Story: Knowledge-based industries

Page 1. New knowledge industries

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New Zealand’s economy is expected to change greatly during the 21st century. In the 1950s, exporting farm produce to Britain gave New Zealanders an average income among the highest in the world. However by 2006 New Zealand was near the bottom of the income table for developed countries.

New Zealand is small and remote. To compete successfully with other countries it needs to build efficient export industries. High-speed broadband internet allows high-value, ‘weightless’ products – such as research, design and broadcast programming – to be supplied easily to customers anywhere in the world. Knowledge-based industries exploit peoples’ ideas and create ‘intellectual property’, property like copyright or patents which can be sold.

Future economic potential

The creative, biotechnology, and information and communications technology (ICT) industries are growing faster than other sectors of the New Zealand economy. They use digital technology and internet communications to overcome the disadvantages of the country’s remoteness from international markets. These industries are knowledge-based, selling ideas as well as products worldwide. They are closely interwoven.

In 2002 the government identified creative, biotechnology and ICT industries as having the potential to transform the New Zealand economy.

Funding new industries

Although knowledge-based industries are growing rapidly, they are quite small compared to other sectors of the New Zealand economy, for example farming. They face difficulties in trying to expand. New Zealand’s domestic market is so small it usually cannot fund the high costs of entering larger and distant offshore markets.

Knowledge-based industries often require large amounts of development funding and research, especially in the early stages. They need to sell products as soon as possible after they are created to recover costs and make profits.

High-speed internet access has been more expensive and less widely available in New Zealand than in some other countries, and knowledge-based industries cannot usually afford to provide it themselves.

State support

A high level of financial and policy support from the government and universities is needed to develop New Zealand’s knowledge-based economy. Some traditional industries receive ongoing support from government and knowledge-based industries are likely to need higher levels of funding for development and research.

Government policies encourage people to train in specialist areas. Industries have to attract and retain suitably trained staff, as well as foreign investment and expertise.

Research

Clusters of similar enterprises have been developed on single sites to share their facilities and specialist knowledge. For example, the University of Auckland combined its schools of architecture and planning, fine arts, music, dance studies and the Centre for New Zealand Art Research and Discovery to form the National Institute of Creative Arts and Industries.

Special funds have been set up to support research and innovation, and opportunities for exporting. In 2015 the government introduced a 28% tax credit on the cost of carrying out research and development.

How to cite this page:

Mark Derby, 'Knowledge-based industries - New knowledge industries', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/knowledge-based-industries/page-1 (accessed 23 March 2019)

Story by Mark Derby, published 11 Mar 2010, reviewed & revised 5 Dec 2017