Our productivity paradox

New Zealand managers must lift their game to garner productivity gains from new technologies, according to an OECD study released by the New Zealand Productivity Commission this month.

The OECD research identifies a serious gap that exists between New Zealand’s actual GDP per capita and both the OECD average and the per capita level we should be achieving given our broad macro-economic policy settings.Our GDP per capita should be $43,518 and 17% higher than the OECD average of $37,181. Instead, it was just $30,179 or 19 percent below the OECD figure.

It’s an alarming paradox, according to the Commission and the OECD researchers. There are, it seems, three main reasons for the chasm. Weak international connections accounted for 55 percent of the problem. Another 40 percent of shortfall comes from underinvestment in “knowledge-based capital” which reduces firms’ capacity to absorb new ideas and innovation. And finally, the quality of management in New Zealand is too low. As a consequence, our companies don’t reap the productivity they should from deploying new technologies.
The paper outlines how New Zealand’s productivity gap might be closed, given the unique features of the country’s economy.

Details can be found at www.productivity.govt.nz

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