Small States in the Modern World
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Small States in the Modern World

Vulnerabilities and Opportunities

Edited by Harald Baldersheim and Michael Keating

Small States in the Modern World comprehensively assesses the different modes of adaptation by small states in response to the security and economic vulnerabilities posed by global change. It uses a diverse collection of case studies to explore the complexities of change and to place them in their temporal and geographical context.
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Chapter 10: The state that reinvented itself: New Zealand’s transition to the market competition state

Jeffrey McNeill


New Zealand is a geographically isolated small state that has reinvented itself several times in its short history as it responded to changing wider geopolitical and economic conditions. Because of its geography and history, New Zealand faces some very different conditions compared to other advanced economy small states. Its remoteness from its overseas markets makes the friction of distance very real, while its colonial history set it on a trajectory that makes it vulnerable to other countries’ economic and geopolitical decisions. Its transition in the 1980s from a corporatist to a market competition state and its rejection of the social investment model are remarkable for their comprehensiveness and rapidity. Accordingly, New Zealand’s experiences provide a laboratory for testing Keating’s model of transition (Chapter 1). This chapter describes New Zealand’s challenges as a small state, particularly from the late 1970s to post-global financial crisis (GFC), as it reinvented itself to adapt to changing global conditions. It then explores attempts to modify exogenous forces, as well as the internal changes to enable the country to respond to these forces. It explores the institutional arrangements that enabled change and rate of change in order to consider opportunities for further adaptation to continuing globalization.

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