Why isn’t New Zealand richer and more productive?

http://marginalrevolution.com/marginalrevolution/2014/04/why-isnt-new-zealand-richer-and-more-productive.html

by user_235711 • 12 years ago

166 163 12 years ago

malanj• 12 years ago

Comparing the GNP per capita of New Zealand to Australia gives some interesting results: https://www.wolframalpha.com/input/?i=%28gross+national+prod...

The variance of the past few years (between 1:1 to 1:2) is quite high. I guess theoretically the biggest difference between the two countries is the mineral wealth of Australia?

endoself• 12 years ago

Australia is doing unusually well recently, I think due to natural resources as you mentioned. This graph might give a better idea of what has been going on: https://www.wolframalpha.com/input/?i=uk+gdp+per+capita+%2F+...

wycx• 12 years ago

I suggest that much of Australia's good performance will turn out to have been a bit illusory. We were extremely lucky to experience a significant terms of trade increase from ~2003 onwards, as world iron ore and coal prices increased.

Unfortunately for us, we pissed all that windfall up against a wall. I don't think we posted a current account surplus at all throughout the resources boom years. Instead, Australian banks borrowed money from overseas to lend to Australians so they could sell houses to each other for ever increasing amounts every year. The Australian economy grew because we borrowed from overseas. Existing property owners got to feel richer. As soon as we start to pay back all the debt in a significant way, our economy will shrink. Just as the dependent to worker ratio has peaked. We will have nothing to show for it. Certainly not fast internets.

jacques_chester4• 12 years ago

Because, as the article says, it's isolated and has a small population.

Tasmania, in Australia, is not as wealthy as the mainland -- it's small and isolated. There are dozens of similar examples.

Meanwhile, Singapore is small, but sits athwart what has been, for hundreds of years, one of the busiest trading lanes on the planet.

ekianjo• 12 years ago

Meanwhile, Singapore is small, but sits athwart what has been, for hundreds of years, one of the busiest trading lanes on the planet.

You might want to revise that sentence. Singapore was nothing 100 years ago.

Wikipedia: Singapore ceased to be part of the British Empire when it merged with Malaysia in 1963. Singapore lost its hinterland and was no longer the administrative or economic capital of the Malay Peninsula. The processing in Singapore of raw materials extracted in the Peninsula was drastically reduced due to the absence of a common market between Singapore and the Peninsular states.[5]

Since Singapore's full independence in 1965, it has had to compete with other ports in the region to attract shipping and trade at its port. It has done so by developing an export-oriented economy based on value-added manufacturing. It obtains raw or partially manufactured products from regional and global markets and exports value-added products back to these markets through market access agreements such as World Trade Organization directives and free trade agreements.[5]

By the 1980s, maritime trading activity had ceased in the vicinity of the Singapore River except in the form of passenger transport, as other terminals and harbours took over this role. Keppel Harbour is now home to three container terminals. Other terminals were built in Jurong and Pasir Panjang as well as in Sembawang in the north. Today, the port operations in Singapore are handled by two players: PSA International (formerly the Port of Singapore Authority) and Jurong Port, which collectively operate six container terminals and three general-purpose terminals around Singapore.

In the 1990s the Port became more well-known and overtook Yokohama, and eventually became the busiest port in terms of shipping tonnage

w1ntermute• 12 years ago

Singapore and its development is a unique case, so I think it's hard to compare it to other countries. It's still a very interesting story: http://www.amazon.com/gp/aw/d/0060197765

gshubert17• 12 years ago

Perhaps no revision is necessary.

Singapore may have been nothing 100 years ago, but trade through the region has been busy for much longer. Hence when Singapore decided to develop, it looked to the preexisting trade patterns, and developed accordingly.

jacques_chester4• 12 years ago

Singapore was nothing 100 years ago.

Singapore was colonised by Raffles in 1819 and within six years had a population of 10,000.

http://en.wikipedia.org/wiki/Founding_of_modern_Singapore#Ea...

In 1756, the French colonised what would become the Seychelles Republic. Today it has a population of about 90,000.

Location matters.

danso• 12 years ago

The original PDF is here: http://www.productivity.govt.nz/sites/default/files/internat...

Figure 3 in Section 1 was really interesting, but maybe I haven't had enough coffee this morning:

http://imgur.com/gvRugtl

New Zealand is in the lower-right quadrant, which I'm interpreting to mean that it is predicted to be 20+% above the OECD average, but it is observed to be at 20% below, i.e. -40% below expectations

So the top-left quadrant would be the best performers, right? Those that were expected to be below the OECD average but are observed to be higher, e.g. Norway with a +25% above expectations?

