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Overcoming distance to improve productivity

16 April 2014

Overcoming distance to improve productivity

New Zealand’s productivity paradox shows more work is needed to overcome our key disadvantages, says BusinessNZ.

New research by the Productivity Commission reveals the paradox that New Zealand’s reasonably robust policy settings should mean productivity growth 20% higher than the OECD average, when it is actually 20% below the OECD average.

The research shows two key reasons for New Zealand’s low productivity growth are poor international connections and poor performance in knowledge-based business.

BusinessNZ Chief Executive Phil O’Reilly says our distance from large markets affects both of these, making it harder to achieve international connections and harder to learn from new knowledge-based advances in overseas markets.

“But we can do better in overcoming the disadvantage of distance,” Mr O’Reilly said.

He said moves already underway – including more NZTE support for exporters and exporters working together to better penetrate overseas markets – would help grow connectivity over time, and better use of ICT would be a key way of improving connectedness and performing better in knowledge-based business. Callaghan Innovation would also have an increasing role to play in facilitating knowledge-based businesses.

“It will be important for us to maintain and grow our efforts across a range of initiatives, including completing more trade agreements, investing more in applied skills and helping more businesses to participate in global supply chains. These will be useful policy considerations for all parties contesting the coming election.

“Higher productivity growth is essential for competitiveness and the Productivity Commission’s analysis is helpful in focusing us all on this key area,” Mr O’Reilly said.


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