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New Zealand is the most geographically isolated of all countries. Its closest neighbour Australia is 2,000 km to the northwest of the main islands across the Tasman Sea. The only landmass to the south is Antarctica, and to the north are New Caledonia, Fiji, and Tonga.

The Cabinet, which is responsible to Parliament, exercises executive authority. (The Cabinet forms the practical expression of a formal body known as the Executive Council.) The Prime Minister, as the leader of the political party or coalition of parties holding the majority of seats in the House of Representatives, leads the Cabinet. All Cabinet Ministers must be Members of Parliament (MPs) and are collectively responsible to it.

Political separation of the two islands was an issue in the 1860s. The more populous North Island was riven by war and political turmoil while the South Island was prospering, especially after gold was discovered (1861) at Gabriel's_Gully in Central Otago. The South Island grew very tired of financially supporting the North Island while receiving very little in return. The feeling was particularly bitter between Auckland and Otago where Dunedin journalist, Julius Vogel began a strong campaign to make the South Island completely independent. The matter was put to a vote in Parliament on September 19, 1865. Seventeen members voted for separation and 31 for unity, so New Zealand remained united. Vogel later became Prime Minister of a united New Zealand.

New Zealand is heavily dependent on trade—particularly in agricultural products—to drive growth, and it has been affected by global economic slowdowns and slumps in commodity prices. Since agricultural exports are highly sensitive to currency values and a large percentage of consumer goods are imported, any changes in the value of the New Zealand dollar has a strong impact on the economy.

The remoteness of many parts of New Zealand and the distance of the country from much of the developed world meant that things that were easily obtainable in other parts of the world were often not readily available locally. New Zealand has only recently experienced economic development outside farming, so traditionally, Kiwis are jacks-of-all-trades to some extent, willing to roll up their sleeves and have a go. Most highly industrialised countries produce experts trained in narrow fields of specialisation, but New Zealand professionals are often generalists as well. This reputation often makes New Zealanders uniquely valued employees in overseas organisations.

New Zealand has a modern, developed economy. Its primary export industries are agriculture, horticulture, fishing, forestry and information technology. There are also substantial tourism and export education industries. The film and wine industries are considered to be up-and-coming.

New Zealand (like Fiji) decided against joining the Commonwealth of Australia in 1901, and instead changed from being a colony to a separate "dominion" in 1907, equal in status to Australia and Canada. New Zealand retained an avowed loyalty to the British Empire of which it formed a part, and contributed proportionally large numbers of troops to aid Britain in the Boer War (1899 - 1902), World War I and World War II (see New Zealand in World War II). New Zealand's complete independence was formalised by the 1926 Balfour Declaration and the 1931 Statute of Westminster, ratified on November 25, 1947. The monarch of the United Kingdom remains the monarch of New Zealand, which has been an independent constitutional monarchy. In 1951, the Legislative Council was abolished as ineffectual, thereby creating a unicameral legislature.