I suspect population density, and thereby urban design as well, may play quite a big part in it – I think we can sometimes throw a bit much in the culture basket 🙂

Nonetheless, we are going to get to see a whole bunch of research over the next few years!

Conversely small size may also give us good innovation in areas of work that we like.. like sailing 🙂

Without knowing too much about the drivers of productivity I suspect that culture and a desire to employ as many bodies as possible is significant in NZ.

JC

Heya, ahh didn’t mean to come off as touche just wanted to raise the point – my masters thesis was about how firms may over hire managers as a form of capacity precommitment, so I’m sympathetic 😉

Indeed, in managerial surveys NZ often comes off quite poorly and lack of competition seems like a fair driver.

My main issues with the managerial explanation stem from measurability (given the types of surveys we rely on) and endogeniety (managerial performance is likely endogenous determined by a number of the other factors behind relatively lower productivity). Atm I find a lack of scale and a lack of competition due to size and distance from market to be the most compelling explanations – and I see managerial performance as endogenously determined by these. Happy to change my view as the evidence appears though 😉

Touche, my razor is that NZ firms are not exposed to a significant enough level of competition that would force them to develop the level of managerial competence that they would require if they were to operate successfully in another market.

As I am sure you would agree it generally holds that NZ’s best performing firms are those that successfully compete internationally in markets with low barriers to entry.

We also have a long tail of underachieving firms that in a market such as the US would have likely been out-managed into non-existence some time ago. That is not to say that poorly-manged firms don’t exist in somewhere like the US but that generally ours on a comparative basis are even more poorly managed.

What are your thoughts?

Aha, but for it to be “relatively” poor we need an explanation about why NZ is worse than other countries – not just an explanation of the failings of management in of itself 😉

http://www.businessweek.com/articles/2013-01-08/em-the-org-em-stands-by-the-status-quo-for-business-management

http://online.wsj.com/article/SB10001424127887324581504578235710908551732.html

Q. What do the authors conclude is the cause of poor labour productivity in about 99/100 cases?
A. P!ss poor management which unfortunately in New Zealand we generally have in abundance.
.

Having a clear interpretation of our moral judgments is important – this is true. But I have not yet met an economist who believes low labour productivity = laziness, the most common ones are “not enough capital”, “poor management”, “distance from market”, and “excessive labour input” (as the marginal product of labour falls – so if we really ramp up hours worked, average productivity will decline).

I am always “discussing” economics with everyone I meet, I’m just lucky some people are willing to tell me what they think 😉

I wonder about the “not what any economist in the universe means” bit. Many economists are rather moralising as I am sure you will know – and language like ‘labour productivity’ suits a moralists, I think. Am glad you have friends who are prepared to challenge you on the language front.

Language is interesting – when economists say labour productivity they are imagining a cobbs-douglas production function just sitting around. As a result the level of capital, technology, and other forms of labour all have an impact on the marginal product (and the average) of labour.

This is so ingrained that when I think “labour productivity” I usually start thinking about the stock of capital pretty much immediately!

However, in the last couple of years especially, I’ve had a whole number of non-economists say that it makes them feel like they are being attacked for what they do at work – which I’m pretty sure is not what any economist in the universe means! It was nice to see the Productivity Commission get that a cover off on their blog 😉