This report explores the policies to encourage technological adoption and how governments can better encourage technology uptake by firms and grow productivity.

Decisions about whether and how to adopt technology are taken by individual firms. Many factors influence these decisions, but the most important drivers are relative prices, risks, rewards and management capability. Government policies and infrastructure affect firm technology adoption decisions, sometimes in unexpected or unintended ways.

Protecting and extending business environment dynamism should be a priority of any government seeking to encourage technology adoption. The business environment should be kept open to flows of goods, services, capital, data and ideas. This helps to offset the constraints on technology adoption created by New Zealand’s size and distance. New Zealand’s policy settings generally support openness now, but this needs to be maintained. There are some specific areas where government action could help remove barriers to, or increase the rewards for, technology adoption. These are discussed in the report.