1. Introduction
Export performance is both an indicator of, and a factor in, New Zealand's economic success. In an increasingly globalised environment, the ability to reach and supply international markets is perhaps the clearest measure of performance for New Zealand firms.
Exporting provides substantial benefits, both to the firms involved and to the economy as a whole. Exporting gives firms access to larger markets, allowing them to expand their customer base, increase their scale and raise profits. It forces firms to confront world-class competitors, exposes them to new ideas and expertise, and encourages them to stay abreast of market trends. By maintaining a strong international position, firms also protect their domestic markets from increasing import competition. For the economy as a whole, exporting brings wealth into the country, provides employment and allows us to raise overall living standards.
However, New Zealand's recent export performance has been less than stellar. While other OECD countries have been rapidly expanding their export intensity, New Zealand's exports to GDP ratio has changed little. By 2006, New Zealand's exports to GDP ratio was 28.86%, 21st of the 30 OECD countries, and well behind most other small countries (OECD 2008). For goods exports, the measure examined here, New Zealand's 2005 export intensity was 20.1%, 21st of the 28 countries with data available, and less than half that of other small countries such as Ireland, the Netherlands and Hungary. Although comparisons between New Zealand and these countries need to take into account their proximity to large markets, and New Zealand's lower import intensity of exports (such that most of the value added in New Zealand exports is produced domestically), slow export growth has become a cause of concern to many (see, for example, Skilling and Boven 2005; Boston Consulting Group 2004).
Improved aggregate export performance can come from a wide range of sources. Export value can increase with little change in the composition of products exported, firms involved or trading partners, through increasing the volume of exports or through changes in the unit price of existing export products. Alternatively, export growth can involve significant innovation – new firms beginning to export, new products being introduced, new markets being targeted.1 At the same time, the international environment changes rapidly, and exporting is a difficult business. Not all exporters survive, and those that do may find themselves changing the focus of their efforts to different countries or products.
In this paper we examine changes in the composition of New Zealand's merchandise exports over time, focusing on the dynamics of market entry and exit, and on the degree of diversification in recent years. We consider a greater level of detail than has been attempted previously, considering trade patterns at the level of detailed 5 and 10 digit product classifications by destination. Two levels of analysis are presented in parallel – a macro perspective on exports from New Zealand, and a micro perspective on the export performance of New Zealand firms. The analysis is descriptive, and is intended to frame future analysis of the determinants and impacts of observed trading behaviours. In many cases, this paper replicates and extends previous New Zealand and international studies of export performance.
Future work will consider the firm-level and environmental determinants of export market entry and exit, including the impact of firm characteristics such as domestic or foreign ownership, productivity, innovation, and past export performance alongside environmental factors such as exchange rate levels and volatility, economic conditions in New Zealand and destination countries, and geographic and cultural distance. We will also be looking at the impact of exporting on firm performance, asking the question of whether exporting has an appreciable impact on firm-level productivity and performance.
Back to Top