Communications Project

Document Type:Dissertation
Name:Donald L. Grebner II
Title:Analysis of Policy Reforms in the New Zealand Forest Manufacturing Sector
Degree:Doctor of Philosophy
Committee Chair: Gregory S. Amacher
Committee Members:Hugh Bigsby
Richard Cothren
Jay Sullivan
Harold Wisdom
Keywords:Privatization, Deregulation, Cost Efficiency, Stochastic Frontier, Econometric Analysis, New Zealand
Date of defense:April 10, 1998
Availability:Release the entire work for Virginia Tech access only.
After one year release worldwide only with written permission of the student and the advisory committee chair.


New Zealand experienced dramatic restructuring programs after the Labor party won the national elections in 1984. Deregulation of price controls, removal of the log export ban, and privatization of public assets were the main shocks to the forest sector. The purpose of this paper is to analyze the impacts of these reforms on wood and paper industry cost, production, and cost efficiency. Unlike previous work, the effects of privatization and deregulation are compared to determine which shock had the most influence on the forest sector. Results show that production decreased, total cost increased, and cost efficiency decreased after deregulation for the sector, and that deregulation was more significant than privatization for the wood and paper sectors. In particular, removal of the log export ban had the greatest impact, while privatization had little effect on industry production and cost. This suggests that countries with comparative advantages in wood processing who implement deregulation or privatization may suffer through a short term period of lower cost efficiency as the economy adjusts to higher input costs in those sectors. In New Zealandís case, the adjustments most likely affecting efficiency have been investments in new technologies, which require time to attain maximum efficiency. The results are contrary to other studies that have predicted increased efficiency as a result of privatization.

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