Regime shift and fast recovery on the periphery: New Zealand in the 1930s
Like most primary producers, New Zealand was hit hard by collapsing export prices at the onset of the Great Depression, but its recovery from the slump was both early and unusually fast. New data show that New Zealand’s real GDP declined by 16.6 per cent between 1929 and 1931. 2 By 1938 the Dominion’s real GDP stood 46.3 per cent above its 1929 level. Over the same period real GDP growth in Australia, Denmark, and the UK ranged between 18 and 22 per cent, and growth was 10 per cent in the Argentine. After adjusting for purchasing power parity, Maddison estimated that in 1938 New Zealand had the world’s highest GDP per caput, with a level 3 to 5 per cent above that of Switzerland and the United States, and 8 to 13 per cent above that of Australia and the UK. 3 Comparatively little effort has been made to understand why New Zealand’s recovery in the 1930s was distinctively fast. 4 Much of the literature argues that responses to the depression in the Dominion were tardy and orthodox, and highlights wage cuts, new taxes, and the priority given to balancing the budget. 5 Hawke takes a different view, arguing that New Zealand governments responded actively to the depression, for example by choosing devaluation, but with limited success. 6 He discerns little difference between the pace of recovery in New Zealand and that in Australia, both of which depreciated their currency to the same extent against the pound sterling during the 1930s. 7 Recent analyses of the international disparities in recovery from the