The New Zealand Paradox Economics, Innovation and Prosperity
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The New Zealand Paradox Economics, Innovation and Prosperity Paul Callaghan Alan MacDiarmid Professor of Physical Sciences Victoria University of Wellington New Zealand performance IilitIncome inequality 26/33 Unemployment 15/33 Level of democracy 3/33 Life expectancy 11/33 Prison population 26/33 Math score 9/33 Science score 6/33 Time magazine 2011 Adam Smith 1776 David Ricardo 1817 free market economies are more productive and beneficial to their societies. Adam Smith 1776 David Ricardo 1817 free market economies are more productive and beneficial to their societies. Effective markets Property rights Legal frameworks Free Trade Lack of corruption Property Rights 135 countries (2011 International Property Rights Index 95% of world GDP Americans for Tax Reform Foundation/Property Rights Alliance ) New Zealand 6th in world Bottom performers Top performers Legal and Political Rights 135 countries (2011 International Property Rights Index 95% of world GDP Americans for Tax Reform Foundation/Property Rights Alliance ) New Zealand 2nd in world Bottom performers Top performers Free Trade (World Economic Forum) New Zealand 6th in world Corruption (Transparency International 2009 Review) New Zealand best in world New Zealand third lowest iOECDin OECD True effective personal tax New Zealand third from low est in OECD The New Zealand Paradox Strong property rights Low taxation Free, open markets Excellent legal frameworks Honest work ethic Incorruptible …..but poor economic performance Adam Smith 1776 David Ricardo 1817 free market economies are more productive and beneficial to their societies. Effective markets PtihtProperty rights Legal frameworks Free trade Lack of corruption + something else! Economic history year Being behind has advantages Terence Kealey The Economic Laws of Scientific Research Economic history year Economic history BiBrita in joins EU year Economic history 1984- reforms BiBrita in joins EU year NZ has 1.3 million FTE of emppyloyment $500,000 $400,000 ployee mm Fonterra $300,000 Fisher and Paykel Healthcare ue per e nn NZ Manu factur ing Exports Total NZ Manufacturing Reve $200,000 NddNeeded Food manufacturing for current per capita GDP $100,000 Wine Tourism 0 100,000200,000 300,000 FTE of employment PTC and audited by Business NZ 5. You can’t manufacture in New can’tmanufacture Zealand You 5. Foreign earnings (NZ$ billion) 10 0 2 4 6 8 Year ended December 2010 ended Year Meat Dairy Fish Fruit and vegetable NZ $9.5 billion tourism NZ$ 41 billion Wine Forestry products g oods Al Metals ELT Manufacturing &Tourism Satellite Account: 2010 &Tourism Satellite Account: Global-nz-june-2010-tables-3 http://www.stats.govt.nz NZ External TradeStatistics Petroleum Tourism TIN100 F and P appliances Datacom New Zealand Technology Companies F and P Healthcare NDA 2010 Tait Electronics Ltd $1410m Temperzone Gallagher ) Douggplas pharmaceuticals $$ Rakon Moffat Ltd $500m Schneider electric Methven ue (NZ Allied Telesis Glidepath $400m Dynamic controls Navman wireless NZ l reven Weta Ltd aa Skope industries $300m TruTest Annu NextWindow Orion Health $200m NZ Pharmaceuticals $100m 100 90 80 70 60 50 40 30 20 10 1 Rank Paradox: if it sounds unfamiliar, it may stand a chance New Zealand Science Phase I New Zealand Science Phase II Peter Hunter FRS, Engineer Peter Gluckman FRS, Pediatrician Margaret Brimble, Chemist DPhil, Oxford PDF, Un ivers ity o f Ca liforn ia, SF PhD, Southampton Dan Walls FRS, Physicist David Penny, Biologist