New Zealand: Selected Issues

This Selected Issues paper explores New Zealand’s productivity growth in a cross-country perspective, reflects on business dynamism in New Zealand and its implications for productivity, and considers some of the factors shaping the costs and incentives for investment and innovation toward a more productive economy. The paper evaluates trends in productivity growth in New Zealand and peer advanced economies in recent decades, both on aggregate and at the sector level. Additionally, it also considers drivers of productivity growth and the interplay of capital and labor inputs. The paper also evaluates business dynamism in New Zealand relative to peers, with a focus on the experience of young, high-growth firms with the potential to make meaningful contributions to productivity growth. The availability and range of financing options for New Zealand’s firms are also discussed along with considering impediments to business dynamism and productivity growth that emerge from regulatory frameworks, the pace of innovation and technological diffusion, and infrastructure gaps. The paper also provides some policy recommendations to address the obstacles to productivity growth identified.