Don't ignore regional economies, report warns

Shamubeel Eaqub
Shamubeel Eaqub
Once-prosperous New Zealand provinces are falling into the economic doldrums as politics and policies focus on the urban powerhouses of Auckland and Wellington, according to a new report.

The New Zealand Institute of Economic Research report on regional economies says complex, misunderstood regional economies range from triumphant to troubled.

''Regional considerations need greater prominence in the political and economic debate,'' NZIER principal economist Shamubeel Eaqub said.

As the country headed towards a general election, Auckland and Wellington's views and needs were well heard.

''But what about Taranaki, which has the highest GDP per capita in the country? What about Northland and Gisborne-Hawkes Bay which rank near the bottom on many economic measures?''

Mr Eaqub and his colleague John Stephenson wrote the report as a stocktake of New Zealand's regional economies.

They warned future social and demographic trends, such as continued urbanisation and ageing populations, would favour complex, urban centres to the detriment of regional communities.

A typical Auckland family had an income of about $77,000 a year, compared with $60,000 in Waikato and $47,000 in Northland. The gaps would widen if economic prosperity in provincial economies did not improve, Mr Eaqub said.

The study of regional data found how closely interconnected regions were. Growth in one region could spill over to others. A neighbouring region might benefit from such growth if it had complementary specialisations, but lose out if it had the same specialisations.

New Zealand, and every one of its regions, was facing the forces of broad secular trends. Those affected where people lived and worked, businesses made investments and central and local authorities delivered the supporting infrastructure. Forces tended to favour the urban centres to the detriment of regional communities, he said.

The focus on regional performance would be under an increasing spotlight. There was no single recipe for success.

''The similarities between regions, and the issues they face, mean we need to think about the country as a whole. But there are enough differences to require a closer look to understand the causes of these differences and find place-specific strategies,'' Mr Eaqub said.

Different economies
Two distinctively urban economies:
• Auckland and Wellington. They have complex economies and very high human capital.
• Three distinctively resource-based economies: Taranaki, Upper South Island and Southland with concentrated exposures to natural commodities and international commodity prices.
• Remaining regions are driven by common national factors.

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