Rick Sibson FRS, Earth scientist PhD, Harvard PhD, Yale PhD, London New Zealand 10th in OECD New Zealand 21st in OECD New Zealand Science Phase III 2 MHz Halbach magnet rockcore analyzer • Industry Market (R&D groups) •Both NMR and MRI applications •High value and high gross margin sales • Product $150k • 22 staff: existing products selling well • Growth rate ~50% per annum • ~ $3m sales in 2011 • Significant pipeline of new products NZ Taxpayer investment in Callaghan 1993 to 2009 Magritek export sales TIN100 F and P appliances Datacom New Zealand Technology Companies F and P Healthcare NDA 2010 Tait Electronics Ltd $1410m Temperzone Gallagher ) Douggplas pharmaceuticals $$ Rakon Moffat Ltd $500m Schneider electric Methven ue (NZ Allied Telesis Glidepath $400m Dynamic controls Navman wireless NZ l reven Weta Ltd aa Skope industries $300m TruTest Annu NextWindow Orion Health $200m NZ Pharmaceuticals $100m 100 90 80 70 60 50 40 30 20 10 1 Rank TIN 100 exports NZ$ millions (2000 do llars ) year TIN 100 exports NZ high tech NZ$ millions exports (2000 do llars ) World Bank New Zealand High Tech sector has grown 11% per annum in real terms over past two decades year United Nations, Comtrade database (http://www.indexmundi.com/facts/new-zealand/high-technology-exports) 100 Power Law fit TIN100 TIN100 Shaun Hendy, 2011 (X>x) New Zealand Technology Companies rr P 2010 10-1 10-2 100 101 102 103 x 105 103 ar] ee Tree diameters in 4 Earthquakes 10 Columbian forest 103 102 quakes/y hh 102 1 10 101 >m) [eart 0 MM 10 M( Unified scaling law for earthquakes 10-1 Christensen, Danon, Scanlon and Bak PNAS February 19, 2002 vol. 99 Suppl 1 2509 100 10-2 1 10 0 1 2 3 4 7 5 6 The fractal nature of nature: power laws, ecological complexity and Magnitude m=log10(S) Brown, Gupta, Li, Milne. Restrepo and West. Trans. R. Soc. Lond. B (2002) 357,619 TIN100 F and P appliances Datacom New Zealand Technology Companies F and P Healthcare NDA 2010 Tait Electronics Ltd $1410m Temperzone Gallagher ) Douggplas pharmaceuticals $$ Rakon Moffat Ltd $500m ue (NZ $400m l reven Our top 10 technology Companies aa $300m $3.5 bn Annu $200m $100m 100 90 80 70 60 50 40 30 20 10 1 Rank 100 companies, 100 inspired entrepreneurs An additional $40 bn per annum in exports (double our present exports) Ask the question: why would such a business want to stay in New Zealand? 100 companies, 100 inspired entrepreneurs An additional $40 bn per annum in exports (double our present exports) Ask the question: why would such a business want to stay in New Zealand? “A place where talent wants to live” New Zealand has Diaspora 2005 highest rate of graduate migration Expatriates as a percentage of all native born OECD countries 25 Total population Highly skilled 20 15 10 5 0 16 % of New Zealanders migrate abroad 24% of N ew Z eal and’ s ter tiary gra dua tes m igra te a broa d International mobility of the highly skilled : a new perspective, OECD 2005 Education problems we must fix 555 541 530 Science 537 529 Maths Reading 522 OECD OECD 500 487 OECD 476 478 441 446 448 400 Pakeha 71% of students Asian 14% Maori 19% Pasifika 10% PISA 2009: our 21st century learners at age 15 Comparative Education Research Unit Research Division Ministry of Education New Zealand Transit of Venus 2004 Dexter Waru, Hana Parata Walker, Sara Pethybridge Nori Parata Tolaga Bay Area School Unrelenting achievement with attitude Using all our creative power Water Renewable energy MlilMultiple c limat ic zones Abundant outdoor and natural environments Excellent education Civil Society “A place where talent can thrive”.