Growth policy initiatives: the New Zealand experience

1. Growth and Policy Initiatives:
the New Zealand experience
Gareth Chaplin
Chief Economist, NZTE
1 December 2010

2. Some New Zealand Statistics
Economic indicator Total Year end
New Zealand national population 4,367,700 Jun 10
Nominal GDP (NZ$ billion) 186.1 Mar 10
Nominal GDP growth 3.5% Mar 10
Nominal GDP per capita (NZ$) 43,031 Mar 10
Real GDP (NZ$ billion) 133.1 Mar 10
Real GDP growth -0.7% Mar 10
Real GDP per capita growth -2.6% Mar 10
CPI inflation 1.8% Jun 10
Unemployment rate 6.8% Jun 10
Total exports (NZ$ billion) 40,655 Jun 10
Total imports (NZ$ billion) 40,016 Jun 10
Source: Statistics NZ

3. New Zealand’s GDP as a percentage
of the OECD Average
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Australia Denmark New Zealand United Kingdom United States
Source: MED

4. The Challenge Facing New Zealand
• NZ scores highly on World Bank and other
indicators for corruption, ease of doing business
and quality of life
• New Zealand is second in the world for early stage
initiation, but 26th out of 36 for execution in market
(GEM)
• New Zealand is the developed economy furthest
from its major markets
• New Zealand companies have to internationalise
very early in their lifecycle
• Scale, resilience and international outlook are
critical to success

5. The NZ starting position – atypical
developed economy
Sectoral value-add as a share of GDP
Agriculture
Non-Manufacturing
Industry
Manufacturing
Industry Services
Australia 2 11 18 69
Canada 2 16 16 66
United
Kingdom 1 14 10 76
New Zealand 7 16 9 68
Source: World Economic Forum, 2009/10

6. THE NZ ECONOMIC GROWTH AGENDA
Increase exports
to 40% of GDP
Close the income
gap with Australia
Six policy drivers will further our economic objectives
Regulatory
reform
Investment in
infrastructure
A better
public
service
Education
and skills
Innovation
Science and
Trade
A world class
tax system
Key issues:
A How to maximise the returns and value from traditional areas of
excellence (dairy, meat, aquaculture, seafood)
B How to support high technology manufacturing and services; how to
overcome the issues these firms face in operating from NZ (skills, capital,
connectivity)
C The opportunities in the energy and minerals sectors
D Wider cross-cutting issues around skills and capability, capital/support for
growing companies, infrastructure, international connections

7. E
G
A
2025
GOALS
Science,InnovationandTradeDriver
Grow & Diversify
Exports of
High Value
Manufacturing &
Services
Export more
value-added
Food
&
Beverages
Attract More
High Value
Tourists
Create Wealth
From
Minerals
&
Petroleum
$9B to
$29B
$20B
to
$58B
$8B to
$14B
$4B to
$??B
CRITICAL SECTORS
Sector
Export
Projections
by 2025
(2009 prices)
NEW CROSS CUTTING ACTIONS
qJoined-up public investment
- unified business investment strategy for
NZTE, MSI & MED, informed by OECD visit
on innovation
- joint government and industry market–led,
“plate-to-paddock-to-plate” investment
plans for food & beverages
qBetter Business Innovation.
- Public/private research & development
infrastructure to clusters of firms
- reposition IRL
qSmarter capital.
-Improve flow of quality ODI/FDI
qStronger international connections.
- China and Australia.
- FTAs
- NZ major events fund
- Air connectivity.
q Vibrant cities.
- Economic development strategy and spatial plan for
Auckland, and other cities too.
qEnvironment and the economy.
- Develop a strategy for integrating economic and
environmental performance
Income
Parity
with
Australia
Increase
Exports
$57B
to
$150B
Table 1. New Actions under the Science, Innovation and Trade Driver

8. New Zealand Innovation in Action.
Bahia, Brazil

9. Thank you for your time