Published on the 11/03/2025 | Written by Heather Wright
Agtech, medtech, green tech, space and satellites…
Agriculture 4.0, space and satellites, green tech, and health IT have the potential to lead New Zealand into a better future – but only if the country starts picking winners and throwing resources behind them to develop new export opportunities, according to a new report.
The Boston Consulting Group report says existing key export sectors such as dairy, film and tourism, are now at capacity and new ecosystems need to be developed to bolster New Zealand’s economy.
“We cannot wait another 25 years to act.”
New Zealand’s government has set a target to double exports by value in 10 years, but the report notes that the country has too often spread its limited investment across too many industries, rather than focusing those limited resources on specific, high-potential industries.
“In an environment where other countries are making choices about what sets them apart, can we afford to gamble the future of NZ Inc on happy accidents, or is there a way we can strategically bet on ecosystems we know we can excel in?’, says Kelly Newton, BCG New Zealand managing partner.
The report, What will New Zealand be known for in 2050, starts with some grim reading, noting New Zealand’s lagging economic performance, with per capita income dropping, declining productivity and a drop in our ranking in the IMD World Competitiveness Rankings, where New Zealand slumped from 22 to 32 out of 67 countries.
A growing talent gap, particularly in high skill industries, is also a challenge.
Meanwhile there’s been historic underinvestment in innovation. New Zealand’s R&D spend in 2019, as a proportion of GDP, was just 1.4 percent, well below the OECD average of 2.5 percent and even further behind innovation leaders such as Denmark (3.0 percent) and Israel (4.9 percent).
The historic approach to public sector investment, meanwhile, drove fragmentation, with investment spread across multiple crown research institutes, and public investment, incubation and acceleration vehicles largely industry-agnostic.
BCG says in the face of those challenges and rising geopolitical instability and reshoring disrupting global supply chains, climate change, tech innovation intensifying competition, NZ Inc can’t rely on historically successful industries to drive wealth creation.
“NZ Inc must build new industries for its future, and the way we go about this matters.
“Instead of spreading finite investment across a broad range of industries as it does today, NZ Inc must take a focused approach, concentrating its efforts on three to five high-value ecosystems, where it can build and sustain an advantage.
The report has identified five areas BCG says are worth making a bet on, and which could unlock competitive advantages in the coming years:
– Agriculture 4.0, including agtech, geospatial analytics and other offerings focused around more sustainable and efficient food production
– Space and satellites, including componentry, launch vehicles and satellites
– Green tech, including data centres, carbon sequestration, and clean tech
– Future of medicine, such as medical devices and software – and AI and ML; and
– Creative industries, including game development and film.
“Each of these ecosystems consist of several industries or capabilities in which New Zealand has a natural advantage or potential for competitive advantage and which have the potential to be large global markets in coming decades,” BCG says.
The ecosystem approach – with businesses, research institutions and government bodies collaborating to leverage shared resources and synergies – is key in BCG’s eyes.
“High-value ecosystems are not just for world super-powers; in fact, they are even more important for smaller nations to develop a specialty and focus innovation and investment in an ecosystem built around that specialty.
“By focusing on three to five high-value ecosystems aligned with its overall strategy, NZ Inc can more efficiently build scale and density in future industries, create comparative advantage and position New Zealand as a global leader while stimulating economic growth and skilled employment.”
That’s a call that has been made many times in the past, including back in 2001 when Harvard Business School’s Professor Michael Porter, who back in 1990 had been asked by the then government to identify potential areas of competitive advantage (his recommendations included the software sector) emphasised the importance of ecosystems and focused investment.
The report says geographically concentrated ecosystems enable players to share specialised resources, including infrastructure, training programs and venture capital, while also concentrating talent and providing a common labour pool.
“All of this facilitates knowledge transfer between startups, established firms, universities, research institutions and investors and keeps players up to date on the latest innovations and best practices.”
It is, however, a ‘radical change’ for NZ Inc, the report notes and would require coordination across all players.
The report highlights the success of Taiwan’s semiconductor ecosystem. The Taiwanese government established a science park near two top universities in the 1980s, offering tax incentives and favourable land use policies to attract industry players and established a Ministry of Science and Technology to coordinate between academia, investors and industry.
The park is now home to more than 500 manufacturers, including the world’s largest chipmaker, TSMC, and semiconductors now contribute 15 percent of Taiwan’s GDP.
There is some optimism with the report noting recently announced reforms are taking steps to ‘simplify the architecture of the public innovation’ with New Zealand’s myriad of crown research institutes being refined to three Public Research Organisations.
“NZ Inc needs to channel investment into high-value ecosystems where New Zealand has a strong right to win, and players across government and industry need to work together to set up the components required for these ecosystems to thrive.
“Applying New Zealand’s capabilities to their highest potential now is essential to help Kiwis prosper in the future. NZ Inc has exciting opportunities ahead, and we cannot wait another 25 years to act on them.”
