Increasing productivity

BNZ economist Paul Conway says the overarching objective of rebuilding the economy in the wake of COVID-19 must be to improve productivity and ensure the benefits are widely spread

Interest.co.nz , 24 May 2020

An¬†excellent statement of an ambitious direction for New Zealand. Next I’d like to see a discussion of the specific policies that might bring this about. We’ve been bemoaning low productivity for years, as Conway says — the hard part (as in all political action) is changing incentives to achieve your goal without losing votes in the process.

Linked to this is a new paper by David Skilling for the Productivity Commission that lays out a path for NZ to escape our low productivity trap.

What’s critical is clusters of large exporters. There are only a few areas that qualify:

  • the primary sector (broadly defined, from dairy and red meat to wine, horticulture, as well as adjacent sectors in agritech);
  • people flow industries (tourism, including export education);
  • and weightless activities (creative, digital, professional and financial services, etc).¬†

He notes that people flow will be limited for a while, so primary and weightless should be first cabs off the rank.

(Editor note – these critical cluster are the same areas of focus for this site)