(Now that I wrote this out, it makes more sense to me...I was having trouble divining where exactly the USA stood by being in the top far right, but it's more about the distance from the line)

ronaldx2• 12 years ago

The graph is claiming that countries should appear on the line - above the line are doing better than average; below the line are doing worse than average.

Vertical distance from the line is what you're looking for, so NZL is a crazy distance below. NOR, GRC and IRL are the furthest above the line.

However, another way to view this graph is to say that structural policies have no predictive power.

If you take out the outliers: the countries away from the central blob (e.g. Greece, Portugal and USA: all countries with exceptional circumstances), then the correlation is gone or perhaps even negative - meaning this is a poor model and a pointless exercise.

pcrh4• 12 years ago

I went to the real source [1], which provides this data: http://i.imgur.com/d46JG8Q.png, and plotted it. The R(square) value for the fit it 0.2. The Pearson r is 0.44 with a p-value of 0.02 i.e. potentially useful. Taking out Greece, Portugal and USA changes the R(square) to 0.002, the Pearson r to 0.05 with a p-value of 0.8, i.e without the outliers there is no correlation between the values.

So, indeed, the outliers are driving the association... However, one is not permitted to cherry-pick data, so the "outliers" have to be left in.

[1]Barnes, S., Bouis, R., Briard, P., Dougherty, S., and Eris, M. (2011).The GDP impact of reform: a simple simulation framework,OECD Economics Department Working Papers, no. 834, Paris, France: OECD.

PDF file: http://www.oecd-ilibrary.org/docserver/download/5kgk9qjnhkmt...

hyp03• 12 years ago

Adam Smith noted cities were founded on "navigable rivers", because that's how trade works. Still true today for cargo ships. But today the internet is a river everywhere, for information goods.

New Zealand is the most beautiful place in the world, in my travels (circumvented the globe, but not been everywhere). Though I'm biased towards mountains.

So, theoretically, beauty+internet makes it a great place for software developers (and other information goods and services producers).

OTOH, NZ has prevented software patents (one of the few countries in the world to do so). Although many software developers love this, consider the question: will it increase investment in patentable inventions, or decrease it?

But in a way it's irrelevant: NZ itself is a tiny market. What counts is patents in other markets, US, Europe, Asia.

jotm• 12 years ago

The Internet river is mighty narrow in New Zealand though :-)

pcrh4• 12 years ago

Circumventing the globe while traveling is a pretty impressive feat, unless you're an astronaut.

hyp03• 12 years ago

Well, I went around the globe rather than through it.

collyw• 12 years ago

We don't have software patents in Europe and seem to be doing ok.

jacques_chester4• 12 years ago

If my lawyer's advice is any guide, Europe has a kind of software patent. It's much more difficult to obtain.

okso• 12 years ago

Because kiwis are too cool to worry too much about money and productivity.

lifeisstillgood• 12 years ago

Because you still need a critical mass of people and interactions to generate enough economic serendipity.

Zuckerberg won't just bump into Sean Parker unless they are in a melting pot.

NDizzle• 12 years ago

When your country is as beautiful as NZ you don't have to worry about things like the GDP.

JPKab2• 12 years ago

There was a humorous video on the net recently, where each US state had a quote attached to it. The one for Hawaii:

"Hawaii: If you lived HERE points to stunning scenery you'd be lazy too."

TallGuyShort3• 12 years ago

It's refreshing to click on a headline in the form of a question and have the article explain why it's the right question to be asking, and not just following Betteridge's Law. I lived in New Zealand for about 5 or 6 years, and I saw huge numbers of people just living on welfare because they could - that's probably got a lot to do with low GDP. Normally, I would see that as a bad thing, but I think New Zealand's relative lack of corruption and the friendly disposition of almost everyone illustrates there is more to life than productivity, and the results of the atmosphere and culture speak for themselves. As fiscally conservative as I may be, I had to admire that. Additionally, I hate frivolous lawsuits, and having the government compensate you so readily for injuries really seemed to reduce the way people would resort to "just sue them". Perhaps there's moral hazard and I'm not smart enough to know how one would quantify that, but again - I had to admire that.

atmosx• 12 years ago

So what you're saying basically is that although the avg income is low, the quality of life is generally (way?) higher than the OECD?

grecy3• 12 years ago

I would say yes, from my experience.

I genuinely think it's time for an overhaul of how we rate standard of living. Consumption is not a good measure, and it's too closely tied to "more money means better"

monochr2• 12 years ago

Not necessarily higher but at least equal to the best. According to its HDI[1] New Zealand is ranked 6th, bellow the USA but above Japan, Switzerland and South Korea.

