I am putting in a Official Information Act request to see if anyone advise ministers that a export promotion target results in a matching increase in imports along with a large appreciation in the New Zealand dollar. Did New Zealand dodge the Dutch disease from this foolhardy export promotion policy? The Dutch Disease story is one of sectoral shifts.
In the 1960s, with fixed exchange rates under the Bretton Woods system, the Netherlands discovered off-shore natural gas. As natural gas was extracted, it increased domestic income and spending. Investment was redirected toward the natural gas sector. Dutch wages and prices began to rise gradually. The Dutch guilder became overvalued in real terms, their industrial products became uncompetitive, and the manufacturing sector shrunk. This phenomenon of de-industrialization in the presence of rich natural resources was called the Dutch disease. They got natural gas but lost manufacturing.
In the late 1970s and early 80s, the UK experienced similar de-industrialization under a floating exchange rate regime. They discovered and exploited the North Sea oil fields. Since the global oil price was rising, the UK was expected to earn a great amount of foreign exchange in the future. But even before these earnings were realized, the British pound appreciated suddenly in both nominal and real terms. This damaged the British manufacturing sector.
Source: MF model – float
If there is an increasing demand for New Zealand exports if the Business Growth Agenda target of increasing New Zealand exports was successful, there is an increase in demand for New Zealand dollars to pay for these exports. This will result in an appreciation of the New Zealand dollar making imports cheaper. This will switch demand for New Zealand competing industries to these imports.
This process of currency appreciation and expenditure switching will continue until export match exports again. There is nothing wrong with an export boom as long as it is based on comparative advantage rather than subsidies.
Published: Goldin, Claudia. “Monitoring Costs and Occupational Segregation by Sex: An Historical Analysis,” Journal of Labor Economics, Vol. 4, (January 1986), pp. 1-27.
The robots are coming have got nothing on the mid 20th century in terms of man being replaced by a machine.
One of my favourite scenes from Apollo 13 happens to be online. Tom Hanks and the Apollo 13 crew and ground control were using slide rules to make the critical calculations about re-entry trajectories. That had not been automated in 1969.
I went to high school just after slide rules were replaced by simple calculators.
I am reading some great essays from the 1960s at the moment about the great fear that people had from the computer entering the factory.
The reason for claiming that this time it was different was computed could automate calculations millions of times faster than people could. The computer could monitor and react to events without human intervention as Yale Brozen explained in the mid-60s
The hallmarks of automation, to distinguish it from mechanization or automatic
methods, are its sensing, feed-back, and self-adjusting characteristics. Because it senses changing requirements and adjusts without human intervention, it presumably does away with the need for human attendants or human labor. This is very fearful indeed to those who depend upon jobs for their livelihood.