Thanks Michael. Great discussion to have and your piece is carefully nuanced. I personally don't think it's possible to significantly shift momentum without a change in the incentives for household investment.
Thanks Bernard. I haven't got around to reading Andrew Coleman's epic series on tax yet, but going by past work I'm sure I'll find a lot to agree with. Does it hit the mark for you, our are you thinking more widely than that?
This 2014 paper put 40% NZ's productivity shortfall down to distance and lack of international connectedness, although that left a lot of the productivity puzzle unexplained.
de Serres, Alain, Naomitsu Yashiro, and Hervé Boulhol, An International Perspective on the New Zealand Productivity Paradox. Working Paper 2014/01. New Zealand Productivity Commission.
My (probably untestable) theory is that distance has become less important over time, which means that scale has become more important as a differentiator across countries. It's not a great answer, but I do think we need to grapple with the idea that these factors change in importance over time - after all, our underperformance really kicked off in the 1960s and it's not as though we suddenly became smaller or more distant then.
Thanks Michael. Great discussion to have and your piece is carefully nuanced. I personally don't think it's possible to significantly shift momentum without a change in the incentives for household investment.
Thanks Bernard. I haven't got around to reading Andrew Coleman's epic series on tax yet, but going by past work I'm sure I'll find a lot to agree with. Does it hit the mark for you, our are you thinking more widely than that?
I need to. Also a fan of Andrew’s work. Will try to get an interview with him.
This 2014 paper put 40% NZ's productivity shortfall down to distance and lack of international connectedness, although that left a lot of the productivity puzzle unexplained.
de Serres, Alain, Naomitsu Yashiro, and Hervé Boulhol, An International Perspective on the New Zealand Productivity Paradox. Working Paper 2014/01. New Zealand Productivity Commission.
My (probably untestable) theory is that distance has become less important over time, which means that scale has become more important as a differentiator across countries. It's not a great answer, but I do think we need to grapple with the idea that these factors change in importance over time - after all, our underperformance really kicked off in the 1960s and it's not as though we suddenly became smaller or more distant then.
Aus Treasury put the distance penalty for Australia as high as 45% (relative to US productivity), but agree this should become less important over time https://treasury.gov.au/publication/2006-03-does-distance-matter-the-effect-of-geographic-isolation-on-productivity-levels/2006-03-does-distance-matter-the-effect-of-geographic-isolation-on-productivity-levels