This is similar to the way that European countries seem to lose out to the US in wages yet when you take into account the time spend on holidays and lack of overtime you see that the gap essentially disappears.

[1] http://en.wikipedia.org/wiki/Human_Development_Index

TallGuyShort3• 12 years ago

Right. I used to criticize New Zealand a lot because it doesn't jive with my mind's ideas of how government should work, until a friend pointed out how much New Zealand was #1 in many areas that are considered signs of an ideal society. Makes me question my ideas :)

JPKab2• 12 years ago

A good friend of mine studied abroad in Australia, and then met and moved in with a Kiwi and then lived in New Zealand with him for a while.

He has now moved to the US with her. Her brother is a good friend of mine, and is incredibly irritated with his lack of drive and motivation. I've hiked with the guy, and I don't think he's lazy at all. He just doesn't value money, and his view on life is that he's going to teach school, and do whatever it takes to make his lifestyle match his income, rather than the other way around.

He told me that this is a cultural thing in New Zealand. Nobody pressures you to achieve a certain level of material success. The view is that if you are self-sufficient, then you've arrived. Nobody judges you for not being a "good provider."

Me, as an American, I envy this. I have tremendous pressure from my extended family to make money, so I do. (Plus, in this country, you can't have a decent school system and/or health insurance unless you have a good job)

cryoshon• 12 years ago

There's also the related phenomenon that in the US, the rich are in the spotlight of society and the poor are decidedly disliked.

jamesfranco• 12 years ago

"Nobody pressures you to achieve a certain level of material success."

I live here in New Zealand and thats quiet true. There are 3 billionaires in NZ and almost no one knows who they are. The only guy that is living a noticeable extravagant lifestyle is Kimdotcom, but that guy's german.

cylinder2• 12 years ago

If someone is a bit more ambitious but still wants a mix of the aforementioned lifestyle I would recommend Australia. Much bigger population and resources and better opportunities than NZ with a good safety net that doesn't cost the government much and doesn't suffer rampant abuse. I wouldn't recommend NZ for an American, except for perhaps retirement; it would just be too tough, the isolation and small pop. would be crushing for someone used to living in a giant country of 330M consumers.

ScottBurson2• 12 years ago

Fuck your family. Make money for your own reasons, or don't. It has to come from you or you'll never feel successful.

dhughes2• 12 years ago

It's like that where I am in eastern Canada people go out smoke weed and drink every weekend if not every night!

Most have menial jobs just enough to get by with government assistance.

Yet everyone goes to Cuba, the Dominican Republic, Mexico every year and they make nothing. I can see how all-inclusive vacations became so popular.

I work with 20-year-olds who laugh if they are sent home at work for doing something wrong or if sent home due to some issue at work. A few have travelled all over Europe, Australia, South America yet make nothing as a salary I probably make four times what they do but can't see how they can afford it let alone me.

People are OK with you if you pay your bills nobody freaks out or looks down on you if you aren't super successful or even if you don't work full-time.

Goosey• 12 years ago

I had not heard of Betteridge's Law, so I had to look it up [0]. Given I only just became aware of it due to your comment (thank you, by the way: good comment) it feels strange to be pedantic about it, but the question in the headline is not a yes/no question and therefore seems immune to Betteridge's Law. :)

[0] http://en.wikipedia.org/wiki/Betteridge's_law_of_headlines

thathonkey2• 12 years ago

I went through the same exercise and came to the conclusion that the commenter just name-dropped Betteridge to sound smart. (At least that is what I would have done.)

TallGuyShort3• 12 years ago

Right - Betteridge's Law does not apply very well. My point was more that an article that presents an open question is interesting food for thought - as opposed to articles devoid of substance that seek to answer everything in their headline. Now that you know the term, look in the comments every time you see a '?' on the front page, and you'll see the law mentioned. It is not a claim to be smart, as the peer claims, it is an indication that I spend too much time on HN.

ThomPete4• 12 years ago

Reminds me of the nordic countries.

Edit: Huh? Why the down vote?

toddan• 12 years ago

because the nordic countries has showed being capable of excelebt inovation and entreprenourahip

cowsandmilk• 12 years ago

Because you are so off-base

The point of the post is that NZL has 20% below OECD average GDP per capita, when it would be predicted for them to be 20% above.

The key figure is Figure 3 from http://www.productivity.govt.nz/sites/default/files/internat...

In that, you can see NZL at the far bottom right.

On the other hand, Norway, Sweden, and Finland are all above the line, meaning they have higher GDP per capita than predicted. The only nordic country below the line is Denmark, and they are barely below the line.

