Fostering Innovation - How New Zealand Performs
The New Zealand picture on business innovation is mixed. Though the data show a healthy, flexible economy with the potential for high rates of innovation and productivity growth, we still have low rates of R&D, capital investment and investment in ICTs. Government provides or funds significant inputs to business - particularly education and training, research, science and technology, and infrastructure. Better identification of issues affecting firms' international competitiveness and coordination of public and private investments will improve the probability of successful innovation and help build scale through improved linkages. More directly, government also provides assistance through industry capability development and export promotion programmes.
Supporting innovation, New Zealand has:
- low barriers to firm start-ups and high rates of firm turnover
- a sound framework of business regulation and openness to trade, which keeps competitive pressures on domestic businesses
- high levels of participation in tertiary education and a moderately well-skilled workforce
But New Zealand also has:
- low (though fast growing) rates of R&D and particularly low rates of business R&D. While this largely reflects our industry structure and relative lack of large firms, the strong correlation between R&D and productivity growth suggests grounds for concern.
- low numbers of researchers, scientists and engineers in the private sector
- business investment rates that have been lower than the OECD median for most of the years from 1987-2003, though increasing rapidly over the last few years
- rates of investment in ICTs that are in the lower half of the OECD
- low uptake of broadband (in terms of percentage of population subscribing). A consequence is a limited broadband infrastructure with lower benefits to firms and higher costs.
- technological networks, important because they facilitate the transfer of knowledge and technology developed elsewhere, that appear to be weak.
Back to Top