The nuts and bolts of our knowledge economy

The Ministry for Business, Innovation and Employment has just released the last of its Sectors Report Series, a very useful snapshot of the New Zealand economy and which sectors contribute what economic output.

Many Sciblogs readers, according to the demographic info a computer algorithm throws up for you, are involved in the knowledge intensive services area of the economy. This covers everything from legal services to public relations to scientific research and development.

What can be said about this segment of the economy? MBIE summarises:

The knowledge intensive services sectors account for 20% of New Zealand’s GDP, a fifth of all firms amounting to 100,000 companies, 19% of employment and 4% of exports.

A number of themes in the knowledge intensive services sector are highlighted in the report, including

  • The number of firms grew at 6% per annum to 2009, driven by finance, insurance, scientific, professional and technical services, but growth has been slow since the global financial crisis (GFC).

  • Knowledge intensive services added 61,634 jobs to 2008; 22,000 jobs were lost during the GFC, but employment growth since 2010 has seen job numbers regain 2008 levels.

  • Knowledge intensive services sectors generated 62% of all commercial services exports (amounting to $2.494 billion) in 2011.

  • Professional, scientific & technical services (a subset of knowledge intensive services) are important inputs to the Canterbury rebuild, with a large increase in employment in engineering, design and consulting services in that region.

  • Workers in professional, scientific & technical services firms are paid $31,000 (40%) more than the New Zealand average, reflecting higher qualification levels.

All that knowledge generation employs a lot of people and contributes a fifth of GDP. But only 4 per cent of exports? That seems really low to me. This graphic from the MBIE report gives more insight…

Source: New Zealand’s economy: Sectors Reports Series
Source: New Zealand’s economy: Sectors Reports Series

I’d like to think knowledge services as a proportion of exports could be much higher. But that slide is only part of the story. Consider the indirect contribution knowledge services have to other exports…

Source: New Zealand’s economy: Sectors Reports Series
Source: New Zealand’s economy: Sectors Reports Series

And look how important professional, technical and scientific services are to the rest of the economy…

New Zealand’s economy: Sectors Reports Series
New Zealand’s economy: Sectors Reports Series

And here’s the money shot… the improved pay prospects of being a knowledge worker in New Zealand…

New Zealand’s economy: Sectors Reports Series
New Zealand’s economy: Sectors Reports Series

 

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