Policy proposals to improve internationalisation success and lift NZ’s prosperity
03 Dec 2010
The New Zealand Institute’s latest discussion paper, Plugging the gap: An internationalisation strategy, proposes 14 policy directions to improve the success of businesses trying to establish themselves in international markets.
Government has established a target of matching Australia’s GDP per capita by 2025. The Institute has previously argued that growing exports of high value differentiated goods and services is the best option for New Zealand to rejoin the most prosperous nations. Further, improving the success of internationalising businesses is the best way to lift high value differentiated exports.
The policy proposals are designed to:
- Increase the availability of expansion capital;
- Improve the quality and quantity of talent available for internationalising businesses;
- Provide businesses with more and better information about how to grow successfully and establish themselves in international markets; and
- Make it easier to establish valuable domestic and international connections.
Image courtesy of Lee ter Wal Design
Three proposals aim to increase the availability of capital for international expansion. The first is to revitalise the developing venture capital industry by establishing tax-based incentives to encourage investment and by requiring co-investment by international partners to access skills and connections.
The second is to extend those tax incentives to angels and others, and establish a fund to allow more New Zealanders to invest in new ventures targeting international markets.
The third is to establish a loan guarantee facility that will lead to greater bank lending to internationalising businesses and encourage banks to establish specialised lending capability.
The proposals to address talent shortages for management roles are to establish world-class institutes with the purpose of lifting the quantity and quality of management in their specialisations throughout New Zealand. They would conduct research on what works, train specialist managers and offer internships. A national entrepreneurship education strategy to foster a strong entrepreneurial and innovative culture should also be developed.
The shortage of well-qualified directors is addressed by a proposed policy requiring directors of companies receiving government assistance to complete specific training in governance of internationalising businesses, or demonstrate relevant experience that provides them with that competence.
Having the right connections is essential for business success. Policies are proposed that improve domestic and international connections, renew efforts to establish clusters to lift productivity of businesses in the same sector, and establish colonies of New Zealand businesses in important locations around the world to develop sustainable international connections.
Practical information that can help guide internationalising businesses and reduce their costs and risks is important and policies are suggested to improve its provision. Focusing the efforts of business academics on research that assists internationalising New Zealand businesses to be successful is recommended too. Providing public good information such as standard contracts and how-to guides from a single central source is proposed, along with a single web-based clearinghouse to access commonly used information, forums, expertise and opportunities.
An Innovation Council should monitor the performance of the innovation ecosystem as a whole, including internationalisation success. The Council should review opportunities and obstacles, agree priorities and identify resourcing requirements. The importance of innovation to economic success, the large number of agencies and constituencies involved, and the high rate of change, make coordination critical for success.
If New Zealand can become prosperous by developing an innovation driven economy with high value differentiated exports, then it will attract more talent and capital, establishing a virtuous cycle.
Insufficient levels of any one critical factor such as capital, talent, information or connections will be enough to seriously reduce the chance of success. A decision to remedy some but not all of the obstacles to world-class performance may lead to improved outcomes but the performance of the whole depends on the weakest link.
Competing countries that aim to remain prosperous or to become more prosperous have developed innovation strategies. They have introduced policies to overcome constraints and have acted more aggressively than New Zealand to promote growth in priority sectors of their economies. We are in a race.
Reducing the GDP per capita gap with Australia requires ‘NZ Inc’ to define its strategy and implement new policies that will lift prosperity and strengthen New Zealand’s appeal as a country where people want to live and work.
ENDS
For more information please contact:
Dr Rick Boven, Director, The New Zealand Institute, Ph: 09 309 6230
Email: Website: http://www.nzinstitute.org