A chart for New Zealand’s national day

Cross-country comparisons of material living standards aren’t easy to do well, and especially for earlier historical periods when data are often patchy, to say the least.

But Professor Angus Maddison made the effort of compiling estimates for a range of a countries –  in some cases going back (with estimates every few centuries) as far as the year 1AD.  He used the best estimates he could find from other researchers where they were available, and did his own estimates to fill in some of the gaps.  As one gets further into the 20th century, more official or semi-official estimates could be used.

His fullest set of estimates for the last couple of hundred years was for a group of 16 Western European countries and the four advanced “offshoots” –  New Zealand, Australia, Canada, and the United States.     The estimates have to be taken with a considerable pinch of salt, but in broad outline they seem fairly consistent with other research on the relative prosperity of various countries.

Maddison reports an estimate for each country for either 1830 or 1840.  For New Zealand he uses an estimate for 1840 that was consistent with his estimates for much of Europe in 1000AD (and the same low estimate as he uses for pre-settlement Canada, US, and Australia).  If that estimate is even roughly right, then material living standards in New Zealand at the time the Treaty was signed were lower than those in all other 19 countries.

Here is how that ranking is estimated to have changed (using the Conference Board’s Total Economy Database, which builds on Maddison’s work, for the latest observation).

waitangi

 

Through some combination of immigration of people and technology, substantially (and often forcibly) displacing the previously dominant population and culture, fifty years later GDP per capita in New Zealand is estimated to have been among the very highest in the world.  One wouldn’t put much weight on precise numbers, but on this particular series, in 1910 no country had a higher GDP per capita than New Zealand.

But 100 years on, 16 of these 19 countries now have higher GDP per capita than New Zealand does.

Absolute living standards in all of these countries are, of course, far higher than they were in 1840.   And the evidence strongly suggests that living standards in New Zealand –  and Canada, US, and Australia –  are now far higher than they’d have been without European settlement (see here or here).  But the last 100 years has been a fairly dismal relative performance by New Zealand.  And there is no sign of that reversing again.

3 thoughts on “A chart for New Zealand’s national day

  1. Not necessarily that badly. The Liberal govt did a lot of stuff a modern market-oriented economist wouldn’t enthuse over, but it probably didn’t make that much difference. I think what happened in that period was some combination of
    (a) the aftermath of the huge Aus boom of the 1870s and 80s. From 1890 to around WW1 there was no growth in Aus per capita GDP (so we went past them)
    (b) capturing the fuller benefits of refrigerated shipping and the associated diary technologies, all in an environment in which the world economy was doing well. In essence, there was a hugely positive supply shock. In part, the gains were shared with the new tide of immigrants – in some sense, akin to Ireland in the decade before the bust, there were so much wealth to share around we could let many people in and still do very well ourselves.

    All that said, if I’d used 1913 (last pre WWI year) rather than 1910, we’d have been third. So in the longer sweep of history, we produced top notch incomes for 60-70 years from the 1880s to the early-mid 1950s.

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  2. On Monday Collin Peacock (“RNZ”) will be discussing whether diversity increases creativity; so I guess the great minds are on to it?

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