
Why isn’t New Zealand richer and more productive? - user_235711
http://marginalrevolution.com/marginalrevolution/2014/04/why-isnt-new-zealand-richer-and-more-productive.html
======
TallGuyShort
It's refreshing to click on a headline in the form of a question and have the
article explain why it's the right question to be asking, and not just
following Betteridge's Law. I lived in New Zealand for about 5 or 6 years, and
I saw huge numbers of people just living on welfare because they could -
that's probably got a lot to do with low GDP. Normally, I would see that as a
bad thing, but I think New Zealand's relative lack of corruption and the
friendly disposition of almost everyone illustrates there is more to life than
productivity, and the results of the atmosphere and culture speak for
themselves. As fiscally conservative as I may be, I had to admire that.
Additionally, I hate frivolous lawsuits, and having the government compensate
you so readily for injuries really seemed to reduce the way people would
resort to "just sue them". Perhaps there's moral hazard and I'm not smart
enough to know how one would quantify that, but again - I had to admire that.

~~~
JPKab
A good friend of mine studied abroad in Australia, and then met and moved in
with a Kiwi and then lived in New Zealand with him for a while.

He has now moved to the US with her. Her brother is a good friend of mine, and
is incredibly irritated with his lack of drive and motivation. I've hiked with
the guy, and I don't think he's lazy at all. He just doesn't value money, and
his view on life is that he's going to teach school, and do whatever it takes
to make his lifestyle match his income, rather than the other way around.

He told me that this is a cultural thing in New Zealand. Nobody pressures you
to achieve a certain level of material success. The view is that if you are
self-sufficient, then you've arrived. Nobody judges you for not being a "good
provider."

Me, as an American, I envy this. I have tremendous pressure from my extended
family to make money, so I do. (Plus, in this country, you can't have a decent
school system and/or health insurance unless you have a good job)

~~~
cylinder
If someone is a bit more ambitious but still wants a mix of the aforementioned
lifestyle I would recommend Australia. Much bigger population and resources
and better opportunities than NZ with a good safety net that doesn't cost the
government much and doesn't suffer rampant abuse. I wouldn't recommend NZ for
an American, except for perhaps retirement; it would just be too tough, the
isolation and small pop. would be crushing for someone used to living in a
giant country of 330M consumers.

~~~
santaclaus
I don't know if I'd go that far. As an American who lived in NZ for a few
years I got a very pacific northwest vibe from the NZ cities. If you like
Portland or Seattle, Wellington is sweet as.

~~~
chair6
Hah .. I spent the first 25 years of my life in NZ (10 years in Wellington)
and have lived just outside of Seattle since 2007. I tell people that the PNW
is the closest to NZ that I've seen in America, both culturally and landscape.

------
antipodean
Early-rising New Zealander here (it's 5am folks!).

Bullet points for starters:

1\. We are genuinely relaxed people, life is good, weather not too hot or too
cold, food easy to get or grow, housing not horribly expensive, healthcare
obtainable for all, education as close to free as we can make it and an
overall low crime and corruption rate. So the majority of us go to sleep at
night, overall, not worried about losing our livelihood one day to the next or
not having enough to eat. Similar in this respect to the Northern Europeans.

2\. Tall poppy syndrome. We don't like people standing out from the crowd in
terms of personality, flamboyance, income - to fit in, you maintain a level of
'bloke/girl next door'. Even if you have tons of money or you are flamboyantly
dressy. If not, cue media outcry and attacks, so you move overseas where you
can disappear among the masses.

3\. Geography! You have no idea how expensive it can be to live here. We work
hard to export all our fine goods to you and work harder to import the things
we love.

4\. The knowledge economy We are messing up here. Internet is too expensive,
kids are not getting properly schooled in computing skills and we don't place
a high enough value on STEM. If the government really really focused on STEM
the next 10 years our next gen kids could have incredible lives, where
distance is no barrier thanks to internet access and quality of life is
incredible (those mountains, sheep and rivers/lakes are totally as amazing as
you see in the photos).

~~~
niels_olson
Hi, how expensive is it? I mean, I live in Southern California, and a 3
bedroom house 17 miles inland is upwards of $500,000. Checking real estate in
NZ, houses can readily be found within blocks of the beach for $300,000 NZD
(257,000 USD). Seems like a pretty good deal to me...

