The Polynesian Maori reached New Zealand in about A.D. 800. In 1840, their chieftains entered into a compact with Britain, the Treaty of Waitangi, in which they ceded sovereignty to Queen Victoria while retaining territorial rights. That same year, the British began the first organized colonial settlement. A series of land wars between 1843 and 1872 ended with the defeat of the native peoples. The British colony of New Zealand became an independent dominion in 1907 and supported the UK militarily in both world wars. New Zealand's full participation in a number of defense alliances lapsed by the 1980s. In recent years, the government has sought to address longstanding Maori grievances. New Zealand assumed a nonpermanent seat on the UN Security Council for the 2015-16 term.
Over the past 40 years, the government has transformed New Zealand from an agrarian economy, dependent on concessionary British market access, to a more industrialized, free market economy that can compete globally. This dynamic growth has boosted real incomes, but left behind some at the bottom of the ladder and broadened and deepened the technological capabilities of the industrial sector.Per capita income rose for 10 consecutive years until 2007 in purchasing power parity terms, but fell in 2008-09. Debt-driven consumer spending drove robust growth in the first half of the decade, fueling a large balance of payments deficit that posed a challenge for policymakers. Inflationary pressures caused the central bank to raise its key rate steadily from January 2004 until it was among the highest in the OECD in 2007 and 2008. The higher rate attracted international capital inflows, which strengthened the currency and housing market while aggravating the current account deficit. Rising house prices, especially in Auckland, have become a political issue in recent years, as well as a policy challenge in 2016 and 2017, as the ability to afford housing has declined for many.The economy fell into recession before the start of the global financial crisis and contracted for five consecutive quarters in 2008 and 2009. In line with global peers, the central bank cut interest rates aggressively and the government developed fiscal stimulus measures. The economy pulled out of recession in 2009, and achieved 2%-3% growth from 2011 to 2016. Nevertheless, key trade sectors remain vulnerable to weak external demand and lower commodity prices. In the aftermath of the 2010 Canterbury earthquakes, the government has continued programs to expand export markets, develop capital markets, invest in innovation, raise productivity growth, and develop infrastructure, while easing its fiscal austerity. Expanding New Zealand’s network of free trade agreements remains a top foreign policy priority.