Data-driven innovation in New Zealand is generating $2.4 billion in value annually and there is potential for this to double in five years.
In this 2015 study, Sapere Research Group and Covec investigate the contribution of data-driven innovation to the New Zealand Economy and find that in 2014 it created approximately $2.4 billion in additional economic output. That is the equivalent of 1.4% of New Zealand economic activity in 2014. Sapere Research Group and Covec anticipate this data-driven innovation has the potential to contribute an additional $2.1 billion each year to the New Zealand economy within five years. This would bring the total contribution of data-driven innovation to $4.5 billion each year, the majority of which is consumer surplus achieved in the form of lower prices.
“We estimate that around 56% of the estimated benefits (around $1.3 billion in 2014 and $2.5 billion in 2020) accrue to New Zealand consumers in the form of lower prices”
In addition to the quantified benefits data-driven innovation generates for New Zealand, Sapere Research Group and Covec note the broader social-value generated, which is hard to precisely quantify. In particular, the growth of data-driven innovation is evidenced to reduce environmental emissions and improve health outcomes. These public benefits will not directly impact economic activity but nevertheless constitute important social improvements.
The potential for continued data-driven innovation in New Zealand is sizeable as it is trails fellow countries in important indicators. The report estimates that if New Zealand businesses achieved the same level of data-driven innovation as Australian counterparts the economic contribution would double to $4.8 billion. Adoption of data-driven innovation in New Zealand is calculated to be around five years behind leading international competitors.
The future of data-driven innovation in New Zealand will depend on the policy environment implemented according to Sapere Research Group and Covec. Policymakers will have to confront the challenge of protecting privacy and promoting data-driven innovation. This will force policymakers to understand the trade-offs and develop a clearly articulated and balanced regulatory framework to attain the optimum social and economic benefit.