THE BIG PICTURE: New economy, what new economy?

Two government reports out last week have highlighted the problems facing our new economy.

Two government reports out last week have highlighted the problems facing our new economy.

The first, from the Ministry-formerly-known-as-Commerce, highlights the place IT has in the existing economy — somewhere ahead of apples but behind trees — but breaks IT down into a number of categories, making straight comparisons a job for the statistics department.

Sadly, exports are tailing off in the hardware side, down from 1998 figures by just on 8%. This is the first fall in a decade and while you’ve got to consider the effects of the Asian economic crisis (or crises for that matter), the fact of the matter is we’re down right around the world. On the plus side, however, software and service exports are up by a huge 44%. That’s on top of 56% the previous year. This can only be a good thing — it’s far easier for us to export disks or streams of data than it is to export hardware. Hopefully this trend will continue — at the moment the software export market is worth around $285 million which is chicken feed really.

The question also has to be asked: how do they measure our exports of software? There are a number of people and companies working here in New Zealand directly on offshore projects — are they counted in this figure? What about companies that are wholly-owned subsidiaries of New Zealand companies working overseas? Would their work be counted as an export?

The other report makes for even worse reading. As reported in Computerworld last week (April 3, 2000) the Association of Crown Research Institutes has put together a report on New Zealand’s knowledge-based economy. We don’t have one, is the short version, and we’re getting further and further behind countries that do. Here’s a frightening fact for you: only Greece is worse off than we are when it comes to IT exports. We’re not just behind, we’re behind by 25 years and we’re losing market share rather than increasing it.

Hands up those of you working in IT 25 years ago. There aren’t that many in New Zealand — even a decade is considered a long time, and rightly so. When I started writing about IT the Pentium MMX chip was just hitting the shelves and we were joking about one day seeing a one gig processor with terabytes of disk space.

That was all of three years ago and I feel like an old hand. Twenty-five years ago even the Sinclair ZX-80 was a blip on the horizon and the cellphone was something they used on The Man from UNCLE. Yet this report says we are currently at the same level as most other OECD counties were in 1975. This is unbelievably appalling and the report rightly points that out. It says we need more leadership from government, fewer universities that are better able to pool resources for costly IT courses and the clustering of technology companies. This has started to happen — Christchurch has a small bevy of industries and Ericsson is talking about clustering in Wellington for WAP application development as well.

Something’s got to happen and it’s got to happen now — not at the end of the year or before the next election — now. The government’s been in power for more than 100 days and sure, Paul Swain has been out of action for most of that time. But if the government thinks it can fob off the future of New Zealand’s economic worth on to one man and expect it to fly, they’ve read its tea-leaves wrong. It’s a simple equation — either we get into the high-tech sector or we get into the hospitality industry to cater for the rich folk so they’ll come here and spend some money. It’s time to decide because the current mainstay of our economy, the farming sector, is so prone to fluctuations based on things like the weather and food fads that we can’t rely on it in the long term. The growth potential of the primary sector can be measured in single figures while high-tech sector growth can still be seen doubling every couple of years.

Of course, we still have an economic growth strategy that involves slamming on the brakes if we approach the 3% mark. Can you imagine how Ireland would be faring if that was the policy on the Emerald Isle? The time for caution is long past - now is the time for action.

IT statistics can be found at: Knowledge economy report is at:

Paul Brislen is a regular columnust and reporter for Computerworld. Phone him on: 0-9-302 8751.

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