A comparative advantage analysis of risks and opportunities is required to ensure New Zealand firms operate at the productivity frontier. This means that policies and interventions need to extend to operationalising those comparative advantages (and mitigating any risks).
Dynamic temporal first principles must be considered, not just a static snapshot. Key points:
- If only today’s ‘frontier firms’ are analysed, then insights will be out of date because of the constant disruption in business.
- Frontier firms may not have been created yet. To work out what these futureholder frontier firms might be, a comparative advantage analysis is required which:
- Identifies areas of opportunity for New Zealand in a COVID-rebuild world and in a transition to (and end-game of) a net zero carbon world, and
- Identifies areas of risk for New Zealand (vis-à-vis current ‘frontier firms’) assuming that the world will do a) above even if we don’t.
- What is the point in increasing productivity of today’s leading firm/s if they’re a “Kodak” and the world is changing around them?
The future New Zealand economy and the future wellbeing (which is generally coupled with economic progress) of current and future New Zealanders depends in part on the Productivity Commission and others realising that there is no square to think outside of.
Productivity improvements should not just be viewed as an opportunity to “catch-up”, but also to “forge ahead”. The best way of doing that is by democratising an analysis of comparative advantage.
That’ll also allow New Zealand’s team of five million to participate in the direction of the country in the coming decades.
Chris Boxall 