The dominant approach to economic development in NZ since the mid-1980s has been economic liberalisation. But the NZ Institute says this has defocused efforts to internationalise its business, and refocus export priorities. NZ needs to improve labour productivity and grow exports enough to reduce its debt load and increase prosperity. NZ’s most important sectors for exports are tourism, agriculture, and manufacturing. All three have average or lower than average productivity so simply growing these activities without also substantially lifting productivity will not materially lift GDP per capita.

Diversity Needed. The Institute says NZ’s relatively poor economic performance is explained by the lack of differentiated goods and services exports. The Institute says ICT and niche manufacturing, along with value-added and differentiated goods and services based on primary production, are where NZ should invest most aggressively. It argues NZ’s success at exporting differentiated goods and services has been limited by the obstacles of small domestic market size and distance from markets. Internationalisation of businesses is a critical binding economic constraint. But over-reliance on economic liberalisation has led to NZ committing less effort than other small trading countries to overcome the internationalisation challenge.

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Put Resources To Work. The Institute argues a strategy for success is to reallocate resources to achieve a valued goal. If the goal is important and the strategy is sound the reallocation should be sufficient to change the outcome. A few tens of millions of dollars is not material. Competing small countries are committing hundreds of millions of dollars to efforts they regard as strategically important. It believes supporting internationalisation success for differentiated exports should be the economic strategy priority, and should be tested and debated. If the conclusion survives this scrutiny significant resources should be allocated to make it happen.

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