~~~
bitserf
Outside of Auckland, it's reasonably affordable. In Auckland, the average
price is quite high relative to incomes.

Most of my friends who entered the market recently were looking at prices of
between $650k-$850k for something smallish in an OK area.

This was for houses which were not new builds (70s/80s) and would need a bit
of work to get up to scratch (insulation, plumbing, kitchen/bathroom
remodelling).

So I've just been sitting and building equity and cash reserves. Who knows
when/if it will return to earth, but I don't feel comfortable leveraging up
that much, so as a single buyer, I'm sitting this one out.

------
ekpyrotic
Given its comparative geographical isolation, it makes sense for NZ to invest
in it's digital economy.

NZ has its own competitive advantages:

(1) An educated population; (2) An English-speaking population (yes, this is
an advantage. Regardless of the rise of the East, English is still the
international language of business.)

But, clearly, it has certain disadvantages. Geographical isolation is one of
those. It is difficult to close your trade deficit efficiently if your
manufacturers are pummelled by shipping costs (and expensive labour costs).
It's products are almost always going to be more expensive than it's
competitors.

So, what should NZ do?

An obvious solution would be to invest in intangible exports (that's the
technical terms for non-physical exports); exports that will bring money and
jobs into NZ without having to saddle the costs of shipping.

This is what has happened in most of the west. But in most of Europe, we have
invested in financial intangibles rather than digital intangibles. That's gone
okay (hmm, okay might be a stretch). But it is unlikely to be the right move
for NZ because it hasn't got an established financial center nor access to the
Euro markets. (Actually with the rise of the China, which is geographically
close to NZ, it might have a go at snapping up some of the renmimbi trade).

What does a country do with a highly educated workforce that needs to export
intangibles? Software is the obvious solution.

Invest in Computer Science education at school, write an attractive set of tax
laws for digital start-ups, and invest in high-tech infrastructure (i.e, be
the first country to roll-out 5G).

In fact, the more I think about the it, the more this makes sense. As NZ is a
comparatively small country with few concentrated geographical centres, it
could roll-out super-fast broadband, 5G, etc, on the cheap.

Anyways, just a few thoughts.

~~~
cylinder
Xero is a NZ startup success story but they have moved their main offices to
Australia and the US. Tiny population and geographic and time-zone isolation
are big obstacles for anyone trying to do things on a global scale.

~~~
monochr
As someone in Australia our decrepit internet makes it impossible to do
anything resembling a startup. I can't imagine New Zealand would be so bad
that they need to move here.

~~~
josai
While as a fellow Australia I bemoan the woeful state of our internet, I don't
think it makes it "impossible" to start a startup, in fact I know many
startups in Sydney and elsewhere. It makes it more difficult, yes, and limits
your options, but it's not impossible.

I can think of several reasons to move to AU from NZ as a startup; a greater
talent pool and larger investment community for starters. It's by no means a
slam dunk, but they're valid reasons.

------
Lewisham
Having lived in NZ for a couple of years working at Victoria University of
Wellington, the other piece of the puzzle is NZ suffers from crippling brain
drain: their best and brightest students immediately head over to Australia
where they can make more money and use the exchange rate to pay off their
student loan quicker.

My read is that kiwis tend to come back when they're ready to start a family,
but during those vital 18-25 years when the entrepreneurial spirit is
strongest, they're simply not in the country. They're elsewhere.

The kiwis I talk to that are in that demographic here at Google all seem to be
want to go back to NZ, but only if the prospects are there, such as Google
opening a real-deal engineering office. But it's hard to convince companies
that that is a worthwhile venture when Australia and NZ have freedom of worker
movement.

Without the population to lead NZ forward, and with no companies willing to
invest to drag it forward, I don't think we'll ever see NZ be richer and more
productive. But as other commenters have noticed, I think NZ is perfectly
happy with that, because they're happy with their lot, which is something to
be envied.

~~~
gibrown
That was my experience as well. The few folks who managed to work remotely for
an overseas company did really well, but pay rates within the country were a
lot lower than I expected.

