New Zealand economic growth—endogenous or exogenous? Original Research Article

Economic growth has, once again, taken centre-stage in macroeconomics. Attempting to discriminate empirically between exogenous and endogenous engines of growth has become an important element of this resurgence and this paper adds to the debate. In this paper we present two contributions to the literature on economic growth. Firstly, a standard two-sector model of growth is extended to consider m-types of capital, where one of these can be human capital. The second contribution relates to the empirical application based upon New Zealand annual data 1955–1998. The results presented here lead to no support for exogenous growth models as an explanation of the growth process in New Zealand. However, the evidence is not overwhelming and further work is required both in terms of data used and types of tests employed.