New Zealand is facing the prospect of a significant economic shock from the spread of COVID-19. Helping more Kiwi firms reach the productivity frontier would be a valuable step towards the economy reaching its full potential once the immediate effects of COVID-19 have passed.
This inquiry focuses on a central aspect of New Zealand’s productivity performance – the economic contribution of its most productive firms. The Terms of Reference (ToR) for this inquiry are included as an appendix to this paper. The Government has asked the Commission to investigate how the economic contribution of frontier firms can be maximised through policies and interventions aimed at:
- improving the performance of frontier firms themselves; and
- helping new technologies, efficient business practices and other productivity-enhancing innovations diffuse more effectively to other New Zealand firms.
Through these two channels, the productivity performance of frontier firms can lift the productivity of the whole economy.