Professor Michael Enright, member of the international Competitiveness Institute (TCI), hits town next month for the organisation's annual global conference.
In the meantime, he spoke to Idealog about how New Zealand could position itself as a trade centre and why there’s nothing inconsistent about a competitive economy and a minimum wage.
What is New Zealand’s opportunity to be competitive? Where should we be applying our collaboration and brain power?
These days, the world is not a flat world, the world is like an inverted T. The people who have the ideas and can get the capital to globalise global resources do extremely well. The locations that allow people who first generate those ideas, and then exploit those ideas, do extremely well. That’s more possible today than it’s ever been before. These days, any industry where people can come up with the ideas, if they know what they are doing, they can mobilise global resources.
If you think about some of the commodities that exist here, why doesn’t New Zealand take advantage of its timezone and experience in commodities to become a trade centre for some of the commodities? Why can’t New Zealand be the place where UK law firms, instead of keeping some young lawyer up overnight in London, why don’t they just put that down the wire to New Zealand? It’s the same legal background. People here have the training and capabilities.
The thing that seems to be missing here is actually that capital step.
These days, my view is that there is still, despite the global financial crisis, more capital chasing ideas than there is ideas chasing capital.
There have been examples of successfully internationalising New Zealand entities firms over the last 10, 20 years. In the US, that gets leveraged because the people who start those firms become venture capitalists or angel investors themselves. Their connections and experience get utilised by others. It’s not clear to me that New Zealand has developed both the local and international networks to allow the people who have succeeded, who have the good ideas and figured out how to make it happen, a) become the examples that others here follow, b) that they become a source of expertise and knowledge that can be based on, and c) whether they also become the links for other people to enter those sorts of networks.
One of the things I find quite striking is the extent to which the professional service sector in places like Hong Kong, Singapore and other places in Asia as well, how many firms have the upper ranks populated by New Zealanders. One of the major exports of New Zealand, of course, is talented individuals.
Historically, competitiveness, people think of it as being things like removing the minimum wage, tax rates, things like that. But there’s so much more that gets considered now – sustainability, quality of life. Has that changed your thinking at all?
Well, competitiveness to me has always been about improving standards of living, and economic measures and measurements are just part of the story. The policy debate in New Zealand has evolved dramatically over time, but in the rest of the world, competitiveness, as identifying and removing bottlenecks to development, that’s been current for a long time.
Competitiveness, as the need to invest in the appropriate both general and specific infrastructure to support an economy, that’s been current for a long time. The notion of investing in skills and capabilities, that’s been current for a long time. The notion of having government be a catalyst to help identify areas in which firms can coordinate and generate joint gains through coordination, that’s been around outside of New Zealand for a long time now, within New Zealand, not so much.
To me the debate in New Zealand tends very much to be around a limited number of macroeconomic issues and tools, such as tax rates, minimum wage. To me, there’s nothing inconsistent about a competitive economy and a minimum wage. The countries that are generally considered less competitive in the world, most of them have a minimum wage. That to me is, is a social choice which need not get in the way of substantial economic development. Obviously each place has to have their own incentives.