The internet is bringing significant economic benefit to New Zealand businesses and consumers. Data-driven innovation in New Zealand is generating $2.4 billion in additional economic output per year, with the potential for this figure to double in five years. What’s more, 56% of the benefits are estimated to accrue to consumers (Innovation Partnership 2015).
In New Zealand, the benefits of the internet are not limited just to companies in the information and communications technology (ICT) sector. Research has found that firms that make use of internet services are 6% more productive than average firms in their industry, with plenty of room for growth -- estimates show that if enterprises that make little use of internet services became more similar to those using the internet with high intensity, this shift would be worth approximately $34 billion in productivity impact (Sapere Research Group 2014).
Data-driven innovation has already yielded real value for consumers. In 2014, it created approximately $2.4 billion in additional economic output -- the equivalent of 1.4% of New Zealand economic activity that year. The majority of this value goes right into consumers’ pockets in the form of lower prices, and that consumer surplus is expected to continue to grow -- data-driven innovation has the potential to contribute $4.5 billion each year to the New Zealand economy within five years (Innovation Partnership 2015).
A favorable policy environment will be critical to achieving these expected, positive levels of growth. By OECD standards, the New Zealand services sector has seen relatively poor productivity growth, due in part to the country’s remoteness geographically. Reducing barriers to trade and sharpening competition law will both be helpful in encouraging service sector firms to invest in and adopt ICT and improve their efficiency and productivity.
In particular, the New Zealand Productivity Commission emphasises the possible role competition authorities could play in improving competitive dynamics in the market by conducting more market studies in poorly performing industries (New Zealand Productivity Commission 2014). With 96% of firms already connected to the internet, New Zealand is well-placed to make use of this connectivity to benefit business owners and consumers alike (Sapere Research Group 2014).