”. 

This paper draws on standard regional economic development analysis to conclude that geography matters for economic strategies. It draws on endogenous growth theory to explain how the properties of knowledge mean that knowledge can sustain increasing returns to scale and hence productivity growth. The paper draws on that theory to introduce a mission-oriented innovation research programme that has contributed to creating and capturing greater value from New Zealand food and fibre exports.

The full article can be read here [external link].