New Zealand's key export industries have been maxed out and the country urgently needs a strategy to develop new sectors for future growth, a Boston Consulting Group report says.
In a report published Thursday, BCG NZ’s managing director Kelly Newton said export industries like dairy, film, and tourism have led the economy over the past 50 years but are running out of steam.
“The local dairy industry says that New Zealand has reached peak milk production, film and television production is limited to serving the outsourcing needs of US-based studios, and travellers are choosing more affordable and lower-carbon holiday options,” she wrote.
Businesses, government, and researchers must collaborate to incubate new industries that can diversify and expand the economy, focusing on creating three to five "high-value ecosystems" to drive growth.
In the report, "ecosystem" refers to a region or city where businesses, research institutions, and government bodies concentrate on a specific industry.
These areas offer benefits by sharing resources, attracting talent, and encouraging the exchange of ideas between startups, companies, universities, and investors, keeping everyone informed on new ideas and best practices.
Newton said New Zealand has often spread its limited investment across too many industries, many of which are too dispersed. For example, when she asked at Fieldays where a food-tech business would have the best chance of success, people suggested five different locations.
“That makes it really tough, because when you want to attract or retain talent, they need to know where to go to be the best in the industry and have options to move roles,” she said.
Someone might start as a researcher, move into an industry job, and then join a startup — but that’s harder if those businesses are spread across different locations. Investors are more likely to seek opportunities in cities or regions known for innovation in a specific sector.
Plus, the entire ecosystem becomes more efficient when the core industry is supported by related services and innovations.
A successful example of this strategy is Taiwan’s semiconductor industry. In the 1980s, the government established Hsinchu Science Park near top universities, offering tax breaks and connecting researchers, investors, and industry.
Now it’s home to over 500 manufacturers, including TSMC, the park drives a sector that contributes 15% of Taiwan’s GDP and supplies 60% of the world’s semiconductors.
BCG’s report suggested five potential target industries for New Zealand: agricultural technology, space and satellites, green technology, medical innovations, and creative industries.
Newton said these weren’t meant to be a definitive list but examples of large, growing markets where New Zealand already had a comparative advantage.
Rocket Lab and Fisher & Paykel Healthcare are successful businesses already contributing to the space and medical ecosystems.
The agricultural and renewable energy industries are already sizable and should be able to support ecosystems, though they are spread across the country.
Film and animation studios in Auckland and Wellington, which mainly support subsidised Hollywood productions, could be encouraged to develop more original intellectual property, possibly in the gaming industry.
Critics might argue that government involvement would mean picking winners, but Newton said small countries need to focus their investments to compete with larger nations.
"If we say we’re not going to make choices, or place bets, then we’re choosing not to be competitive," she said.
21 Comments
Well.. We have plenty of ml minerals and coal and gold.. How is that for an idea..
Something of a one off unfortunately. Once it's all dug up then we'll need another idea (Shane Jones will be long gone by then off course, so I imagine his attitude would be, "Not my problem.").
How about solar and wind farms so we can power the ever increasing influx of data centres? Couple this with more computer game companies (the film industry world wild is smaller than gaming now, which is why I'm saying gaming).
Of course, with the using up of resources and continuing destruction of the worldwide habitat, we should be aiming for less rather than more - so we could become a training hub for teaching consultants to go out and spread the mantra of "doing less with less".
According to available data, New Zealand has approximately 8.35 billion tons of proven coal reserves, which places it around 13th globally in terms of coal reserves.
quite a long one off, and we may need it
So should we use it now or save it for when the country really needs it in the future? (Because other energy sources might be harder to access then)
Not that I'm promoting it, but while digging it out now with the relatively cheap energy we currently have makes commercial sense, what happens with the revenue from selling it?
Option 1: Sovereign wealth fund to invest in a sustainable future.
Option 2: Tax cuts, vanity projects (cancelled at 95% completion) and a serious case of Monumentitis!
It has to be Option 2, every time.
