Waikato regional economic profile - Waikato Regional Council

Figure 2: Relative levels of GDP per capita, 1975 to 2009 (OECD average=100) 20The main driver of GDP per capita is labour productivity (the economic output per hourworked). 21 The drivers of labour productivity include entrepreneurship, innovation, skillsand talent, investment and natural resources. 22 New Zealand has a large labourproductivity disadvantage relative to Australia across all major sectors of the privateeconomy, apart from property and rental, as illustrated by figure 3. Importantly thedifference in labour productivity between the countries is not driven by one dominantsector. For example, while mining has high productivity in Australia, and requires highvalue services, it occupies a very small proportion of the workforce so it is not theexplanation for Australia’s GDP per capita being so much higher than New Zealand’s.Figure 3: Ratio of labour productivity Australia to New Zealand 2008 23Labour productivity is not the only important measure of economic prosperity though.For a small trading nation exports are very important too. New Zealand’s exports havegrown much more slowly than the OECD average partly because global trade incommodities (where New Zealand exports are concentrated) has grown more slowlythan trade in differentiated goods and services, as shown by figure 4. 2420The Treasury (2011b, p. 13).21Boven et al (2010, p. 2).22Boven et al (2010, p. 15).23Boven et al (2010, p. 16).24Boven et al (2010, p. 2).Doc # 2069885 Page 7