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The New Zealand economy is a complex system whose operation cannot be fully understood by pondering macroeconomic statistics. The policy process can be greatly improved by developing a deeper understanding of the microeconomic dynamics of the economy– an understanding that is partly delivered by research using detailed unit-record data. Statistics New Zealand (SNZ), together with the Inland Revenue Department (IRD), has been instrumental in enabling work of this sort to be done in New Zealand. Most recently, this collaboration has produced a prototype Longitudinal Business Database (LBD), integrating a plethora of survey, tax and Customs trade data within the SNZ secure environment. From a research perspective, the breadth of data included within the prototype LBD enables advances to be made in many of the microeconomic studies previously investigated in New Zealand, as well as opening up many new avenues for investigation. The purpose of this paper is to explore and highlight some of this potential.

At this stage, the analysis presented provides motivation for more work, not definitive answers to questions. However, some clear themes arise from the data:

• Strong "Darwinian" processes act on firms, weeding out the weak and rewarding the strong. Having said that, there is great variation in firm performance within industries, implying that economic models assuming homogeneous producers, or rhetoric labelling particular industries as "good" and others "bad", may be somewhat counterproductive. Low (high) average productivity industries always contain high (low) performing firms; and
• Firms with international connections (exporting or foreign-ownership) have a clear productivity advantage over purely domestic firms. Initial exploratory work suggests that the performance advantage exporters have exists prior to their entering exporting (ie, firms self-select into exporting).

The dataset stands out – internationally – for both its comprehensive coverage of firms and the sheer variety of data captured. The unique strengths of this data bode well for the ongoing research programme, which is focussed ontopics close to the heart of the public policy debate on the state of the economy.