A research agenda for lifting productivity - article

Patrick Nolan

Patrick Nolan gives an overview of current and proposed research work on understanding and improving New Zealand’s productivity performance.

This article "Lifting New Zealand’s productivity: a research agenda" appeared in the May edition of Policy Quarterly magazine.

Sebastian Edwards (2013) wrote that when it comes to the economy New Zealand appears to exhibit ‘Woody Allen syndrome’. In most of Allen’s movies, he observed, the main character is leading what appears to be a charmed life (‘interesting friends, a nice apartment, and a well-paying job’) but he still worries a lot. New Zealanders too ‘worry a lot. They worry about the economy and about the country’s position in the world.’ And, as Edwards went on to note, as ‘Woody’s movies progress, the viewers realise that, although he is sweet and loveable, he has certain traits that could be improved on. … Similarly, and in spite of New Zealand’s wonderful showing in ranking after ranking, there are a number of areas where reforms would make the country’s position in the world even better.’

So it is with New Zealand’s pro-ductivity, which is a measure of the economy’s ability to turn resources into goods and services. The latest figures suggest we are doing well. Over the last couple of years measured sector output, labour productivity and multi-factor productivity have all been growing. And not only is labour productivity growth picking up, but labour inputs are slowly increasing too. Yet, when considered in a wider context, the picture is not quite as rosy. Labour productivity growth since the global financial crisis, and indeed throughout the 2000s, has been below that of the 1990s. New Zealand is still below the OECD average for output per capita and labour productivity. And there is a question of how much of the ‘rock star’ growth expected in the next year or so will be due to terms of trade increases and the Christchurch rebuild. These factors will only take the economy so far. We need to continue to lift our productivity.

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