What good would a sovereign wealth fund do if we couldn't power our electricity grid and needed the resource vs the money (a.k.a a promise)? There'll be a time when the value of the resource is that of it's energy contribution vs the monetary value we give it. I'd rather have the resource then, or my future kids, or their kids. They're the ones inheriting an even-more-plundered world than we.
How about setting ourselves up as "State The Obvious Consultants Ltd" offering our considered opinion from our holier than thou green perspective.
Now that seems a real way to make money.
How about setting ourselves up as "State The Obvious Consultants Ltd" offering our considered opinion from our holier than thou green perspective.
The secrets to the universe can be found and a blueprint for a nation's future can be solved by a BCG ppt template.
A successful example of this strategy is Taiwan’s semiconductor industry. In the 1980s, the government established Hsinchu Science Park near top universities, offering tax breaks and connecting researchers, investors, and industry.
Now it’s home to over 500 manufacturers, including TSMC, the park drives a sector that contributes 15% of Taiwan’s GDP and supplies 60% of the world’s semiconductors.
It is ludicrous to suggest Aotearoa can replicate this.
She's not talking about replicating semiconductors, she's talking about picking an industry and using the same strategy. I think you know this.
Perhaps the focus should be on producing what we need here as opposed to what we might export to others?
Thanks to Kelly and the team at BCG.
I hope nobody associated with taxpayer funds paid for this report?
It is not a fluff piece, more of an advertising / marketing / thought piece, - OK, fair enough. Why not? They gave it a go. Good on them.
Everybody, unless running from the coppers or the spouse, mostly wants and needs to get noticed.
We could look back 30 - 40 years, and see fairly much the exact document / thought piece from government, political parties, consultants, grandparents and anyone with experience and / or overseas travel.
However, in the interests of trying to make our country / region more aware, robust, productive and wealthy, - (PDK - please refrain from comment) ....
This, we are told, is the first of a series of reports / investigations on and of NZ from BCG.
From page 3 of 16 page report, - with 6.5 pages of photos within -, "Introduction" Future of New Zealand Inc.
Drawing on the robust expertise of our New Zealand team and the wealth of resources and access enabled by BCG’s global network, we identified 5 ecosystems for further exploration:
1. Agriculture 4.0
2. Space and satellites
3. Green tech
4. Future of medicine
5. Creative industries
This report is not an end in itself. It is an invitation from BCG to decision-makers in business, government, and other institutions that comprise the fabric of NZ Inc, to engage with the material presented in this report.
We welcome your discussion, debate, and dialogue, as progress with this ongoing investigation and look to share further insights and findings.
An OK statement and or challenge to make. Particularly to the quality of readers and responders available on Interest.Co.
My immediate, non-exhaustive, thoughts.
1. The politicians have held us back as a country with very poor future-proofing, non-partisan economic development, lack of effective, efficient and fair taxation, and developing a regulatory screen for an in-depth Research and Development atmosphere - with momentum. But we are still one of the best countries to live in and grow families.
2. Agriculture has always got NZ out of a hole with exports. Noting the destructive damage caused to the environment, but seeing and experiencing us all get better at it.
3. Tourism is ignored at our country's peril. It puts a lot of economic opportunities across the land for local people to become entrepreneurs and thus spreads the wealth efficiently.
4. Natural leadership and the following ecosystems always steps forward to take advantage of opportunities.
Just my thoughts - there will be plenty better out there in the Interest.Co community - so let them flow.
"The politicians have held us back as a country with very poor future-proofing, non-partisan economic development, lack of effective, efficient and fair taxation, and developing a regulatory screen for an in-depth Research and Development atmosphere - with momentum. But we are still one of the best countries to live in and grow families."
The politicians that we persistently elected have indeed done a poor job....and the fact we are still one of the better societies to live in is largely due to our low population density and (relatively) short period of exploitation.
" Agriculture has always got NZ out of a hole with exports. Noting the destructive damage caused to the environment, but seeing and experiencing us all get better at it."
As the author has noted ag output appears to have plateaued...and our inputs are also at a level that is making us increasingly uncompetitive internationally.
