Exports continue to simplify under National

Export data released today from Statistics New Zealand shows a continuing and disturbing trend in the New Zealand economy — we are exporting less high-valued manufactured goods (down 12.5 percent) and less high-valued manufactured goods as a proportion of total exports.

The chart says it all:
Manufacturered exports

Compared to other small, developed economies — some of the richest countries in the world — our economic complexity significantly trails Finland, Denmark, Israel, and Singapore. These countries make things!

They manufacture integrated circuits, cell phones, wind turbines, and medicines that other countries can’t make. This is their competitive advantage that enables them to pay high wages on the back of high export receipts.

Smart Green Innovation
wind turbines

By comparison, New Zealand largely produces commodities, which most countries can also produce. As a result, we have to produce more commodities at a cheaper price to compete with the rest of the world.  This ‘commodity thinking’ is about competing on price, which means lowering input costs like lowering environmental standards and lowering wages.

We do not support National’s commodity thinking which is driving a low wage pollution economy. That why we announced a major new investment in innovation as the first of our economic priorities this election.

Innovation is one of the best ways we can add value to our exports. Economies that innovate do better over the long term, creating good jobs that pay well and enable us to live quality lives within environmental limits.

Innovation lies at the heart of a smart, green economy.



1 Comment Posted

  1. Innovation is vital to our society, and important to our economy. To build any new “thing”, particularly a new thing that is more than a clever app, requires resources of trained technicians, ready access to materials and fabrication tools. The new printing techniques may alter the “cost to produce” in other ways as well, but for us to be able to pay ourselves well, we have to build things ourselves.

    A careful reader of Ricardo will notice that it is NOT however necessary for NZ to “innovate” to reduce the amount of stuff it imports. This would also have a salutary effect on our balance of trade. We are perhaps, a bit more greedy than wise in ignoring the long term cost to our society of our addiction to cheap imports. There are many things we can produce from the materials we have, and do so without wrecking our environment.

    Innovation then will have a base of production on which to build. The capacity to build new things will expand and inventories of basic materials will available without special orders. The process becomes far easier, and less dependent on the exchange rates.

    Carbon taxes, including on imports, including the transport of those imports… can raise the prices of imports. A larger tax gives advantages to local production that is based on our renewable energy resource.

    None of it is ever in isolation. ALL the policies have to be considered as working together. The media, the public and our opposition far too often fail to understand just how comprehensive our understanding is.

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