New Zealand's ranking in the world economic league is well down and slipping. SIMON COLLINS has been discovering what we can do to change it.
On the way out to the seaside suburb of Cleveland, south-east of Brisbane, a big red Warehouse is a surprise reminder of home.
In Cleveland itself, the
biggest employer - which the locals think is an Aussie company - is Fisher & Paykel, the Auckland-based maker of fridges and washing machines.
In a downtown bar in San Jose, in the world's high-tech capital of Silicon Valley, Steinlager is on tap.
When we visited a pump manufacturer in Denmark, or a run-down housing estate in Ireland, we were steered unexpectedly to New Zealanders.
New Zealand companies, New Zealand products and New Zealanders are making valuable contributions around the world - just as at home many of us now work for foreign-owned companies, drive in foreign-made cars and have friends and neighbours from several continents.
Everywhere, people from all over are being mixed: a quarter of Singapore's four million residents are foreigners; a third of Silicon Valley's start-up companies were started by Chinese and Indians; in the 1996 census, 31 per cent of Aucklanders were born overseas.
Trade has risen from accounting for an average 27 per cent of high-income countries' annual incomes in 1986 to 39 per cent a decade later, and to 45 per cent in New Zealand.
The value of foreign-owned assets has risen from 6 per cent of the world's annual income in 1960 to 57 per cent in 1995, and 127 per cent in New Zealand.
When even overseas ownership of our "national" airline is a possibility, it is easy to see all this as threatening.
In the newly integrated world, we have some serious disadvantages: we are about as far as you can get from the world's main population centres; we are too small to make our own cars or computers; our exports still derive mainly from grass and trees.
By now the story is familiar: World Bank figures for 212 countries show that our average income per person has slipped from third in 1960, after the United States and Switzerland, to 22nd today.
At current exchange rates, Australia's income per person is now 50 per cent higher than ours; the US figure is 128 per cent higher.
The result is that we are losing many of our most highly trained people - in the past year the net loss to Australia, North America and Europe was 33,802 people, only partly offset by an inflow of 21,202 from Asia and the rest of the world.
This matters, for two reasons: first, many of those who are going would actually prefer to stay, if only they could earn enough; and second, a sense of economic failure reinforces what is already a tendency towards a lack of confidence in this isolated place.
In a sense, the figures are not what really matters. Despite our low dollar incomes, our quality of life is still high - most of us have more space at home, more access to bush and sea and clean air, shorter commuting times, less stress and more balanced lives than people in most higher-income countries.
Yet our quality of life is undermined as long as we feel we can't do what we want to do, as long as we lack the confidence to shoot for our dreams, or even to dream at all of what we can contribute to the world. If we are to turn this around, we need to regain our confidence.
If you look around the world, it is clear that other small, relatively peripheral states have somehow kept - or in Ireland's case, rekindled - the confidence that they can achieve their dreams.
This series reports on seven such places: Queensland, the fastest growing state in Australia; the "Asian tigers" of Singapore and Taiwan; the "Celtic tiger" of Ireland; Denmark, representing the wealthy Scandinavian countries; Israel, which has more companies listed on New York's Nasdaq than any other country outside North America; and Silicon Valley, the only one of the list which is neither a separate state nor peripheral but exemplifies success in the new economy.
In the decade to 1998, New Zealand's income per head grew by 10 per cent in real terms (after taking inflation into account), according to the World Bank.
In the same decade, real incomes grew by 15 per cent in Australia, 17 per cent in the United States, 22 per cent in Denmark, 23 per cent in Israel, 70 per cent in both Singapore and Taiwan, and an extraordinary 92 per cent in Ireland.
Israel, Singapore, Taiwan and Ireland were all poorer than New Zealand in 1988, but had easily surpassed us a decade later.
Many countries which are still poorer than us are also doing spectacularly well. China equalled Ireland's 92 per cent growth in income per head, South Korea's growth was 69 per cent and India's 39 per cent - even though these three countries lose many of their best trained people to the United States.
