Helping Kiwi firms reach the productivity frontier

The Productivity Commission has published a report that highlights the importance of New Zealand’s exporting firms.

The report by Dr David Skilling, a Kiwi economist based in the Netherlands, looks at 13 small advanced economies to illustrate the role played by exporting firms and the types of government policies that could help these firms improve their performance.

A key message from this work is that small economies can be very successful. Indeed, the small countries the report studied were generally high-performing and had better economic and social outcomes than their larger peers.

Yet, the report argues, compared to small advanced economies like the Netherlands, Switzerland and Denmark, New Zealand needs to do more to create large exporting companies.

While there are already some Kiwi firms succeeding on the international stage, New Zealand needs need more firms expanding strongly into international markets. The report highlights that of the top 10 listed firms on the NZX only two compete in global markets at scale, Fisher & Paykel Healthcare and A2 Milk.

As Murray Sherwin, the Chair of the Productivity Commission, said: “This matters as exporting firms tend to pay higher wages, adopt the latest technologies and business practices, and help push out the productivity frontier.”

The Productivity Commission is investigating these issues as part of its inquiry into the most productive firms in New Zealand. The Commission earlier released an issues paper that outlines what it is planning to do and how it is thinking about these topics. We want to learn from businesses and others and to develop practical recommendations for the Government.

The Commission encourages anybody with an interest to read through the issues paper, think about the questions and participate by making a submission or getting in touch. We are particularly keen to hear from Kiwi firms about the barriers and opportunities they face to improving their productivity.