Working at a distributed company, I really wish more Kiwis would apply to my
company if only so I could have an excuse to go visit. :)

~~~
peatmoss
I'm an American with NZ permanent residency. I might be convinced to return
there ;-)

------
crb
Living in NZ is, by and large, a lifestyle choice for smart, capable New
Zealanders. It's trivial to work in Australia [1], reasonably easy [2] to work
in the UK, and NZers have a good enough reputation to go to any other majority
English-speaking country with little trouble.

Because the country is so small - and generally without a class system - it's
possible, on a relatively small income, to have everything you might want.
This has sometimes been reported as the "three Bs" \- a boat, a BMW and a
beach house [3]. To have those three things in the UK without being born into
them, you might have to have a business that employs 100; a decent tradesman
working alone in NZ can get those by their early 30s.

I think a short answer is "because it doesn't want to be."

[1] When traveling from Canada to Australia for work on my NZ passport, I was
held up for some time explaining why I was traveling, who I worked for in
Canada, who I was going to see, etc. If I had instead said "Hello, I want to
live in your country forever, and claim benefits", they would have rubber-
stamped my passport and allowed me on my merry way.

[2] Changing, even over the last few years, with the whim of the UK government

[3] [http://techcrunch.com/2012/12/16/punching-above-their-
weight...](http://techcrunch.com/2012/12/16/punching-above-their-weight/)

~~~
gcv
That sounds amazing.

Are boats and beach houses that much cheaper in NZ? In the US, you have to be
quite wealthy, or quite an avid sailor, to own anything more substantial than
a dinghy. Houses anywhere near a semi-desirable beach community cost >$1M.
Even successful people in their 30s don't often buy second homes in that price
range.

~~~
lostlogin
Way way less than that. I'm in this town on holiday currently. Check the
prices!

[http://www.trademe.co.nz/Browse/CategoryAttributeSearchResul...](http://www.trademe.co.nz/Browse/CategoryAttributeSearchResults.aspx?search=1&cid=5748&sidebar=1&rptpath=350-5748-3399-&132=PROPERTY&selected135=11&134=14&135=11&136=728&216=0&216=0&217=0&217=0&153=&29=&122=0&122=0&49=0&49=0&178=0&178=0&sidebarSearch_keypresses=0&sidebarSearch_suggested=0)

------
danso
The original PDF is here:
[http://www.productivity.govt.nz/sites/default/files/internat...](http://www.productivity.govt.nz/sites/default/files/international-
perspective-working-paper.pdf)

Figure 3 in Section 1 was really interesting, but maybe I haven't had enough
coffee this morning:

[http://imgur.com/gvRugtl](http://imgur.com/gvRugtl)

New Zealand is in the lower-right quadrant, which I'm interpreting to mean
that it is _predicted_ to be 20+% _above_ the OECD average, but it is
_observed_ to be at 20% _below_ , i.e. -40% below expectations

So the _top-left_ quadrant would be the best performers, right? Those that
were expected to be below the OECD average but are observed to be higher, e.g.
Norway with a +25% above expectations?

(Now that I wrote this out, it makes more sense to me...I was having trouble
divining where exactly the USA stood by being in the top far right, but it's
more about the distance from the line)

~~~
ronaldx
The graph is claiming that countries should appear on the line - above the
line are doing better than average; below the line are doing worse than
average.

Vertical distance from the line is what you're looking for, so NZL is a crazy
distance below. NOR, GRC and IRL are the furthest above the line.

However, another way to view this graph is to say that structural policies
have no predictive power.

If you take out the outliers: the countries away from the central blob (e.g.
Greece, Portugal and USA: all countries with exceptional circumstances), then
the correlation is gone or perhaps even negative - meaning this is a poor
model and a pointless exercise.

~~~
pcrh
I went to the real source [1], which provides this data:
[http://i.imgur.com/d46JG8Q.png](http://i.imgur.com/d46JG8Q.png), and plotted
it. The R(square) value for the fit it 0.2. The Pearson r is 0.44 with a
p-value of 0.02 i.e. potentially useful. Taking out Greece, Portugal and USA
changes the R(square) to 0.002, the Pearson r to 0.05 with a p-value of 0.8,
i.e without the outliers there is no correlation between the values.

So, indeed, the outliers are driving the association... However, one is not
permitted to cherry-pick data, so the "outliers" have to be left in.

[1]Barnes, S., Bouis, R., Briard, P., Dougherty, S., and Eris, M. (2011).The
GDP impact of reform: a simple simulation framework,OECD Economics Department
Working Papers, no. 834, Paris, France: OECD.

PDF file: [http://www.oecd-
ilibrary.org/docserver/download/5kgk9qjnhkmt...](http://www.oecd-
ilibrary.org/docserver/download/5kgk9qjnhkmt.pdf?expires=1397838927&id=id&accname=guest&checksum=583ADE3E363128945532B8219957347D)

~~~
ronaldx
>However, one is not permitted to cherry-pick data, so the "outliers" have to
be left in.

