Patrick O’Brien's approach to the economics of empire and globalization stresses hierarchy. The ability of a colony to gain from economic exchange with the European core in the age of liberal imperialism was influenced by its “political status.” The zones of European overseas settlement enjoyed the highest status and reaped large rewards from economic interaction, rewards that fell disproportionately to white inhabitants. Other zones of the periphery, in eastern and southern Europe and the developing world, were in a weaker position to extract benefits from exchange with the core.

New Zealand and Australia, along with Canada and South Africa, occupied a distinctive position within the empire. As well as being conquered by the British, they attracted British settlers and achieved self-governing status. New Zealand and Australia depended on Britain for markets, inflows of capital and labor, and – until the fall of Singapore – defence. Although jealous guardians of their autonomy, they sought to preserve most aspects of the imperial nexus, which they experienced as broadly beneficial. Provincial and few in number, the white subjects of the dominions were nonetheless prosperous. New Zealanders, Australians, and Canadians saw themselves as Better Britons, as stronger, healthier, more pragmatic, and less class-ridden than the puny and decadent residents of the motherland.

By the 1930s, however, the belief that immersion in global markets was the basis of prosperity could no longer be taken for granted in New Zealand and Australia. Their status within global and imperial networks seemed vulnerable. Disenchantment with globalization was somewhat greater amongst policymakers than academic economists, but the latter were not immune. Bill Sutch's The Quest for Security in New Zealand (1942) exemplified the new, more defensive mentality. An economist and former private secretary to the Minister of Finance, Sutch argued for widespread state intervention to insulate employment and living standards from external shocks. As a senior civil servant at the Department of Industries and Commerce in Wellington in the 1950s and 1960s, Sutch was an enthusiastic advocate of import substitution industrialization (ISI).

Nation-building also contributed to the new policy ethos, and it was a form of nation-building compatible with the maintenance of close economic ties with the United Kingdom. Depression, war, and the post-1945 dollar gap tended to reinforce cooperation in trade and finance between the UK, New Zealand, and Australia.