A study for the New Zealand Business Roundtable by economist Frederic Sautet released today emphasises the importance of an economic environment which is more conducive to entrepreneurship if New Zealand is to grow and prosper.

Dr Sautet is a Senior Research Fellow at the Mercatus Center at George Mason University. Previously he worked in New Zealand at the Treasury and the Commerce Commission.

The report is entitled Why Have Kiwis Not Become Tigers?: Reforms, Entrepreneurship and Economic Performance in New Zealand .

It finds that New Zealand's economic reforms in the 1980s and early 1990s “vastly improved the entrepreneurial environment, and, as a result … have greatly enhanced New Zealand's economic performance.”

Since that time, however, little has been done to improve that environment, and in recent years there have been backward moves that have made the economy less free and less conducive to business operation.

Dr Sautet's report focuses on five areas which were important pillars of earlier reforms: the tax system, the labour market, trade liberalisation, monetary policy, and fiscal management.

The report argues that more needs to be done in most of these areas and others if New Zealand is to become a ‘tiger' economy and generate a high rate of growth in income per capita. “In the absence of changes”, Dr Sautet says, “New Zealand's economic outlook seems likely to be mediocre rather than exciting.”

“A key perspective in the report is the central focus on entrepreneurship and the importance for wealth creation of an environment where tax and regulatory burdens are not onerous”, Roger Kerr, executive director of the New Zealand Business Roundtable said.

“As Dr Sautet says, “Only by guaranteeing the free emergence, discovery and exploitation of profit opportunities can countries improve their growth prospects over time.”

“These perspectives are sometimes described as arising from Austrian economics, which puts entrepreneurship at the centre of investment and growth. A focus on an economically free environment and on entrepreneurship has been absent in much official advice to the government about how to achieve its growth objectives.

“Such a focus is highly relevant to the debates about the problems of increasing government spending, taxation and regulation which the Business Roundtable and others have identified as reasons why New Zealand's medium-term productivity and growth rates are now projected to deteriorate rather than improve”, Mr Kerr said.

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For more information, contact:

Frederic Sautet
Senior Research Fellow
Mercatus Center, George Mason University
Ph: +1 703 993 4939
Email: fsautet@gmu.edu

Roger Kerr
Executive Director
Ph: 04 499 0790
Email: rkerr@nzbr.org.nz

Web: www.nzbr.org.nz