Within 5,000 km of New Zealand

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Presentation transcript:

Within 5,000 km of New Zealand About 18% of NZ trade within 5,000 km (goods + services, exports + imports). About 14% of goods trade within 5,000km.

Distance effect on trade Distance is the single biggest barrier to NZ trade with the rest of the world. Small economy emphasises the need for international trade. 20 odd cities in China with greater population than NZ Tyranny of distance not improving. Flat world = Pangaea Source: Keith Head and Thierry Mayer (2013)

Buyers, sellers and productivity A quasi-natural experiment in Japan A reduction in search costs. Firms find new suppliers in areas with new stations. The effects are strongest in industries with many purchased inputs. Affected firms increase sales and productivity. Source: Bernard, Maxnes and Saito (2018)