So, you are saying that the nordic countries are similar, but the very paper this blog post is based on shows they are not at all economically similar.

EdwardDiego4• 12 years ago

I saw huge numbers of people just living on welfare because they could

Where were you living? The hardcore 'bludgers' are a minority of our welfare claimants.

Your portrayal of NZ strikes me as lopsided, considering we're working longer and longer hours : http://www.stuff.co.nz/business/money/7841749/No-rest-for-th...

ekpyrotic• 12 years ago

Given its comparative geographical isolation, it makes sense for NZ to invest in it's digital economy.

NZ has its own competitive advantages:

(1) An educated population; (2) An English-speaking population (yes, this is an advantage. Regardless of the rise of the East, English is still the international language of business.)

But, clearly, it has certain disadvantages. Geographical isolation is one of those. It is difficult to close your trade deficit efficiently if your manufacturers are pummelled by shipping costs (and expensive labour costs). It's products are almost always going to be more expensive than it's competitors.

So, what should NZ do?

An obvious solution would be to invest in intangible exports (that's the technical terms for non-physical exports); exports that will bring money and jobs into NZ without having to saddle the costs of shipping.

This is what has happened in most of the west. But in most of Europe, we have invested in financial intangibles rather than digital intangibles. That's gone okay (hmm, okay might be a stretch). But it is unlikely to be the right move for NZ because it hasn't got an established financial center nor access to the Euro markets. (Actually with the rise of the China, which is geographically close to NZ, it might have a go at snapping up some of the renmimbi trade).

What does a country do with a highly educated workforce that needs to export intangibles? Software is the obvious solution.

Invest in Computer Science education at school, write an attractive set of tax laws for digital start-ups, and invest in high-tech infrastructure (i.e, be the first country to roll-out 5G).

In fact, the more I think about the it, the more this makes sense. As NZ is a comparatively small country with few concentrated geographical centres, it could roll-out super-fast broadband, 5G, etc, on the cheap.

Anyways, just a few thoughts.

chiph• 12 years ago

They have a visa category for skilled workers - the ones for computer science/IT are pretty liberal.

http://www.immigration.govt.nz/migrant/stream/work/worktores...

cylinder2• 12 years ago

Xero is a NZ startup success story but they have moved their main offices to Australia and the US. Tiny population and geographic and time-zone isolation are big obstacles for anyone trying to do things on a global scale.

monochr2• 12 years ago

As someone in Australia our decrepit internet makes it impossible to do anything resembling a startup. I can't imagine New Zealand would be so bad that they need to move here.

owenwil3• 12 years ago

Xero HQ is very much in New Zealand and the CEO (Rod Drury) still lives in Hawkes Bay of New Zealand. This is not correct.

mikeash• 12 years ago

When you say that China is geographically close to NZ, do you mean that it's closer to NZ than other big players like the US and Europe? I ask because I got confused due to the order you listed the countries and thought you were saying that China was closer to NZ than others, and it's not really. Even considering NZ's distance, China isn't too much closer than the US. Wellington to Los Angeles is almost exactly the same distance as Wellington to Beijing, for example.

zmmmmm• 12 years ago

Paradoxically I'm not sure this is true at all. It turns out that the tyranny of distance can make software even harder to do than tangibles. Why? Because software is intimately driven by domain and end user requirements. It's just not possible to build the right stuff unless you're intimately in contact the people who need it. If you're sitting in NZ, you simply can't appreciate what the driving needs are in an economy 50 - 100 times as big. (Obviously I'm generalising here - there are a few domains where you can - but in general, looking across the vast expanse of the software industry). And it turns out that for those areas where you can do the software remotely - there are nations with billions of people who are seeing the same opportunity.

EdwardDiego4• 12 years ago

I code in NZ for a German company. We are very competitive on price compared to Germans, and very competitive on quality, compared to Indians. It's a happy middle ground.

oska• 12 years ago

(Actually with the rise of the China, which is geographically close to NZ, it might have a go at snapping up some of the renmimbi trade).

The geographical 'closeness' of New Zealand to China can be overstated. The distance between Auckland and Hong Kong is only slightly less than the distance between Los Angeles and Santiago. I'm not sure that many US Americans would consider Santiago geographically close. The basic fact about New Zealand is that it really is not geographically close to anywhere and this is why it was the last significant habitable chunk of land on the planet to be settled by humans (within the last 1000 years). New Zealand is actually very close to the centre of the 'water hemisphere'.

http://en.wikipedia.org/wiki/Water_hemisphere

Nevertheless, you're right that trade with China is becoming more and more important to New Zealand's economy.

As NZ is a comparatively small country with few concentrated geographical centres, it could roll-out super-fast broadband, 5G, etc, on the cheap.

