Modern Period (1901-Present)
New Zealand 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.

First World War
The country remained an enthusiastic member of the British Empire, and many New Zealanders fought in World War I. New Zealand forces took Western Samoa from Germany in the early stages of the war, and New Zealand administered the country until Samoan Independence in 1962.

Like most other countries, New Zealand was hard hit by the Great Depression of the 1930s, which affected the country via its international trade. The country was most affected around 1930-1932, when the unemployment rates peaked.

Attempts by the conservative Liberal-Reform coalition to deal with the situation with spending cuts and relief work were ineffective and unpopular. In 1935, the First Labour Government was elected, and the post-depression decade showed that average Labour support in New Zealand had roughly doubled comparable to pre-depression times. By 1935 economic conditions had improved somewhat, and the new government had more positive financial conditions, under which it established a full welfare state, which included free health care and education and state assistance for the elderly, infirm, and unemployed.

Second World War
When World War II broke out, New Zealand contributed with troops. They mostly fought in Europe and later the United States to protect New Zealand from the Japanese forces. The cooperation with the United States meanwhile set a direction of policy which resulted in the ANZUS Treaty (military alliance) between New Zealand, America and Australia in 1951, which was to hold until disagreements over nuclear armaments decades later.

Maori Urbanization
Many Māori fought in World War II, and many others moved from their rural homes to the cities to take up jobs vacated by the whites. Māori culture had undergone a renaissance. World War II saw the beginning of a mass Māori migration to the cities, and by the 1980s 80% of the Māori population was urban, in contrast to only 20% before the war. The migration led to better pay, standards of living and education for most Māori, but also exposed problems of racism and discrimination. By the late 1960s, a protest movement had emerged to combat racism and promote Māori culture.

The urbanization of the country was far from restricted to Māori. In the late 1940s, town planners noted that the country was "possibly the third most urbanized country in the world", with two thirds of the population living in cities or towns.

Post War
The Māori protest movement was just one of several movements which emerged at this time to challenge the conservatism of mainstream New Zealand culture. This culture, and the country's economy, was based on being an offshoot of Britain. However, Britain's accession to the European Community in 1973 forced New Zealand to not only find new markets, but also re-examine its national identity and place in the world.

In 1984, The Fourth Labour Government of New Zealand was elected. A new policy of restructuring was implemented. This involved floating the New Zealand dollar, cutting government spending, reducing most taxes and introducing a sales tax (GST), and removing almost all industry subsidies.

The country became a nuclear-free zone and effectively left the ANZUS alliance. Immigration policy was liberalized, allowing an influx of immigrants from Asia. Other innovations included greater recognition of the Treaty of Waitangi through the Waitangi Tribunal, Homosexual Law Reform, the Constitution Act 1986 and the New Zealand Bill of Rights.

Unhappy with the speed and extent of reforms, voters elected a National government in 1990, led by Jim Bolger. However the new government continued the economic reforms of the previous government. Unhappy with what seemed to be a pattern of governments failing to reflect the mood of the electorate, New Zealanders voted to change the electoral system to Mixed Member Proportional (MMP), a form of proportional representation. New Zealand's first MMP election was held in 1996. Following the election National was returned to power in coalition with the New Zealand First Party.

New Zealand Today
The Fifth Labour government led by Helen Clark was elected in 1999. It maintained most of the previous governments' economic reforms - restricting government intervention in the economy much more so than previous governments - while putting more of an emphasis on social policy and outcomes. Helen Clark's Labour government remained in power for nine years before being replaced in 2008 by New Zealand's fifth National government led by John Key.

New Zealand retains strong but informal links to Britain. Despite New Zealand's immigration liberalization in the 1980s, Britons are still the largest group of migrants to New Zealand, due in part to recent immigration law changes which privilege fluent speakers of English. A few constitutional links to Britain remain - the New Zealand Sovereign is a British resident, for example. However, British imperial honours were discontinued in 1996. The Governor-General has taken a more active role in representing New Zealand overseas. From time to time there is public debate about whether New Zealand should become a republic, and public sentiment is divided on the issue.

New Zealand contributed troops to the Afghanistan War, but did not contribute troops to the Iraq War although some medical and engineering units were sent.

For a developed country, New Zealand's economy is still very dependent on farming, although the old trinity of meat, dairy and wool has been supplemented by fruit, wine, timber and other products. Tourism is a major industry, and the country has been successful in attracting several major film productions, most notably the Lord of the Rings trilogy, directed by New Zealander Peter Jackson, which in turn bolstered New Zealand's tourism image.