Innovation in New Zealand stagnant for the past decade

The rate of innovation in New Zealand not only flatlined from 2000 to 2007 but dipped sharply in 2008, according to the Innovation Index of New Zealand, launched yesterday by IBM and the University of Auckland.

The index looks at innovation across the New Zealand economy from 1998, focusing on 16 industry sectors including commercial and non-commercial organisations. The methodology measured seven components of innovation - patents, R&D, trademarks, design, plant variety rights, productivity and organizational and managerial innovation.

Agriculture, fishing and forestry was the only sector to show strong growth - innovation activity more than doubled between 1998 and 2008.

Professor Basil Sharp of the University of Auckland Business School and one of the principal researchers for the index, said the result was unsurprising given that agriculture, forestry and fishing was easily the largest single export sector, responsible for more than half of New Zealand’s total income from exports.

Ten of the 16 sectors measured registered a decline in innovation in 2008, probably due to the initial effects of the recession, said Professor Sharp.

Worst hit were the construction sector (down 15%), the accommodation, cafes and restaurants sector (down 12%), and the property and business services sector (down 11%).

The decline in innovation intensity suggested that some organizations in New Zealand viewed investment in innovation as a luxury rather than a necessity, said Professor Sharp.

“An economic recession is the time when you should increase your rate of innovation, not let it drop off. Continuing to invest in innovation when times are tough gives you an advantage over your competitors when the economy picks up again.”

Innovation is widely regarded as a key driver of economic prosperity, said IBM New Zealand chief executive Jennifer Moxon. “Given the critical role that innovation plays in creating wealth and prosperity, it is concerning that the rate of innovation in this country has been virtually stagnant for the past decade.”