They are now doing this:

http://en.wikipedia.org/wiki/Internet_in_New_Zealand#Governm...

antipodean• 12 years ago

Early-rising New Zealander here (it's 5am folks!).

Bullet points for starters:

1. We are genuinely relaxed people, life is good, weather not too hot or too cold, food easy to get or grow, housing not horribly expensive, healthcare obtainable for all, education as close to free as we can make it and an overall low crime and corruption rate. So the majority of us go to sleep at night, overall, not worried about losing our livelihood one day to the next or not having enough to eat. Similar in this respect to the Northern Europeans.

2. Tall poppy syndrome. We don't like people standing out from the crowd in terms of personality, flamboyance, income - to fit in, you maintain a level of 'bloke/girl next door'. Even if you have tons of money or you are flamboyantly dressy. If not, cue media outcry and attacks, so you move overseas where you can disappear among the masses.

3. Geography! You have no idea how expensive it can be to live here. We work hard to export all our fine goods to you and work harder to import the things we love.

4. The knowledge economy We are messing up here. Internet is too expensive, kids are not getting properly schooled in computing skills and we don't place a high enough value on STEM. If the government really really focused on STEM the next 10 years our next gen kids could have incredible lives, where distance is no barrier thanks to internet access and quality of life is incredible (those mountains, sheep and rivers/lakes are totally as amazing as you see in the photos).

silvestrov• 12 years ago

Item 1 + 2 are true for Scandinavia too (except weather).

lostlogin4• 12 years ago

Housing is horribly expensive in Auckland and the cost is rising fast. Compared to wages, Auckland's prices are unaffordable. https://www.interest.co.nz/property/69289/barfoot-thompson-r...

owenwil3• 12 years ago

Yes, as another person who resides in NZ here, this is the problem. Our government doesn't realize just how important the Internet is and high-tech companies are to the economy and does nothing to foster them. The PM often refuses to meet even the largest, most promising tech companies (the biggest three) because he sees most of the countries value in agriculture.

As someone who works in high-tech company, I can't see any reason to stay here once we've got a big enough base to support ourself. We'll probably shift to the US.

niels_olson2• 12 years ago

Hi, how expensive is it? I mean, I live in Southern California, and a 3 bedroom house 17 miles inland is upwards of $500,000. Checking real estate in NZ, houses can readily be found within blocks of the beach for $300,000 NZD (257,000 USD). Seems like a pretty good deal to me...

bitserf• 12 years ago

Outside of Auckland, it's reasonably affordable. In Auckland, the average price is quite high relative to incomes.

Most of my friends who entered the market recently were looking at prices of between $650k-$850k for something smallish in an OK area.

This was for houses which were not new builds (70s/80s) and would need a bit of work to get up to scratch (insulation, plumbing, kitchen/bathroom remodelling).

So I've just been sitting and building equity and cash reserves. Who knows when/if it will return to earth, but I don't feel comfortable leveraging up that much, so as a single buyer, I'm sitting this one out.

krawczstef• 12 years ago

There's not much R&D because people who do that leave to go overseas ;)

dimitar• 12 years ago

Economist John Quiggin claims that low NZ performance relative to Australia is because of its central bank being fighting inflation to the point of causing unnecessary recessions.

Source: 4th paragraph here: http://johnquiggin.com/2011/05/19/9813/

Edit: Please note that the gravity model of trade is an approximate empirical observation of trade, not economic growth. Australia is just as isolated as is NZ and yet fares better.

jacques_chester4• 12 years ago

Australia has a much larger internal market.

tezza• 12 years ago

Although I'm an Australian, I was born in South Africa, and so was rather surprised to find that there is a standing joke in Oz:

How does a Kiwi get a small business?, you give them a large business.

That's just a cruel joke and yet another data point in why Kiwis (rightly) think Aussies are pricks to them.

From my personal anecdotal experience of NZ:

* they have a much more laid back attitude

* many of the hard workers f-off to Australia to do it

* the government takes big stands on things, which is admirable but not indicative of a focus on business.

- i.e. No American nuclear ships allowed to dock there.

It's not just the local prostitute trade that benefits by having a US naval base in town.

None of this is NZ hate, far from it... they do their own thing and they are fine with it.

vacri4• 12 years ago

That's just a cruel joke and yet another data point in why Kiwis (rightly) think Aussies are pricks to them.