I respect why you think this, but I don't agree. Identifying points on the
graph which don't fit with the pattern of the rest of the data is a reasonable
way to identify outliers. Even if you choose not to exclude those, there's a
greater problem:

Correlation is not robust if it depends on 2 or 3 points being in just the
right place. And, robustness is one of the things you really ought to check
for if you calculate Pearson's r. If you get different results with outliers
in and out, that's a problem for your results.

In my opinion, any significant result here is just statistical noise.

See Wikipedia for further discussion:
[https://en.wikipedia.org/wiki/Pearson_product-
moment_correla...](https://en.wikipedia.org/wiki/Pearson_product-
moment_correlation_coefficient#Robustness)

~~~
pcrh
I agree that the statistics on this association are pretty lousy, even with
the outliers in. However, one would preferably find an specific reason to
exclude outliers, rather than rely on intuition.

------
jacques_chester
Because, as the article says, it's isolated and has a small population.

Tasmania, in Australia, is not as wealthy as the mainland -- it's small and
isolated. There are dozens of similar examples.

Meanwhile, Singapore is small, but sits athwart what has been, for hundreds of
years, one of the busiest trading lanes on the planet.

~~~
ekianjo
> Meanwhile, Singapore is small, but sits athwart what has been, for hundreds
> of years, one of the busiest trading lanes on the planet.

You might want to revise that sentence. Singapore was nothing 100 years ago.

Wikipedia: Singapore ceased to be part of the British Empire when it merged
with Malaysia in 1963. Singapore lost its hinterland and was no longer the
administrative or economic capital of the Malay Peninsula. The processing in
Singapore of raw materials extracted in the Peninsula was drastically reduced
due to the absence of a common market between Singapore and the Peninsular
states.[5]

Since Singapore's full independence in 1965, __it has had to compete with
other ports in the region to attract shipping and trade at its port. It has
done so by developing an export-oriented economy based on value-added
manufacturing. __It obtains raw or partially manufactured products from
regional and global markets and exports value-added products back to these
markets through market access agreements such as World Trade Organization
directives and free trade agreements.[5]

By the 1980s, maritime trading activity had ceased in the vicinity of the
Singapore River except in the form of passenger transport, as other terminals
and harbours took over this role. Keppel Harbour is now home to three
container terminals. Other terminals were built in Jurong and Pasir Panjang as
well as in Sembawang in the north. Today, the port operations in Singapore are
handled by two players: PSA International (formerly the Port of Singapore
Authority) and Jurong Port, which collectively operate six container terminals
and three general-purpose terminals around Singapore.

In the 1990s the Port became more well-known and overtook Yokohama, and
eventually became the busiest port in terms of shipping tonnage

~~~
gshubert17
Perhaps no revision is necessary.

Singapore may have been nothing 100 years ago, but trade through the region
has been busy for much longer. Hence when Singapore decided to develop, it
looked to the preexisting trade patterns, and developed accordingly.

~~~
jessaustin
You seem to think it was quite simple. It was not.

------
hyp0
Adam Smith noted cities were founded on "navigable rivers", because that's how
trade works. Still true today for cargo ships. But today the internet is a
river everywhere, for information goods.

New Zealand is the most beautiful place in the world, in my travels
(circumvented the globe, but not been everywhere). Though I'm biased towards
mountains.

So, theoretically, beauty+internet makes it a great place for software
developers (and other information goods and services producers).

OTOH, NZ has prevented software patents (one of the few countries in the world
to do so). Although many software developers love this, consider the question:
will it increase investment in patentable inventions, or decrease it?

But in a way it's irrelevant: NZ itself is a tiny market. What counts is
patents in other markets, US, Europe, Asia.

~~~
pcrh
Circumventing the globe while traveling is a pretty impressive feat, unless
you're an astronaut.

