Growing competitiveness

26 October 2017

4. Kirk HopeFor people in business, the environment for enterprise matters a lot. Your success can be affected by all sorts of factors - whether there’s a good supply of skilled workers, whether it’s easy or hard to get resource consents for development, whether taxes are high or low, and so on.

Such factors can mean the difference between profit and loss for New Zealand businesses.

They can make an even bigger difference for New Zealand businesses operating internationally, because impediments at home can hold us back from competing strongly in overseas markets.

Global research shows the New Zealand environment for business is becoming more competitive.

The World Economic Forum surveys businesses around the world and gathers economic data to make up the annual Global Competitiveness Index ranking of countries.

This year New Zealand has been ranked 13th out 137 countries for business competitiveness – a strong showing for a small economy.

The survey shows that New Zealand has been gradually moving up the competitiveness rankings over the last decade, up from 24th place ten years ago.

The survey is useful in showing areas of strength in the economy, as well as areas where improvement is needed.

This year’s Index shows New Zealand ranking highly for financial market development, lack of corruption, labour market efficiency, health and primary education, higher education and training, and goods market efficiency.

Areas for improvement include New Zealand’s inadequate infrastructure, inefficient government bureaucracy, insufficient capacity to innovate, inadequately educated workforce and restrictive labour regulations.

These results confirm many of the efficiencies in the New Zealand economy and also point to areas where more work is needed, including achieving more infrastructure investment and less labour and overall regulation.

This year’s results indicate what seems like a paradox: New Zealand ranks highly for education, yet ranks poorly for an educated workforce and ability to innovate.

This strange result highlights the fact that there is a mismatch between the skills required by business and the skills that are being taught in the education system.

It points to the fact that more New Zealanders need to be equipped with higher-level technical, trades, science, and maths education.

It’s also useful to be reminded that there is an optimal level of bureaucracy and regulation, and too much regulation can be inhibiting for business. The Global Competitive Index clearly shows New Zealand needs to focus on reducing unnecessary red tape.

Overall, New Zealand’s strong placing on the Index and our positive 10-year trend are cause for celebration.

We are not too far behind the top ten countries in the world: Switzerland, US, Singapore, Netherlands, Germany, Hong Kong, Sweden, UK, Japan and Finland.

And we are well ahead of Australia, which ranks at 21st.

How could we transform our business environment to get a higher competitiveness ranking?

Actions that could be taken would include:

  • Reviewing our labour and general regulations to see where unnecessary regulation could be reduced.
  • Continuing to focus on improving infrastructure needed for doing business efficiently, especially roading.
  • Promoting more students receiving more and better technical, trades, science and maths education.

These are all actions that would take time to work through, and would not improve our rankings immediately. But they could all be achieved in the medium term at least. And as they are critical to New Zealand’s competitiveness, it would be exceptionally worthwhile for us to tackle them.

These are actions that Otago Southland Employers’ Association and BusinessNZ will promote strongly to the new Government, with the goal of making the New Zealand environment for enterprise as competitive as it can be.


Kirk Hope | Chief Executive | BusinessNZ |

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