You may have missed that it's actually friendly sibling rivalry between the two. Most of the kiwis I've known make their own comedic jabs at Australia. It's all in good fun.

the government takes big stands on things ... No American nuclear ships allowed to dock there

This really isn't that big a stand. If NZ was where Borneo is, I doubt they'd have made that stand. NZ has effectively zero military needs due to its isolation. The closest potential threat to NZ is Indonesia, which is a quarter of the planet away. Not that Indonesia has any such desire, but Australia and PNG don't have the amount of armed forces required for an occupation, and the small islander nations just don't have enough people (with a few living off NZ aid in the first place).

Lewisham• 12 years ago

Having lived in NZ for a couple of years working at Victoria University of Wellington, the other piece of the puzzle is NZ suffers from crippling brain drain: their best and brightest students immediately head over to Australia where they can make more money and use the exchange rate to pay off their student loan quicker.

My read is that kiwis tend to come back when they're ready to start a family, but during those vital 18-25 years when the entrepreneurial spirit is strongest, they're simply not in the country. They're elsewhere.

The kiwis I talk to that are in that demographic here at Google all seem to be want to go back to NZ, but only if the prospects are there, such as Google opening a real-deal engineering office. But it's hard to convince companies that that is a worthwhile venture when Australia and NZ have freedom of worker movement.

Without the population to lead NZ forward, and with no companies willing to invest to drag it forward, I don't think we'll ever see NZ be richer and more productive. But as other commenters have noticed, I think NZ is perfectly happy with that, because they're happy with their lot, which is something to be envied.

peatmoss3• 12 years ago

I saw the same thing when I lived in New Zealand (just under 4 years, 4 years ago) and worked at the University of Auckland in a non-academic technical role. Personally, however, I'm a counter example of what you describe. I'm an American who recently started a PhD program in the states, who would quite like an academic position in New Zealand when all is said and done!

wldlyinaccurate• 12 years ago

As a kiwi, the brain drain is something that always bothered me. Right from the beginning of high school I knew that I would end up working overseas for several years, regardless of whether I really wanted to or not. And that's exactly what I'm doing right now -- I live in London, saving twice as much as I could in NZ. I don't enjoy the lifestyle here at all, and I want to go back to NZ as soon as possible to start a family, but the opportunities available in Europe (and the rest of the world) simply dwarf those available in NZ.

The good news is that immigration from Asia, India and the Pacific has given the country a significant population of people who culturally are more likely than Europeans to help with population growth. So who knows, maybe in 10-20 years the population will be large enough for the brain drain to sort itself out.

gibrown3• 12 years ago

That was my experience as well. The few folks who managed to work remotely for an overseas company did really well, but pay rates within the country were a lot lower than I expected.

Working at a distributed company, I really wish more Kiwis would apply to my company if only so I could have an excuse to go visit. :)

peatmoss3• 12 years ago

I'm an American with NZ permanent residency. I might be convinced to return there ;-)

niix• 12 years ago

Because of Kim Dot Com.

crb• 12 years ago

Living in NZ is, by and large, a lifestyle choice for smart, capable New Zealanders. It's trivial to work in Australia [1], reasonably easy [2] to work in the UK, and NZers have a good enough reputation to go to any other majority English-speaking country with little trouble.

Because the country is so small - and generally without a class system - it's possible, on a relatively small income, to have everything you might want. This has sometimes been reported as the "three Bs" - a boat, a BMW and a beach house [3]. To have those three things in the UK without being born into them, you might have to have a business that employs 100; a decent tradesman working alone in NZ can get those by their early 30s.

I think a short answer is "because it doesn't want to be."

[1] When traveling from Canada to Australia for work on my NZ passport, I was held up for some time explaining why I was traveling, who I worked for in Canada, who I was going to see, etc. If I had instead said "Hello, I want to live in your country forever, and claim benefits", they would have rubber-stamped my passport and allowed me on my merry way.

[2] Changing, even over the last few years, with the whim of the UK government

[3] http://techcrunch.com/2012/12/16/punching-above-their-weight...

gd1• 12 years ago

and a beach house

Surely you mean a bach bro?

gcv• 12 years ago

That sounds amazing.

Are boats and beach houses that much cheaper in NZ? In the US, you have to be quite wealthy, or quite an avid sailor, to own anything more substantial than a dinghy. Houses anywhere near a semi-desirable beach community cost >$1M. Even successful people in their 30s don't often buy second homes in that price range.

roel_v• 12 years ago

It's not a beach house, it's a bach, which is usually just a wooden shed in a nice spot.

lostlogin4• 12 years ago

Way way less than that. I'm in this town on holiday currently. Check the prices!

http://www.trademe.co.nz/Browse/CategoryAttributeSearchResul...