~~~
hyp0
Well, I went _around_ the globe rather than through it.

~~~
lexcorvus
He's suggesting you meant _circumnavigated_ , not _circumvented_.

~~~
hyp0
To explain the joke: Yes, he caught that error of mine, but I found a
retrospective justification as a way to get out of it, as a joke. That's why
he replied "Well done!"

~~~
lexcorvus
Gotcha.

------
chair6
Kiwi here - spent the first 25 years of my life in NZ (Taranaki and
Wellington) but relocated to the USA (a year in the Bay Area, then just
outside Seattle since 2007).

A few observations of factors that may be considered:

\- Distance from markets impacts competitiveness of exports

\- Distance from world / experience / culture / opportunities leads to exodus
of young travelers (see "the Big OE",
[http://en.wikipedia.org/wiki/Overseas_experience](http://en.wikipedia.org/wiki/Overseas_experience))
and braindrain

\- "Tall-poppy syndrome"
([http://en.wikipedia.org/wiki/Tall_poppy_syndrome](http://en.wikipedia.org/wiki/Tall_poppy_syndrome))
reduces visibility of or desire for success

\- "She'll be right" culture
([http://en.wikipedia.org/wiki/She'll_be_right);](http://en.wikipedia.org/wiki/She'll_be_right\);)
apathetic, relaxed, or optimistic?

NZ has a very strong entrepreneurial culture but perhaps the challenges above
or wrong choice of markets to target make that less effective econony-wise
than it could be? There's an interesting read on that at
[http://pando.com/2013/05/14/number-8-wire-
entrepreneurialism...](http://pando.com/2013/05/14/number-8-wire-
entrepreneurialism-how-a-cultural-myth-can-inspire-a-country/).

------
NDizzle
When your country is as beautiful as NZ you don't have to worry about things
like the GDP.

~~~
JPKab
There was a humorous video on the net recently, where each US state had a
quote attached to it. The one for Hawaii:

"Hawaii: If you lived HERE _points to stunning scenery_ you'd be lazy too."

------
tezza
Although I'm an Australian, I was born in South Africa, and so was rather
surprised to find that there is a standing joke in Oz:

 _How does a Kiwi get a small business?, you give them a large business._

That's just a cruel joke and yet another data point in why Kiwis (rightly)
think Aussies are pricks to them.

From my personal anecdotal experience of NZ:

* they have a much more laid back attitude

* many of the hard workers f-off to Australia to do it

* the government takes big stands on things, which is admirable but not indicative of a focus on business.

\- i.e. No American nuclear ships allowed to dock there.

It's not just the local prostitute trade that benefits by having a US naval
base in town.

None of this is NZ hate, far from it... they do their own thing and they are
fine with it.

~~~
vacri
_That 's just a cruel joke and yet another data point in why Kiwis (rightly)
think Aussies are pricks to them._

You may have missed that it's actually friendly sibling rivalry between the
two. Most of the kiwis I've known make their own comedic jabs at Australia.
It's all in good fun.

 _the government takes big stands on things ... No American nuclear ships
allowed to dock there_

This really isn't that big a stand. If NZ was where Borneo is, I doubt they'd
have made that stand. NZ has effectively zero military needs due to its
isolation. The closest potential threat to NZ is Indonesia, which is a quarter
of the planet away. Not that Indonesia has any such desire, but Australia and
PNG don't have the amount of armed forces required for an occupation, and the
small islander nations just don't have enough people (with a few living off NZ
aid in the first place).

------
dimitar
Economist John Quiggin claims that low NZ performance relative to Australia is
because of its central bank being fighting inflation to the point of causing
unnecessary recessions.

Source: 4th paragraph here:
[http://johnquiggin.com/2011/05/19/9813/](http://johnquiggin.com/2011/05/19/9813/)

Edit: Please note that the gravity model of trade is an approximate empirical
observation of trade, not economic growth. Australia is just as isolated as is
NZ and yet fares better.

~~~
jacques_chester
Australia has a much larger internal market.

