Kiwi firms need the tools to make the most of any increase in business research and development (R&D), according to new research by the Productivity Commission. Under the Business Growth Agenda the Government has committed to a target of increasing business expenditure on R&D to 1% of GDP by 2018. While valuable, this is just part of the puzzle of creating more innovative Kiwi firms.
The media often reports stories about firms going out of business and the job losses involved. Of course, job destruction is a difficult process, but it’s only part of the story – a large number of new firms and jobs are also created each year. This “churn” in firms and workers is occurring constantly, leading some to describe the process as a “perpetual motion machine”.
JEL: D24 – Production; Cost; Capital, Multifactor and Total Factor Productivity; Capacity; JEL: O47 – Measurement of Economic Growth; Aggregate Productivity
This Commission Research Paper provides an assessment of New Zealand’s productivity performance for the whole economy, for individual industries and compared to other OECD countries.
The research shows that New Zealand has generally poor productivity performance – both at the economy-wide and industry levels. This underscores the need for our policy environment to be strongly supportive of productivity growth and for firms to have a clear focus on improving productivity.