The myth of the shrinking state? What does the data show about the size of the state in New Zealand?

11 August 2016

By Derek Gill

Co-author Norman Gemmell.

Policy Quarterly Volume 12 Issue 3 August 2016    

The paper explores the urban myth that the economic reforms of the late 1980 and 1990s reduced the size of the state. It uses a variety of lenses – the state as taxer, spender, producer, employer, investor, and steward – to assess how the size and shape of the state has changed.  

It finds despite the rhetoric, there is little sign in the data of the hollowing out or shrinking of the state, though some changes following the 1980s reforms such as the reduction in the state role in the production of market goods and services have persisted. Instead, we find some changes in the shape of the state.  The article is available here.

To check out the trends yourself using the different lenses in this paper by graphing and exploring the data, go to https://data1850.nz/.

If you are interested to learn more about the trends, a more detailed technical paper that provides more background on the data and analysis is available here.

A paper presenting the results of an econometric analysis of the drivers of the changes will be available later in the year.