------
rudin
Compared to Australia, New Zealand has a significant Maori / Polynesian
population. If you combine a part of Australia with a part of Fiji, you would
get similar mix of people and also a similar economic output to New Zealand.
While this obviously doesn't explain all of it, it is important to consider
the historical and demographics reasons as well.

~~~
EdwardDiego
That's racist as.

------
rdl
If I were in charge of NZ, I'd probably try to bring in something like pacific
fibre, even if it required government subsidy. After that, a focus on making
the legal system and business environment very attractive to certain kinds of
tech businesses -- maybe that is privacy and security, maybe a very permissive
IP regime, maybe something else.

------
lifeisstillgood
Because you still need a critical mass of people and interactions to generate
enough economic serendipity.

Zuckerberg won't just bump into Sean Parker unless they are in a melting pot.

------
malanj
Comparing the GNP per capita of New Zealand to Australia gives some
interesting results:
[https://www.wolframalpha.com/input/?i=%28gross+national+prod...](https://www.wolframalpha.com/input/?i=%28gross+national+product+of+New+Zealand+%2F+population+new+zealand%29+%2F+%28gross+national+product+of+australia+%2F+population+australia%29)

The variance of the past few years (between 1:1 to 1:2) is quite high. I guess
theoretically the biggest difference between the two countries is the mineral
wealth of Australia?

~~~
endoself
Australia is doing unusually well recently, I think due to natural resources
as you mentioned. This graph might give a better idea of what has been going
on:
[https://www.wolframalpha.com/input/?i=uk+gdp+per+capita+%2F+...](https://www.wolframalpha.com/input/?i=uk+gdp+per+capita+%2F+usa+gdp+per+capita%2C+canada+gdp+per+capita+%2F+usa+gdp+per+capita%2C+australia+gdp+per+capita+%2F+usa+gdp+per+capita%2C+new+zealand+gdp+per+capita+%2F+usa+gdp+per+capita)

~~~
wycx
I suggest that much of Australia's good performance will turn out to have been
a bit illusory. We were extremely lucky to experience a significant terms of
trade increase from ~2003 onwards, as world iron ore and coal prices
increased.

Unfortunately for us, we pissed all that windfall up against a wall. I don't
think we posted a current account surplus at all throughout the resources boom
years. Instead, Australian banks borrowed money from overseas to lend to
Australians so they could sell houses to each other for ever increasing
amounts every year. The Australian economy grew because we borrowed from
overseas. Existing property owners got to feel richer. As soon as we start to
pay back all the debt in a significant way, our economy will shrink. Just as
the dependent to worker ratio has peaked. We will have nothing to show for it.
Certainly not fast internets.

~~~
eli_gottlieb
>Australian banks borrowed money from overseas to lend to Australians so they
could sell houses to each other for ever increasing amounts every year. The
Australian economy grew because we borrowed from overseas. Existing property
owners got to feel richer. As soon as we start to pay back all the debt in a
significant way, our economy will shrink.

Sounds like the exact same finance became dominant in every other Western
economy.

------
duncan_bayne
I was raised in New Zealand, and spent the first half of my life (so far)
there. I'm now happily raising a family in Melbourne, Australia. Some
observations:

\- many of the people I knew in IT in New Zealand have left, especially for
Australia; when I was there, this was known as the 'brain drain'

\- growing up in New Zealand, there was a strong anti-intellectual current to
the culture, especially amongst Maori students (I came top in my year for
Maori language despite there being fluent speakers in my school, because I did
assignments and they didn't)

\- successful people in New Zealand are often criticised because of their
success; this is known as 'tall poppy syndrome'

\- New Zealand is, politically speaking, entirely socialist; even their 'right
wing' party is in favour of a welfare state, taxpayer-funded education and
healthcare, and a wide range of 'sin taxes' and legislation designed to
protect people from themselves (a.k.a. the 'Nanny State' to its critics)

\- Universities there simply aren't as demanding as overseas; my wife cross-
credited a psych. degree from Australia, and she was more than half way
through a NZ undergrad degree after one year of a degree in Australia

Note that I haven't listed NZ's many positive characteristics. Just saying
that all of the above contribute to an environment that in my experience is
less productive and less entrepreneurial than Australia.

------
owenwil
In New Zealand's technology sector, you're pretty much groomed to expect to
have to move overseas to achieve anything worth something. All through
university it was reiterated to me that I should move overseas to get the job
I want and the money I want.