Widdershin• 12 years ago

New Zealand is gifted in that we have a lot of beaches, and not too many people.

vacri4• 12 years ago

Claiming benefits is no longer automatic for NZ citizens in Australia. It was stopped over a decade ago, with the Australian pollies happy because of the reduced welfare load, and the NZ pollies happy because of the reduced exflux of young adults.

finnigja• 12 years ago

Kiwi here - spent the first 25 years of my life in NZ (Taranaki and Wellington) but relocated to the USA (a year in the Bay Area, then just outside Seattle since 2007).

A few observations of factors that may be considered:

- Distance from markets impacts competitiveness of exports

- Distance from world / experience / culture / opportunities leads to exodus of young travelers (see "the Big OE", http://en.wikipedia.org/wiki/Overseas_experience) and braindrain

- "Tall-poppy syndrome" (http://en.wikipedia.org/wiki/Tall_poppy_syndrome) reduces visibility of or desire for success

- "She'll be right" culture (http://en.wikipedia.org/wiki/She'll_be_right); apathetic, relaxed, or optimistic?

NZ has a very strong entrepreneurial culture but perhaps the challenges above or wrong choice of markets to target make that less effective econony-wise than it could be? There's an interesting read on that at http://pando.com/2013/05/14/number-8-wire-entrepreneurialism....

olssy• 12 years ago

It might be because when you live in paradise money does not have the same value and productivity does not limited to renumerated work.

rdl• 12 years ago

If I were in charge of NZ, I'd probably try to bring in something like pacific fibre, even if it required government subsidy. After that, a focus on making the legal system and business environment very attractive to certain kinds of tech businesses -- maybe that is privacy and security, maybe a very permissive IP regime, maybe something else.

reshambabble• 12 years ago

Singapore is also a tiny island with a limited population that has to import most everything. Over 40 years they've somehow created a culture of hard-working over-achievers and have one of the highest GDPs per capita in the world (they're currently #3). Being dependent on imported goods doesn't seem to be much of a problem here, so perhaps the secret lies in their carefully planned cultural shift. (But if it were me, I'd much rather be a Kiwi with a lower income and laid back lifestyle than a Singaporean with high expectations and a life of hard work).

zhemao2• 12 years ago

Singapore is not nearly as isolated as NZ is. It's on a major ocean shipping lane and is just a bridge away from Malaysia. The problem isn't that NZ is reliant on imports (all countries are to a degree), it's that it is expensive to ship things there since it is out-of-the-way.

That being said, there probably is also a cultural element. I wouldn't really say it was a cultural shift. It's more that the relative stability and increasing globalization in the latter half of the 20th century gave Singaporeans the opportunity to realize their entrepreneurial ambitions.

mikeyouse• 12 years ago

A non-insubstantial amount of Singapore's GDP comes from tax evasion and money laundering from corrupt businesses and individuals.[1] Most corrupt Asian wealth is stored or laundered through Singapore. From Ferdinand Marcos[a], Robert Mugabe[b], Suharto's closest advisors[c], the Chinese princelings[d], Burma's military junta[e], Russia's oligarchs[f] etc etc.

This is in addition to their 'legal' tax avoidance-derived GDP. In 2012, Apple did $14 Billion in revenue in Singapore, which was more than they had in the rest of Asia combined, yet they didn't have a single store or manufacturing center in the city-state.[2] Microsoft actually beat Apple to setup a Singapore-based affiliate for the same purpose.

I'm curious to see how they fare in a decade after these sources of 'income' are greatly restricted in the global crackdown.[3]

One of these days, I'm going to devote a few hours to calculating how much of Singapore's GDP / Tax base only exists due to their status as a tax haven.

[1] http://www.icij.org/search/node/singapore

[a] - http://globalnation.inquirer.net/95743/pnb-gets-marcos-loot-...

[b] - http://www.icij.org/offshore/mugabe-crony-among-thai-names-s...

[c] - http://www.icij.org/offshore/billionaires-among-thousands-in...

[d] - http://international.sueddeutsche.de/post/74093618828/chinas...

[e] - http://www.smh.com.au/news/business/singapore-a-friend-indee...

[f] - http://www.ft.com/intl/cms/s/0/036282b4-be65-11de-b4ab-00144...

[2] http://www.reuters.com/article/2013/11/24/us-singapore-tax-i...

[3] http://www.spiegel.de/international/world/the-singapore-bank...

vacri4• 12 years ago

Singapore is on every shipping lane between east Asia and every location west of East Asia until you hit the far end of Europe and Africa. You effectively have to specifically go out of your way to avoid it.

