More than half the New Zealand government bonds on issue are now held overseas, and the proportion of some of the longer-dated bonds held overseas is even higher. (In recent months, for example, more than 70 percent of the longest-dated nominal bond held by the market has been held by overseas investors.)
In general, this means making sure that policies do not frustrate marketbased adjustments, but rather are aimed at promoting flexibility in markets – particularly labour markets. This means maximizing the ability of workers to relocate if they wish, maintaining appropriate social safety nets that do not discourage employment, and focusing on lifelong learning and training. Beyond labour markets, governments should focus on domestic integration.