The problem is, this behavior is down to the fact that it's true, you do have
to leave NZ to get anywhere in life (for the most part, unless you're happy
only hitting it small). The most desirable companies to work for in the
technology sector of NZ are essentially Xero and Vend right now, with your
other choices being large corporates (Fujitsu, Datacom) or very small early
stage startups with small amounts capital.

Startups don't thrive particularly well in New Zealand either, because there's
nobody with enough capital to invest in them, so they often don't survive long
enough or seek capital from overseas (like Xero/Vend, again, the exception to
the rule).

The only natural thing to do is to move to a country with (a) more money, (b)
more incentives, (c) more interesting work/problems to solve. The government
of New Zealand does little to improve the situation and does not care about
the technology sector much, doesn't work hard on getting better internet (we
only have one cable to the outside world, and it's expensive to get bandwidth
on it!) and doesn't encourage new, young companies to found here.

We just don't have much going for us here, in general, in the technology
sector, but it's starting to change with initiatives like this from local
government at least:
[http://hightechcapital.co.nz](http://hightechcapital.co.nz)

It's sad. I wish the government would focus directly on optimizing NZ for
technology companies, improve the internet, foster and encourage them (maybe
even invest in them), help them get started in the world and meet investors.
Some initiatives exist, like the Kiwi Landing Pad, but it's just not good
enough yet.

~~~
lostlogin
I'll slip in the (in)famous Muldoon quote on the brain drain. He commented on
smart Kiwis leaving for Australia, saying it raises the IQ of both countries.
The political solutions haven't got much better of late, and despite PM Key
trumpeting how bad the brain drain is, he hasn't done much to halt with his
years in power. He has possibly exacerbated it.
[http://i.stuff.co.nz/national/7779840/Key-changes-tack-
with-...](http://i.stuff.co.nz/national/7779840/Key-changes-tack-with-brain-
exchange-tag)

[http://en.m.wikipedia.org/wiki/New_Zealand_humour](http://en.m.wikipedia.org/wiki/New_Zealand_humour)

------
mrmondo
I grew up in Christchurch, NZ.

90% of my friends immediately left the country after university. This is
mostly due to low income employment and lack of potential career development.

Like most kiwis I moved to Australia (two and a half years ago now), my income
increased by 50% just by making the move. People in Australia (Melbourne) also
seem a lot happier and successful (by their own measures, whatever they might
be).

For my friends and I, other than the beautiful landscape there wasn't much
holding us to New Zealand and quality of life is better in Australia.

~~~
mrmondo
Oh I should have mentioned that New Zealand does indeed have much better
technological infrastructure than Australia though, two years after moving to
central(ish) Melbourne the maximum internet speed is less than 1/10th what we
had back in New Zealand years ago.

------
nailer
> Most of the rest of New Zealand’s productivity gap…appears to come from an
> underinvestment in knowledge-based capital.

I'm from the 'West Island' (Australia) but the culture is very similar. Money
is made from physical things, technology is a semi necessary, semi dubious
expense that should only exist as part of 'doing real things'. This is one
reason a lot of Australians and Kiwis who have an interest in technology
leave.

------
olssy
It might be because when you live in paradise money does not have the same
value and productivity does not limited to renumerated work.

------
krawczstef
There's not much R&D because people who do that leave to go overseas ;)

------
okso
Because kiwis are too cool to worry too much about money and productivity.

------
niix
Because of Kim Dot Com.

------
reshambabble
Singapore is also a tiny island with a limited population that has to import
most everything. Over 40 years they've somehow created a culture of hard-
working over-achievers and have one of the highest GDPs per capita in the
world (they're currently #3). Being dependent on imported goods doesn't seem
to be much of a problem here, so perhaps the secret lies in their carefully
planned cultural shift. (But if it were me, I'd much rather be a Kiwi with a
lower income and laid back lifestyle than a Singaporean with high expectations
and a life of hard work).

~~~
zhemao
Singapore is not nearly as isolated as NZ is. It's on a major ocean shipping
lane and is just a bridge away from Malaysia. The problem isn't that NZ is
reliant on imports (all countries are to a degree), it's that it is expensive
to ship things there since it is out-of-the-way.

That being said, there probably is also a cultural element. I wouldn't really
say it was a cultural shift. It's more that the relative stability and
increasing globalization in the latter half of the 20th century gave
Singaporeans the opportunity to realize their entrepreneurial ambitions.

