New Zealand’s economy is developed, but it is comparatively small in the global marketplace. In the late 19th and early 20th centuries, New Zealand’s standard of living, based on the export of agricultural products, was one of the highest in the world, but after the mid-20th century the rate of growth tended to be one of the slowest among the developed countries. Impediments to economic expansion have been the slow growth of the economy of the United Kingdom (which formerly was the main destination of New Zealand’s exports) and its eventual membership in the European Community (later the European Union) and the high tariffs imposed by the major industrial nations against the country’s agricultural products (e.g., butter and meat). New Zealand’s economic history since the mid-20th century has consisted largely of attempts to grow and diversify its economy by finding new markets and new products (such as wine and paper products), expanding its manufacturing base, and entering into or supporting free-trade agreements.
New Zealand has had a long history of government intervention in the economy, ranging from state institutions’ competing in banking and insurance to an extensive social security system. Until the early 1980s most administrations strengthened and supported such policies, but since then government policy has generally shifted away from intervention, although retaining the basic elements of social security. Most of the subsidies and tax incentives to agricultural and manufacturing exporters have been abolished, and such government enterprises as the Post Office have become more commercially oriented and less dependent on government subsidies. In addition, administrations have attempted to increase the flexibility of the labour market by amending labour laws and encouraging immigration.