Beating the Argentine Disease: A Call to Action
The next information revolution is well under way… It is not a revolution in technology, machinery, techniques, software, or speed. It is a revolution in CONCEPTS…
(Drucker, 1998).
We have a good foundation to be successful in the global economy
New Zealanders have some reason to be cautiously optimistic as we approach the third millennium. Since the mid 1980s, when New Zealand embarked on a thorough programme of economic reform, public sector debt has shrunk from more than half of GDP to about a quarter of GDP, saving taxpayers billions in interest payments. Interest rates are now at their lowest level in 30 years. As of March 1999, the economy had 284,000 more jobs than in 1991 (Statistics New Zealand 1999a). Energy reforms, removal of tariffs, tax reforms, and parallel importing have put money into the pockets of businesses and households. New Zealand has slashed its public spending from 41 per cent of GDP in 1990 to 35 per cent in 1997-1998. Our labour markets are flexible and we have one of the most open, transparent and unregulated economies in the world.
We must move quickly to become a knowledge-driven economy
But there is a darker side to our present situation that many in business and government fail to recognise. While we have stopped the inexorable downward slide, there is a new challenge ahead of us. Our competitors are playing a very different game, one whose rules New Zealanders have yet to learn. The efforts of the last fifteen years will be for naught unless the next important step is taken: the conversion of New Zealand from a pastoral economy into a knowledge-driven economy.
New Zealanders have not yet fully recognised that the Internet is the modern equivalent of the freezer ship that revolutionised our economy last century. As we enter the twenty first century, the Internet will be our key vessel for reaching global markets.
Otherwise we could become an "also-ran"
The decline of a once prosperous economy is known as "the Argentine disease'. Although these days Argentina is considered to be a developing country, in 1929 it was as rich as any large country in Europe. Fifty years ago New Zealand exported most of its primary produce to Britain and the country rode to prosperity on the back of the sheep. We had the third highest per capita income in the world. Today we find ourselves ranked just above Greece and Portugal, towards the bottom of the European OECD countries (OECD, 1998). Have we caught the Argentine disease? Why have we dropped so far?
The answer is that New Zealand is still playing the game of commodity exports. Although we have worked hard to find new export markets for our commodity products, and to increase our exports of value-added products, our income is still subject to the vagaries of commodity prices. We have not yet made the transition from an agricultural economy to one based on information, where knowledge is a significant component of products.
We must become a "knowledge-export" platform
We have not yet learned to see our country, as our competitors now see theirs, as a "knowledge export platform". Our competitors - Ireland, Singapore, Australia, United Kingdom - have done so, and they are beating us in the game of economic prosperity. If we do not heed the call, we will fall further in the rankings, perhaps as far down as Slovenia and Hungary, countries that aspire to our standard of living. In ten years' time economists may characterise New Zealand as one of those unfortunate countries that failed to make the transition to the new economy, and count it among the also-rans. They may call it "the New Zealand syndrome".
The nations that will be successful in the information revolution may be large or small, and are unfettered as to hemisphere. Assuredly, however, they will have invested in the critical information, computer, social and Internet infrastructures
(McGovern, 1998).
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