Distortions to Agricultural Incentives in Australia and New Zealand

In 1990, Australia and New Zealand were ranked around 25th and 35th in terms of GNP per capita, having been the highest-income countries in the world one hundred years earlier. The poor performance over that long period contrasts markedly with that of the past 15 years, when these two economies out-performed most other high-income countries. This difference in growth performance is due to major economic policy reforms during the past two to three decades. We provide new evidence on the extent of governmental distortions to agricultural incentives in particular in the two economies since the late 1940s, both directly and indirectly (and negatively) via manufacturing protection.