" Tourism is ignored at our country's peril. It puts a lot of economic opportunities across the land for local people to become entrepreneurs and thus spreads the wealth efficiently. '
Ignored, perhaps not but nor should it be relied upon for a multitude of reasons, not least of which is the poor level of return it provides.
There is however one aspect that he promotes that may well have potential for a small economy well removed from its potential markets and that is medical innovations....an industry leading medical industry could also be used as a driver to improve our struggling public health system, two birds with one stone and any investment likely to have ready support from all quarters.
To your points:
1./ The politicians were elected based on promises, promises that reflected the wishes of the voting majority of the time, and favoured the voting majority:
Free education? Great! Uuuuntil the bulk of voters used it and decided they didn't want to fund it any longer as it didn't benefit them. 66% top tax rate to fund the largest infrastructure of the country, great...until it was built and the voting majority decided they didn't like high tax rates, enter can kicking for decades on infra. Council rates? Nooo keep them low - the voting majority didn't want to have to replace key infrastructure at set intervals, just throw that cost to the following generations go on. Effective taxation? Pffff ya gotta be dreeeamin' mate when the voting majority could leverage housing to make tax free capital gains, ring fence etc for personal gain.
2./ Agriculture was born of the need to supply the UK and has and will always be a staple of the economy - we cannot survive without it and it produces valuable resources - food - there is much innovation opportunity in this sector
3./ Tourism is parasitic, people come, spend money, the environment gets further destroyed then they leave - there are many example of overtourism and it's perils across the globe. Personally I feel we are better off focusing on more effective taxation.
4./ We pray for natural leadership, but we must demand it, which means it must be in significant demand to be classed as in the public interest, this requires greater engagement in politics and ability or more to have logical debates. Things seem to be slowly moving in this direction after the craziness of 2020
Why do you presuppose that any of my points exclude taxation reform?
Disaster prepper bunkers for the uber wealthy. Both the building and the ongoing maintenance thereof.
It seems likely that the filthy rich will have several sites around the world to flee to when civilisation collapses so "miles from anywhere" New Zealand should be one of those sites. They might even want a couple in NZ to cover the possibility of earthquakes around Queenstown/Wanaka or floods/volcanoes around Auckland (and further north).
Capital for the initial builds provided by the foreign billionaires and locals are employed for the aforementioned building and ongoing maintaining.
Chances are too, that things will never get to the point where the owners want to come and hide here (or they can't get here without a rowboat and training from Lisa Carrington) so we could just build these bunkers digitally - or use the approach of gyms and only build enough for the calculated percentage of owners that will eventually get here.
Disaster prepper bunkers for the uber wealthy.
Look at our failure with the Russian oligarchs, despite the one guy in Northland bringing gifts and providing income for the local iwi.
That's euphemistically called a learning experience, so next time those mistakes aren't made.
I'm not asking for them to buy existing buildings/businesses/infrastructure. They can pay for new stuff to be built if they like (such as their bunkers) but other than a bit of wasteland there's no buying up New Zealand. Or at least not under this suggestion.
Agree with your opening headline Dan (are you related to Grant Brunskill?). Easy to say, and been repeatedly said over the last 40 years. Yet here we are in 2025, albeit living off the cow's back, rather than sheep.
One of the big challenges is retaining innovation/new initiatives within NZ so that the NZ economy benefits long term. My perception is that there have been quite a few successful initiatives over the last 40 years and that most have got to a certain commercial scale then been sold off shore.
As well as creating an environment that supports new initiatives being developed, there needs to be incentives to retain those initiatives onshore. Otherwise NZ Inc is just an incubator for large offshore interests. I reckon that is why agriculture still underpins the NZ economy - you can't shift the land offshore easily
Yep. Developed here, sold off and disppears. We need to concentrate on ownership as a way forward.
Savings leads to investment and ownership and then wealth. So muscular Kiwisaver is a way.
Farming still makes us heaps and will continue for a long time. Don't mess with it. That said we can still get on with adding other things.
Tourism is low wage, low productivity, low benefit, no point in promoting it.
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