OK - just how well is NZ stacking up?
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- Category: Our Blog
- Written by Brent Williams
Earlier this year, the World Economic Forum published some interesting data that compares the 'technology readiness' and 'competitiveness' between just about every country in the world. A perfect opportunity to see just how NZ “stacks-up” compared to the rest of the world. The report is a bit of a number crunch, but basically it confirms a lot of what we know already; our dismal broadband speeds, stella brain drain and lack of adequate funding. In other words, all the things one would think 'necessary' to build a modern and successful economy. There are also a few surprises, many of which dispel some myths in the way we see ourselves. Among them, our relative lack of innovation (the number 8 wire myth) and our poor use of technology in marketing. Although our advertising people are considdered top class, but obviously Alice dosen't live here anymore! Read on to see a summary of key findings and my interpertation, at least, of what this may mean.
Our technology usage
NZ is leading the world in several areas, like our use of the Internet (by population). Here we rate 7th with Australia by comparison at 20th. Interesting given the lack of broadband penetration (which we all know about – but for the record we rank 24th v. Australia at 18th.) We even rate below countries like Estonia and Malta and Slovenia! ...and for those of us who shell out big bucks, per month - for the privilege of what we are told is high speed data - we have little to show for it, NZ rates 43th!!! Even ex eastern block countries and places like Trinidad/Tobago burn us into insignificance!! Interestingly Australia is not far in front at 40th.
Kiwis have a high propensity to use new technology, we rate higher than Australia in this respect (this btw, is from a separate study), but our actual access to new technology is very underwhelming. Here we rank 27th in the world just below Chile and one point above Barbados with Australia at 22. The Scandinavians hold the top 5 slots. However the use of technology within business rates better with NZ 17th leading Australia at 19.
Our competitiveness and marketing ability
A real eye opener is our apparent lack of competitiveness in both local markets and on the world stage. Internationally NZ’s competitive advantage is rated a dismal 74th - just below Morocco and one point above Lesotho!! Interesting Australia does not rank much higher at 55th. Little wonder we are performing badly when you also consider we can’t even compete well in our home markets. Here intensity of local competition is ranked at 64th (Aust. is 11). Without strong competition there is little stimulus for local growth, innovative marketing and requisite experience and capital required to penetrate foreign markets.
This lack of competitiveness could be explained by our nations apparent lack of sophistication when it comes to marketing tools and techniques. Here we rate at 23, below most other developed nations with Australia by comparison at 16. Our poor use, or understanding, of sophisticated marketing is reflected by the sophistication of kiwis as buyers (or consumers). Here kiwis rate 31st, (Australians at 16) meaning we are driven more on price than product attributes.
Innovation
We pride ourselves on our Kiwi ingenuity but our many uses for number 8 wire does not seem to extend beyond the farm. Our capacity for innovation is rated at 28th. Although not dismal and only slightly below Australia (at 23) it should be better. Also related is our ability to produce patents, also fairly low at 24th (Aust. 17). This lackluster performance could be explained by the so called brain-drain. NZ’s ability to retain or attract talent is rated at 86th we rate even lower than Kazakhstan. This puts the availability of scientists and engineers in NZ at 73rd in the world, about the same as Vietnam and Brazil (Australia is 45th)
As we know, NZ’s capacity to produce excellent talent is good, with the the quality of our scientific & research institutions rating well at 14th (Aust 10th) however company investment in R&D (i.e. spending the money to keep our graduates employed and subsequently leaving and for in developing greater competitiveness) is low 38th (Australia 23rd); with the collaboration of academic and corporate research a mediocre 21st Vs. Australia at 17. Even worse is the Governments procurement decisions leading to innovation in the NZ, a woeful 73rd right in between Zambia and Tanzania. Australia is rated 37th. For a country that insists we punch way above our weight – we should be doing better!
The state of our small business
Another way of looking at NZ’s ability to compete and drive innovation would be to look at the small businesses environment. Here it would seem that kiwis are an entrepreneurial bunch, and Govt policy and regulations are paying off (data in NZ’s high ranking in Government policy decisions is below). We are the world leaders (first) in our ability to start a business (both through lack of red tape and the time required). Also, we have good strength in professional management rating 3rd, and have good orientation toward our customers (9th Vs. Aust 20th).
However, does NZ small businesses get a fair go! Probably not, we potentially struggle to gain strong positions due to the dominance of large corporations within our local market, NZ ranking at 40th (bad) Vs. say Australia 11; US 9 & UK 10th. Having said this, the Govt. is watching our back, as NZ rates well for not allowing bigger corporations to engage in anti competitive behavior where NZ ranks 5th best in controlling monopolies.
The reason small business in NZ may be having difficulty in growth (improving the ratio against larger corporates), innovation and competitiveness could be due to the availability of finance and affordability of financial services. Here NZ rates 35 & 45 respectively, compared to Australia at 14 & 25; or access to funding through local equity markets (NZ at 23 Vs. Australia 15 or, say, Malta 9th). Even getting loans from the NZ bank’s are tough by world standards. NZ rates 27th with Australia business finding it easier at 16th. How about raising venture capital? more chance if you are in Australia at 12th while NZ rates 26th.
On the flip side Govt regulations have allowed better access to foreign funds with NZ ranking 18th Vs. Aust 32. However this looks like it is being spent with Foreign investors buying Kiwi businesses or setting up their own, which probably speaks to the point raised above about dominance of large corporations in NZ. Here we rate 8th highest in the world in terms of foreign owned businesses, while Direct Foreign Investment into NZ business ranks low at 52nd with Australia at 22. Countries like Cambodia, Uganda, Estonia are doing a better in attracting foreign investment than kiwi firms.
At least this lack of risk-taking by our banks, and their subsequent 'soundness’, has them rated one of the top in the world at 2nd place, behind Canada (1st) and in front of Australia (3rd). Woo Hoo – give yourselves a bonus.
BTW another surprise is our relatively low ration of females to males in workforce, 48th – although we lead countries like the US 49 and Aust 51 - again Kazakstan (22) beats us by a country mile!!
Other things that help NZ business and economy are things like our lack of trade barriers (3rd) and our strong institutions with zero tolerance to corruption (1) or bribes (1). Our Judicial independence (1); efficient legal framework (5 & 7) and Govt. transparency (3); Aslo interesting is our high ranking as ethical businesses (2) and strength of investor protection (1). We also excel in our trust in, of all things, politicians 5th. Here Australians seem smarter than us at 17 with the US at 54.
The herald article: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10718991
The report: http://reports.weforum.org/global-information-technology-report/content/pdf/wef-gitr-2010-2011.pdf
