New Zealand's economy has been dynamic in the last decade and comparisons with Australia are misleading, according to Mastercard Worldwide economic adviser Yuwa Hedrick-Wing.But he also believes New Zealand needs to invest more in the productive part of t
New Zealand's economy has been dynamic in the last decade and comparisons with Australia are misleading, according to Mastercard Worldwide economic adviser Yuwa Hedrick-Wing.
But he also believes New Zealand needs to invest more in the productive part of the economy, rather than in residential property, and harness the talent of a well-educated workforce to produce more high-end niche products.
"The proper comparison is with New Zealand's own previous decade, and from this perspective, the improvement is very impressive," he said in a report entitled Growth Prospects of Australia and New Zealand in the Post-Recovery Global Economy.
"I do not believe New Zealand competes with Australia. If anything to the extent that Australia improves its services exports, especially in tourism, New Zealand improves," he said.
New Zealand's per capita income in 1990 was estimated at $US12,951. By 2000 it was little changed at $US13,557 but by 2008 it had almost doubled to $US30,030.
"You really want to get out of the low productivity area where the competition is intensifying," he said.
The report notes that experimentation with making milk powder for export in the small Manawatu town of Bunnythorpe from 1873 led to the formation of Glaxo Laboratories Ltd, which was now part of global company GlaxoSmithKline.
The story of entrepreneurial spirit demonstrated that a remote location and a small local market were not a deterrent to global success.
Mr Hedrick-Wing highlighted the services sector as a potential new growth engine.
"The future of both Australia and New Zealand lie in expanding the knowledge economy," he said.
"Investment in the service sector is perhaps the best position to leverage the information and knowledge economy to achieve greater success in the future."
He noted the importance of China as an export market for New Zealand. For the next decade demand would stay high in China but there were risks as the inventory cycle had peaked in China and China was trying to slow its economy.