New Zealand is so isolated that there's an entire continent between them and "through traffic" shipping lanes.

rudin• 12 years ago

Compared to Australia, New Zealand has a significant Maori / Polynesian population. If you combine a part of Australia with a part of Fiji, you would get similar mix of people and also a similar economic output to New Zealand. While this obviously doesn't explain all of it, it is important to consider the historical and demographics reasons as well.

EdwardDiego4• 12 years ago

That's racist as.

owenwil3• 12 years ago

In New Zealand's technology sector, you're pretty much groomed to expect to have to move overseas to achieve anything worth something. All through university it was reiterated to me that I should move overseas to get the job I want and the money I want.

The problem is, this behavior is down to the fact that it's true, you do have to leave NZ to get anywhere in life (for the most part, unless you're happy only hitting it small). The most desirable companies to work for in the technology sector of NZ are essentially Xero and Vend right now, with your other choices being large corporates (Fujitsu, Datacom) or very small early stage startups with small amounts capital.

Startups don't thrive particularly well in New Zealand either, because there's nobody with enough capital to invest in them, so they often don't survive long enough or seek capital from overseas (like Xero/Vend, again, the exception to the rule).

The only natural thing to do is to move to a country with (a) more money, (b) more incentives, (c) more interesting work/problems to solve. The government of New Zealand does little to improve the situation and does not care about the technology sector much, doesn't work hard on getting better internet (we only have one cable to the outside world, and it's expensive to get bandwidth on it!) and doesn't encourage new, young companies to found here.

We just don't have much going for us here, in general, in the technology sector, but it's starting to change with initiatives like this from local government at least: http://hightechcapital.co.nz

It's sad. I wish the government would focus directly on optimizing NZ for technology companies, improve the internet, foster and encourage them (maybe even invest in them), help them get started in the world and meet investors. Some initiatives exist, like the Kiwi Landing Pad, but it's just not good enough yet.

cpearce• 12 years ago

Mozilla has an office in New Zealand, you could come work with us... :)

lostlogin4• 12 years ago

I'll slip in the (in)famous Muldoon quote on the brain drain. He commented on smart Kiwis leaving for Australia, saying it raises the IQ of both countries. The political solutions haven't got much better of late, and despite PM Key trumpeting how bad the brain drain is, he hasn't done much to halt with his years in power. He has possibly exacerbated it. http://i.stuff.co.nz/national/7779840/Key-changes-tack-with-...

http://en.m.wikipedia.org/wiki/New_Zealand_humour

nailer2• 12 years ago

Most of the rest of New Zealand’s productivity gap…appears to come from an underinvestment in knowledge-based capital.

I'm from the 'West Island' (Australia) but the culture is very similar. Money is made from physical things, technology is a semi necessary, semi dubious expense that should only exist as part of 'doing real things'. This is one reason a lot of Australians and Kiwis who have an interest in technology leave.

mrmondo2• 12 years ago

I grew up in Christchurch, NZ.

90% of my friends immediately left the country after university. This is mostly due to low income employment and lack of potential career development.

Like most kiwis I moved to Australia (two and a half years ago now), my income increased by 50% just by making the move. People in Australia (Melbourne) also seem a lot happier and successful (by their own measures, whatever they might be).

For my friends and I, other than the beautiful landscape there wasn't much holding us to New Zealand and quality of life is better in Australia.

mrmondo2• 12 years ago

Oh I should have mentioned that New Zealand does indeed have much better technological infrastructure than Australia though, two years after moving to central(ish) Melbourne the maximum internet speed is less than 1/10th what we had back in New Zealand years ago.

duncan_bayne2• 12 years ago

I was raised in New Zealand, and spent the first half of my life (so far) there. I'm now happily raising a family in Melbourne, Australia. Some observations:

- many of the people I knew in IT in New Zealand have left, especially for Australia; when I was there, this was known as the 'brain drain'

- growing up in New Zealand, there was a strong anti-intellectual current to the culture, especially amongst Maori students (I came top in my year for Maori language despite there being fluent speakers in my school, because I did assignments and they didn't)

- successful people in New Zealand are often criticised because of their success; this is known as 'tall poppy syndrome'

- New Zealand is, politically speaking, entirely socialist; even their 'right wing' party is in favour of a welfare state, taxpayer-funded education and healthcare, and a wide range of 'sin taxes' and legislation designed to protect people from themselves (a.k.a. the 'Nanny State' to its critics)

- Universities there simply aren't as demanding as overseas; my wife cross-credited a psych. degree from Australia, and she was more than half way through a NZ undergrad degree after one year of a degree in Australia

Note that I haven't listed NZ's many positive characteristics. Just saying that all of the above contribute to an environment that in my experience is less productive and less entrepreneurial than Australia.

Why isn’t New Zealand richer and more productive?

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