However, in the early 1930s, New Zealand experienced a great economic collapse. This led to staggering unemployment rates and resulted in a struggling economy. People were desperate to receive help from the state and government as many who had lost their jobs needed financial support to feed their families. Eventually, the government decided to reform the state policies. This saw an increase in state-funded sectors such as construction and manufacturing. From the 1940s to the 1970s, the percentage of New Zealand workers employed in the industrial sector increased to 35-40 per cent of the labour force. In the 1920s, less than 25 per cent of the labour force were working in this sector. The government also made various adjustments to their fiscal and monetary policies. The state intervention and support from the first Labour government was deemed effective and helped the economy to revive. The economy experienced a remarkably fast recovery. From 1934 to 1944, New Zealand recorded annual GDP growth rates of 7.5 per cent and GDP per capita rates of 6.7 per cent. These policies were carried through towards the mid-1990s and sustained New Zealand's economy. The policies were also deemed effective as they targeted full employment. The significant inflow of income due to the wool boom following the Korean War also served New Zealand's economy well.
