Innovation and Productivity

The following is an bridged 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 smart choices about savings and investment versus current consumption; dynamic and competitive markets; openness to trade and to international connectedness; high awareness of external influences; rapid uptake and smart application of new technologies, products and processes; and increasing demand for highly skilled and creative people. 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.

 

The per capita income of New Zealand remains low compared to other advanced OECD countries, mostly owing to a substantial productivity gap vis-à-vis top performers. Key policy challenges for stronger productivity growth include promoting further investment and competition in network industries, addressing the high variance in educational outcomes, which reflects a substantial underachievement by some population groups, and stimulating innovation activities.

Get off the Grass- kick starting New Zealand’s Innovation Economy Shaun Hendy and Paul Callaghan – has as its opening paragraph

“New Zealanders work harder and earn less than most other people in the developed world… on a per capita basis the average OECD country produces four times as many patents as New Zealand”.

The message is us kiwis is that we must be prepared to change the way we do things:

  • We need to move away from economy focused on producing lower-value commodities as cheaply and efficiently as possible
  • We need to learn to collaborate
  • We need to find that innovation in the modern world is the result of people with diverse knowledge and skills working together in team or increasingly in less formal collaborative network

“At SmartkiwisConnect we are connecting the dots for a better awareness of NZ’s issues”.

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If New Zealand’s investment’s (as shown below) continues on the same trajectory we will continue remain a low waged and low skilled economy

Likewise we need to be more innovative in the products and services we produce

How to raise productivity in New Zealand

There is no simple formula. Lifting productivity is ultimately the product of individual and organisation decisions about how to generate value.

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:

  • the degree of openness and competition in markets, which is important to incentivise innovation, improve allocation of resources and achieve more dynamic performance;
  • investment and other strategic choices made by organisations (eg, using new and smarter technology), which depend on the quality of governance and management;
  • the attitude and effort of employees toward ongoing training, finding business improvements and helping implement beneficial change;
  • the quality of education and the attitude of students toward the value of learning;
  • the quality of government decisions (at all levels), in setting policy and shaping regulatory environments, and deciding where public money is spent; and
  • the aspirations of individuals and families.

from productivity commission’s website

How is productivity lifted? (information from productivity commission’s website)

There is no simple formula. Lifting productivity is ultimately the product of individual and organisation decisions about how to generate value.

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:

  • the degree of openness and competition in markets, which is important to incentivise innovation, improve allocation of resources and achieve more dynamic performance;
  • investment and other strategic choices made by organisations (eg, using new and smarter technology), which depend on the quality of governance and management;
  • the attitude and effort of employees toward ongoing training, finding business improvements and helping implement beneficial change;
  • the quality of education and the attitude of students toward the value of learning;
  • the quality of government decisions (at all levels), in setting policy and shaping regulatory environments, and deciding where public money is spent; and
  • the aspirations of individuals and families.