We need to up the export ante

20:02, Nov 18 2012

Two reports out last week shed light on where we should be looking to export and problems with how we're going about that.

One was an Organisation for Economic Co-operation and Development report, Looking to 2060: Long-term global growth prospects , which shows where the balance of power is shifting.

The other, Lifting Export Performance, from NZIER and Export New Zealand, said our export growth had been below- par for decades, raising questions about what we should do to fix the problem.

There's a link between the two, because it's logical to target exports to the fastest-growing countries, especially when they're in our neck of the woods. By lifting our export success, we'll boost our overall economic performance.

The OECD report was really telling us what we already know - that along with neighbouring Australia, New Zealand's export success is firmly linked to Asia.

It put some fresh figures behind that knowledge, saying India, Indonesia and China are likely to show the fastest economic growth over the next 50 years as the gap between rich and poor countries closes.


Although the United States remains the largest economy today, accounting for about 23 per cent of global output, it will be surpassed by China within the next five years. The growth rates of China and India suggest their combined gross domestic product will exceed that of the seven main OECD economies by about 2025, and by 2060 it will be more than 11/2 times larger.

China will have the fastest growth rate of any country until 2020 when it will fall to about 6 per cent, and India Indonesia are likely to achieve 7 per cent.

Clearly, Asia should feature in our export focus - and the good news is, it does. The bad news is that we aren't as successful as we should be, and we're not the only country that reads OECD reports. The world is beating a path to Asia's door.

Government-produced strategies have set ambitious targets for boosting exports to India and China by 2015. Export New Zealand also shone a spotlight on trading with Indonesia, now our seventh-largest export market, at a recent forum.

So we're looking in the right direction, but our export growth is slipping behind that of other OECD countries. The OECD reckons being small and isolated shaves 10 per cent off our GDP per capita.

The NZIER report says we can lift New Zealand's overall economic performance if we crack how to lift exports. Export success begets export success - in other words, once you get the snowball rolling, it quickly gains momentum, providing you give it a decent shove in the first place.

We need to get pushing.

Export NZ head Catherine Beard says all the research indicates that doing well in Asia rests on making the right relationships. Companies need to have their own people in the market or be prepared to get on a plane many times to visit to cement those relationships.

Beard cited one company executive who said they visited a potential Asian customer six times and was rejected six times. The seventh time, the customer said, "OK, we'll now take you seriously". It's a long-term game.

One of the NZIER's key recommendations is for New Zealand to hold a serious debate on increasing our population to give local companies more scale before they compete globally. The NZIER is on record as saying it thinks 15 million (from 4.4 million or so) by 2050 would be a good start. The trouble for policymakers is that most Kiwis like our population the way it is.

Another recommendation that could prove controversial is investigating policies to reward high-performing firms that retain capability in New Zealand, and therefore jobs , rather than moving overseas. It would ensure that we keep successful companies of scale here.

There is no silver bullet or one quick fix; rather, it will require good policies and collaboration from the Government and business over the medium to long term. We need to up the ante.

The alternative is fooling ourselves that we're doing OK because a few high- flyers excel in their niche.

That's no snowball.

Fiona Rotherham is managing editor of Fairfax Business Bureau.