Getting fit to compete in the global game
While political and economic “change” is on everyone’s lips, we need to be clear about our current situation, and what kind of change is necessary to achieve our ultimate goals. If we don’t, we could be like a short, unfit person deciding to change into a basketball uniform so they can become a basketball player. The change doesn’t equip them to play basketball well, it’s simply a cosmetic alteration that changes the way they look.
It is possible to effect bigger changes over time; our player can train and increase fitness. But a fit, short basketball player is still undersized in a game of giants. Similarly, when it comes to our trading economy, we cannot alter certain fundamental characteristics of New Zealand; namely, our size and location.
We are the short player in a world of giants.
As Brian Easton points out, “New Zealand may well be the worst-located affluent economy” in the world. Philip McCann, a world-renowned regional development expert, highlights that “60-70 percent of all multi-national activities (trade, investment, sales) typically take place within the same global region in which the firm is located.” It’s clear that New Zealand’s geographic isolation is a major disadvantage in an era of globalisation. The government cannot alter New Zealand’s geography, but it can help or hinder our fitness to compete.
There are things that can help shorter basketball players. They can get better shoes which help them to nimbly change direction and jump higher. They can also make sure they are a part of a great team.
New Zealand firms need assistance to be nimble and turn quickly toward opportunities.
They cannot rely on superior size to succeed in a global market. For example, we need to ensure that firms aren’t unduly constrained when it comes to labour market policy. We must ensure that our workers are protected from the worst forms of unregulated markets, but getting the balance right is key. One-size-fits-all labour market regulation that don’t allow firms to respond to the unique conditions of their size or location would be a real disadvantage.
In addition, New Zealand firms need to be part of global trade on reasonable terms. This access is secured through our international trade agreements enabling us to play on the world stage. Thinking we can easily renegotiate these trade documents is a very high-risk strategy. As a small player we necessarily make concessions, we might not get the same deal as other nations, but agreements allow us to get on the court and compete alongside bigger partners. Getting benched might not be a big thing for a tall and weighty opponent, but for a small isolated nation, its high risk.
So, let’s acknowledge that good change will take time to bear fruit. Second, as change takes place let’s not forget that there are certain constraints and realities that we need to accommodate, in order for our workers and businesses to win in the global game.