Essay Sample on the International Trade of New Zealand

Date:  2021-06-17 05:39:46
5 pages  (1365 words)
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Harvey Mudd College
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One of the factors that have led to the increase in the volume of New Zealand's exports is the increase in the purchasing power of China. This increase has led to spillovers to other economies, with New Zealand included among those economies. The New Zealand exports to the China economy grew more than any other exports of New Zealand as a result of this increase in the purchasing power of China. The purchasing power has risen from3.5% to 11.4%. This is about the year 2009. This increase in the exports was mainly due to two products namely, wood and dairy products.

Apart from the increase in the New Zealand exports to China, there has also been a considerable increase in the exports to the Southeast Asia economies like Indonesia, Malaysia, the Philippines and other countries of the ASEAN. The most probable reason why there has been a huge growth in the exports to these ASEAN countries is due to the increase in the personal income of the citizens of those countries and also due to the changes in the preferences of the consumers. The economies of most of these countries are quite populous despite the low per capita income. The growth in the earnings of the individuals has also been stable. The populations of these economies have also adopted new diets that constitute beef, dairy, and sheep meat. These products are the main exports of New Zealand to the region; hence their demand has increased steadily (Sahota, 2009).

Agricultural production has increased in these countries as result of the adoption of modern technology in farming, but this has not affected the demand for imports from New Zealand due to the increase in demand. However, the most important reason why there has been an increase in these exports has been due to the signing of key trading agreements with these AEAN countries (Czinkota et al., 2009).

There have also been considerable changes in the import market of New Zealand over the last few years. Australia is still the highest source of imports for New Zealand, but there has been an increase in the imports from Asia, except Japan. Over the last ten years, the Asian imports have increased to 33% from 16%. China has been the highest source of the growing imports, and it has gone on to overtake the European region regarding the exports to New Zealand. Currently, it is the second largest import source for New Zealand. Imports from the ASEAN region and other developing economies like Taiwan, South Korea, and Hong Kong have also increased. The major reason for this increase has been the signing of many trade agreements between the countries and New Zealand.

The table on the next page shows the GDP growth rate of New Zealand. The exports of the country have risen to account for at least 30% of the GDP of the country. This has been due to the reduction in the restrictions on the economy. New Zealand had one of the most restated economies several years ago, but currently, it has one of the most unrestricted economies. It is a very competitive economy, and it is very export driven. The country has a low inflation, and the Reserve Bank is responsible for managing the monetary policy for the country.

New Zealand GDP Last Previous Highest Lowest Unit GDP Growth Rate 0.40 0.80 2.80 -2.40 percent [+]

GDP Annual Growth Rate 2.70 3.30 7.30 -2.50 percent [+]

GDP 173.75 200.14 200.14 5.18 USD Billion [+]

GDP Constant Prices 58178.00 58068.00 58178.00 26766.00 NZD Million [+]

Gross National Product 61130.00 60050.00 61130.00 25099.00 NZD Million [+]

Gross Fixed Capital Formation 14370.00 14271.00 14370.00 4071.00 NZD Million [+]

GDP per capita 36801.40 36272.47 36801.40 21659.83 USD [+]

GDP per capita PPP 35158.64 34653.33 35158.64 22888.25 USD [+]

GDP From Agriculture 3145.00 3170.00 3266.00 1804.00 NZD Million [+]

GDP From Construction 3575.00 3511.00 3575.00 1107.00 NZD Million [+]

GDP From Manufacturing 5754.00 5845.00 6266.00 3968.00 NZD Million [+]

GDP From Mining 781.00 800.00 1187.00 437.00 NZD Million [+]

GDP From Public Administration 2449.00 2455.00 2455.00 1311.00 NZD Million [+]

GDP From Services 38459.00 38191.00 38459.00 16867.00 NZD Million [+]

GDP From Transport 2450.00 2468.00 2468.00 941.00 NZD Million [+]

GDP From Utilities 1615.00 1617.00 1629.00 1040.00 NZD Million [+]

International trade is, therefore, the fuel that drives the economy of New Zealand, with Australia leading as the highest importer of New Zealand products. Hence, it would be safe to say that the exports of New Zealand have increased significantly as a result of the trade agreements between the country and its trading partners, and also due to the increase in the demand and purchasing power of its partners. This has also led to increasing I the prosperity of the New Zealand economy, which can be measured using the GDP growth of the country. Therefore the growth in exports has resulted in an increase in the GDP of the country, which translates to economic growth.

Calendar GMT Reference Actual Previous Consensus Forecast

2016-09-14 10:45 PM Q2 0.9% 0.9% 1.1% 0.7%

2016-12-21 09:45 PM Q3 1.1% 0.7% 0.9% 0.8%

2017-03-15 09:45 PM Q4 0.4% 0.8% 0.7% 0.8%

2017-06-15 10:45 PM Q1 0.4% 0.67%

2017-09-14 10:45 PM Q2 0.66%

2017-12-14 09:45 PM Q3 0.70%

Net exports are the other name given to the balance of trade of an economy of a country. It is usually calculated by finding the difference between the value of the exports of a country and the value of the imports of the same country. Hence, the balance of trade is mainly determined by the imports and exports. The net export is a very important measure of the GDP of a country. In case a country can export a higher value of goods than the value of the goods it imports, then the country is termed as having a positive balance of trade about that period. When the vice versa is true, then the country has a negative net export or a negative balance of trade. If this is viewed in the general case, then this can be used to indicate the rate of saving, the future exchange rates, and also the sustainability of an economy (Woolcock and Sampson, 2003).

Therefore, to make sure that an economy sustains a positive trade balance or net export, it is extremely important for the economy to make sure that it increases the number of its exports to other economies. This also serves to increase or raise the GDP of a country. This is because the exports are manufactured domestically, and hence they add to the GDP of a country, while the imports are made from outside the country, and hence they reduce the GDP of the country. This also affects the future exchange rates of a country, where a positive net export means that there will be a favorable exchange rate of the countrys currency (Diamantopoulos et al., 1993).

It can, therefore, be concluded that the growth of the world trade exports leads to the growth in the GDP or the rising prosperity of an economy. The two, however, depend on each other for growth and hence it is not a unilateral relationship (Hoekman and Kostecki, 2009). Despite this interdependence, it is the growth in the value of exports that determines the economic growth rather than the other way round. From the analysis of the New Zealand economy done in the text, it is quite true to conclude that the GDP of a country is heavily influenced by the exports and imports of the country. The increase in the exports followed by a corresponding decrease in the imports of a country means that there is a positive net export or a positive trade balance. Hence, this positive net export leads to a corresponding increase in the GDP of the country (Spero and Hart, 2009).

When attention is paid to the process of increasing the exports in the country, the various sectors of the economy that are more efficient than others are uplifted by the investments done in them, which leads to an increase in the productivity of the economy. This also leads to an increase in the economies of scale because the production is targeting the entire international market at that point. This in turn ensures that the various industries participating have to keep their costs down so that they can be able to compete with the other international firms (Roper and Love, 2002).

It is therefore recommended that then different countries in different regions to make sure that they raise their exports and also, find ways to keep their imports low so that they can maintain a positive trade balance. It is also advisable for different economies to sign trade agreements between themselves and their trading partners so that they can encourage trade. Trade agreements have more bene...

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