Why New Zealand's productivity lags behind small European nations

In this episode of the New Zealand Initiative podcast, Michael Johnston and Oliver Hartwich discuss New Zealand's productivity paradox, defined as the discrepancy between the country's sound institutions and its relatively poor economic performance. They explore common explanations, such as the country's small size and remote location, dismissing them as inadequate. Drawing on lessons from European countries like Switzerland, Ireland, Denmark, and the Netherlands, they emphasize the importance of a clear domestic narrative and culture in driving economic success. They discuss the need for decentralization, structural reforms in government, increased foreign direct investment, and a shift away from a generalist approach in the public service to foster expertise. They also touch on New Zealand's low trade-to-GDP ratio and lack of economic complexity, advocating for policies that promote integration into international value chains. The conversation concludes with a reflection on the role of political leadership and the need for a charismatic figure to inspire and unify the country towards economic reform.