Within each country, many businesses are showing that it is possible to make significant contributions to the world even from remote locations.
On Kibbutz Yizre'el, in a rural valley near Nazareth, a cooperatively owned factory is the leading world producer of a robotic "Dolphin" machine, which crawls along the bottom of swimming pools and cleans them.
At Bagsvaerd, near the Danish capital of Copenhagen, Novo Nordisk is the world's leading producer of both insulin and the devices people with diabetes use to inject it. .
In rural Jutland, the Danish multinational Grundfos employs 5000 people making pumps and irrigation equipment in the town of Bjerringbro, where the company started. Although it now has factories in China, the United States and throughout Europe, Grundfos has kept its headquarters in Bjerringbro.
Lego, the worldwide toy giant, is based at another small Jutland town, Billund and Oticon's advanced electronic hearing aids are made at Thisted, in Denmark's far north-west.
All these businesses were started by local people and still exist in the places where their founders lived. The founders had the entrepreneurial confidence to take big risks, and sometimes failed at first - Kibbutz Yizre'el invested first in another electronic product, which flopped. But they persisted.
Their successes were based on new ideas - innovations. They were not necessarily all their own ideas. Kibbutz Yizre'el bought the rights to make the Dolphin from a South African; Novo Nordisk and Oticon both bought their technologies initially from North America, then improved them.
What made them successful was that their founders travelled, made contacts and picked up ideas, and then invested in developing them.
We are living through two historic waves of innovation: information and communications technologies, including the internet; and biotechnology, or genetic engineering. While New Zealand debates the ethics of genetics, the seven successful economies examined here are pouring billions into both fields.
In both areas, and indeed in most kinds of innovation, skilled people are vital. They are in desperately short supply: between 1994 and 1999, the US "imported" 124,000 Indians, 68,000 Chinese, 57,000 Filipinos, 49,000 Canadians and 42,000 Britons with higher education degrees.
Most of the successful seven make at least some attempt to forecast their needs for people with different skills, and to plan their education systems to meet those needs.
None of the seven allows large numbers of people of working age to rot on welfare benefits without attempting to find them training or jobs.
Finally, all of the seven put a lot of effort into building their networks with the rest of the world.
New Zealand may be too small to build cars or computers, but so are most of these other small economies.
However, the world economy is now so interlinked that, although cars or cellphones may be assembled in China, Korea or Brazil, their various parts may have been designed and made anywhere. Indeed, Ford makes car springs in South Auckland, and New Zealand-owned Rakon makes electronic crystals in Mt Wellington for cellphone manufacturers in America and Europe.
What is true of production is even more true of research. Small countries can't afford to lead the world in everything, but they can join international research teams.
Singapore's Centre for Wireless Communications, for example, employs only 212 people - half as many as New Zealand's Industrial Research Ltd - but it lists research collaborations with five foreign universities, nine companies overseas and 21 local or multinational companies in Singapore, including Motorola, Ericsson and Fujitsu.
With the English language, an open economy, a big immigrant population and a Kiwi diaspora that has put our people in every corner of the globe, New Zealand is better placed than many countries for international collaboration. As our successful companies such as Fisher & Paykel know, cheap air fares and the internet mean our distance from big markets is now much less of an obstacle.
What we need is to spread the word that we can do it. With the right groundwork, we can take our turn in the sun.
Lessons
1. The increasing integration of the world creates both threats and opportunities.
2. Competing in an integrated world requires entrepreneurship, innovation, education and full employment.
3. Above all, success requires networking and collaboration.
Links
World Bank
Novonordisk
Grundfos
Centre for Wireless Communications
Our turn
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The jobs challenge
Common core values
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New Zealand's ranking in the world economic league is well down and slipping. SIMON COLLINS has been discovering what we can do to change it.
On the way out to the seaside suburb of Cleveland, south-east of Brisbane, a big red Warehouse is a surprise reminder of home.
In Cleveland itself, the
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