The Partisanship of Free Trade: An Analysis of Trade Liberalization in New Zealand by the Left-Wing Labour Government

Abstract

Existing literature on the partisanship of trade liberalization finds that right-wing parties are significantly more likely to liberalize trade than their left-wing counterparts. In the 1980s major trade liberalization policies and economic reforms were implemented in New Zealand. Contrary to the existing literature, these liberalization reforms were undertaken by the left-wing Labour Government. This thesis investigates alternative hypotheses for why a left-wing government would liberalize trade. I posit and test several different hypotheses which each provide an alternative explanation for why a left-wing government would liberalize trade. My main findings are that a strong right-leaning Minister of Finance was the driving force behind the Labour Government’s reforms. The election of new centrist MPs provided additional support for the Minister of Finance’s reforms within the party. Finally, there is some evidence to suggest that policy diffusion played a minor role in the left-wing Labour Government’s decision to liberalize trade.