Productivity and Innovation
The following is an abridged version of the information on the home page of the New Zealand productivity commission.
“Generally speaking, the higher the productivity of a country, the higher the living standards that it can afford and the more options it has to choose from to improve well-being. High productivity societies are characterised by:
These are the successful societies that attract and retain people, ideas and capital“.
Recent decades has seen New Zealand slipping from once being one of the wealthiest countries to now around 21st in the OECD.
Our productivity is now much higher than it was, but has not increased as quickly as other countries and our income growth has been slower. As a result, we collectively have fewer options for improving wellbeing than if New Zealand had performed better.
To sustain and hopefully improve New Zealand’s wellbeing, our incomes need to grow. With New Zealanders already among the hardest working people in the OECD in terms of hours worked, improving productivity is the most likely way of achieving higher incomes. Even small increases in productivity growth, if sustained, can have a big impact on income and wellbeing.
There are some general foundations for improving productivity, such as respect for the law and property rights; effective governance arrangements; and an attractive business environment, including a high-quality low cost regulatory environment. These foundations require ongoing attention and improvement. A large number of other factors also matter, such as:
from productivity commission’s website
Paul Krugman an American Nobel Prize economist stated:
that while there has always been a strong and positive connection between rising productivity and living standards, since the global financial crisis (GFC) 2008 a number of economists have identified the uncoupling of higher productivity and higher living standards.
“Productivity isn’t everything but in the long run its almost everything. “