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New Zealand Report

In: Business and Management

Submitted By hmckellips
Words 1269
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Running Head: NEW ZEALAND ECONOMIC ANALYSIS REPORT

New Zealand Economic Analysis Report
Heather McKellips
Grand Canyon University
ECN 600
November 26, 2010

Abstract
New Zealand is a small group of islands that is located to the southeast of Australia. It has a total land area of about 103,733 square miles, making it about the same size as the state of Colorado, USA. Although it has a small size, New Zealand is a thriving country. Their main exports include wool, forestry products, meat, dairy, fruit and nuts and fish. They have a thriving tourism business with more than 1.5 million visitors in 1999. Despite its small size and having to compete with more productive and more powerful nations, where does New Zealand’s economic being lie? This report will detail the economic stability of this country.

Resting just southeast of Australia, New Zealand has some major competition with the production and exportation of their goods. They are also very reliant on foreign imports. Because of the major country of Australia just to their north, they also lose many members of their population to immigration. But on a whole, how does their economy hold up in comparison to the rest of the world?
New Zealand is a power parity and has a gross domestic product (GDP) of $63.8 billion. The Organization for Economic Co-Operation and Development (OECD) has shown a steady increase in the GDP of New Zealand since 2004. However they still fall below the OECD average. (New Zealand Institute, 2010)
There will be an increase in GDP for New Zealand in 2010 because of the earthquake that took place in September. The increase is estimated to be about $4 million dollars to replace and repair the damage that was done during the earthquake. This is a great example of paying attention what has taken place within a country over the last year when reviewing the GDP. Obviously New Zealand would not have had a $4 million dollar increase if the earthquake had not taken place. (New Zealand Institute, 2010) On average New Zealand spends about 3.1% on military expenditures. This is a small amount when compared to the United State’s 19.3% or Russia’s 18.7% or China’s 18.2%. However when evaluated against the level or military role New Zealand has on the rest of the world it is a reasonable number. (Visual Economics, 2010) In contrast to their military expenditures, New Zealand spends about 7.1% on health care. This is one area where they spent the same amount as the United States who also spent 7.1% of their GDP on health care. New Zealand also spends about 6.2% on education which is higher than the United States who spent 5.5% of their GDP on education. New Zealand also had a higher enrollment rate for their schools than the United States and Japan. It is clear to see that the country of New Zealand is far more concerned with health and education rather than their military. This is apparent in the Human Development Index (HDI) where New Zealand has an average life expectancy of 80 and average adult education of 12.5 years. In the areas of health and education New Zealand has higher rates than the United States and the United Kingdom. (Organization for Economic Co-Operation and Development, 2010) The per capita GDP of New Zealand was $27,520 as of 2009. The per capita GDP is very important when trying to determine the economic stability of a country. By taking the GDP and dividing it by the country’s populations, it can be determined the value of production per person. This per person or per capita amount indicates the ability of those people and the country to spend money on the items that they need and want such as education, environmental protection, health and welfare. New Zealand struggles to get some people to with highly sought after skills to migrate to their country because of this slightly lower GDP per capita. In contrast the United States had a GDP per capita of $46,653. (United Nations Development Program, 2010) New Zealand once had one of the highest GDP per capita in the world until the 1960’s. Although this took a steady decline through the 1970’s to the 1990’s; in 1992 the GDP per capita began to rise again in 1992 and made a steady climb until the last recession that began in 2008. The Organization for Economic Co-Operation and development (OECD) has New Zealand below the average and ranked 22nd. This is in comparison to the United States that is ranked 3rd. (New Zealand Institute, 2010)
The population of New Zealand is approximately 4,315,800. There has been a one percent annual increase in population since 1996. The OECD had New Zealand listed as the highest population growth rate for the census between 1991 and 1996. Although as mentioned above there is a large percentage of the population lost because of immigration to Australia as well as the United Kingdom and other countries. There is also an increase of migrants from other countries moving to New Zealand with a heavy concentration of them coming from the Asian countries. The Asian population jumped from 1.5% ten years prior to 5%. However when compared to the United States with an average population growth rate of 0.9%, and the United Kingdom with a population growth rate of 0.7%, New Zealand has a slightly higher population growth rate. (New Zealand Institute, 2010)
When comparing the Human Development Index, New Zealand actually sits above the United States in 2010 ranking under very high human development according to the United Nations Development Program (UNDP). New Zealand sits well above the OECD average and much higher than the rest of the world. This is an important factor to evaluate when trying to determine the well-being of this country. Although they have a lower GDP and GDP per capita than some of the other major countries in the world, they are ranked 3rd overall on the HDI which suggests a higher quality of life. (United Nations Development Program, 2010)
There are many factors that must be analyzed in order to make a sound decision on the well-being of a country. The country that has been researched and analyzed for this exercise was New Zealand. It is important that all factors of a nation be evaluated independently, then together, and then compared to other countries in the world.
Base on the research that has been done, it is safe to say that New Zealand is has a good economic well-being. They are able to compete with much larger and more productive and powerful countries such as the United States of America. Although their GDP and GDP per capita fall below the OECD average they make up for it with an extremely high HDI. This brings up the question of quantity verses quality. It is clear that New Zealand lacks some of the quantity that other countries in the world have but their quality is much better.

References
New Zealand Institute, 2010, GDP Per Capita, retrieved from the internet on November 26, 2010 from http://www.nzinstitute.org/index.php/nzahead/measures/gdp_per_capita1/
United Nation Development Program, 2010, International Human Development Indicators, retrieved From the internet November 26, 2010 from http://hdr.undp.org/en/statistics/
Visual Economics, 2010, How Countries Spend Their Money, retrieved from the internet November 26, 2010 from http://www.visualeconomics.com/how-countries-spend-their-money/

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