Overview

New Zealand is comprised of two main islands and several small outlying islands situated in the South Pacific, about 1,900 kilometres east of Australia, and has a population of just over 3.8 million people. The capital, Wellington, is located on the north island, as is the country's most populous city of Auckland,. Christchurch is the largest city in the south island.

New Zealand benefits from comprehensive free trade agreements with both Australia and Singapore.

Economy

New Zealand's economy has been performing well in recent years and the country has a GDP of just under 60 billion USD, according to figures for 2002 published by the OECD. Statistics produced by the New Zealand Department of Labour show that the economy averaged an annual growth rate of 2.4 per cent during the 1990s, while in 2002 it achieved growth of 4.4 per cent.

The economy is comprised of considerable manufacturing and service sectors and a highly efficient agricultural sector, which is largely export oriented and contributes about 7 per cent of the national GDP. According to the Treasury, retail and wholesale trade and restaurants and hotels are some of the most important industries in the service sector and between them account for just under a third of all service sector activity. Other important industries include transport and communications, which experienced two-figure growth throughout much of 1999 and 2000, business and financial services and tourism. Some of the largest industries in the manufacturing sector include food, beverages and tobacco, machinery and equipment, metal products, wood and paper products, printing and publishing and textiles.

Infrastructure

New Zealand has three principle airports. Two of them, Auckland International Airport and Wellington International Airport, are situated in the north of the country, while Christchurch International Airport, is located on the south island. Together they offer direct flights to destinations all over the world including Argentina, Australia, Canada, Chile, France, Germany, Hong Kong, Italy, Japan, Korea, Singapore, the UK and the USA. Flight times from New Zealand to Eastern Australia take approximately 3.5 hours, while most places on the Pacific Rim, such as Hong Kong, Singapore and Tokyo can be reached in about 10 hours.

New Zealand benefits from 13 major commercial ports, which, according to a recent report commissioned by the New Zealand Government, are regarded as some of the most efficient and productive ports in the world. This is not surprising given that approximately 99 per cent of the country's exports and imports currently travel by sea, although this trend is changing as the demand for quick delivery of specialised products is causing a growth in air freight. The country's largest port is Ports of Auckland and it provides shipping links to over 70 countries.

The country's railway system has been privatised since the beginning of the 1990s and connects all major population centres, although is does not cover the whole country. The main line in the north island runs between Auckland and Wellington and has several branch lines connecting the cities to several destinations including Tauranga, Rotorua and Napier. The main line in the south island runs along the east coast from Picton to Invercargill and there is also a scenic line from Christchurch to Greymouth.

The country's largest investor in research is The Foundation for Research, Science and Technology, which invests approximately $400 million of public money per annum on behalf of the government. The Foundation contains a special group called Technology New Zealand, which has the specific role of helping businesses to develop new technology and encourage wealth creation by businesses through innovation. However, at present New Zealand invests less in research and development than the majority of countries in the OECD. Between 1999-2000, the Government invested just 0.58 per cent of national income in research and development, compared with an OECD average of 0.68 per cent, while business investment was only 0.32 per cent of the national income, compared with an OECD average of 1.4 per cent.

Workforce

In the World Competitiveness Yearbook 2000, New Zealand ranked above both Australia and Japan for the flexibility of its labour regulations and, according to figures released by the International Labour Organization, loses relatively few working days due to industrial action. Between 1996 and 2000, New Zealand lost an average of just 20 days per 1000 employees per annum, which is just one day more than the UK and far less than both the USA and Australia, who averaged 60 days and 85 days respectively.

In recent years New Zealand's labour market has been characterised by continued job growth and low levels of unemployment of around 5 per cent. Figures from the Department of Labour show that in the December quarter of 2002 the unemployment rate fell to its lowest level in 15 years at just 4.9 per cent. However, there are recruitment problems and in the September quarter of 2002, some 16 per cent of firms reported that labour shortages were inhibiting expansion. Such labour problems are particular apparent in the construction, cultural and recreational, forestry and mining and manufacturing industries.

The general level of education in New Zealand is good. In 2000, the OECD Programme for International Student Assessment , which is a new three-yearly survey of the knowledge and skills of 15-year-olds in the principal industrialised countries, ranked New Zealand 3rd for both mathematics and literacy and 6th for science out of a total of 31 countries.

Business Costs

Operating costs in New Zealand are competitive. According to figures published by the New Zealand government, the corporate tax rate is 33 per cent while there is minimal, and in certain circumstances no, capital gains tax.

Furthermore, New Zealand wage costs are among the lowest in the developed world. For example, figures from the World Competitiveness Yearbook 2000 show that the hourly compensation rate for manufacturing workers in New Zealand was 9.08 USD per hour, compared to $15.31 in Australia and $20.75 in Japan.

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