Editorial: Forum focuses the mind

The test of any conference is not often the conclusions it reaches but the lasting impressions it leaves. The Knowledge Wave Leadership Forum held in Auckland last week was a sequel to the event organised mainly by the University of Auckland in 2001, and in some ways the sequel was even more important. It underlined the continuity of the effort to upgrade the economy.

It is an effort the country has been making in fits and starts for all of 35 years. The need has been apparent ever since the sun began to set on the guaranteed British market for our farm products. For the first 15 years of so thereafter, Governments actively selected and protected industries they hoped would produce new manufactured exports, reducing the country's reliance on farm commodities. Since 1984, Governments have largely resisted selective and protective assistance and exposed all producers to the test of international competition.

For all that, the economy remains too dependent on relatively few raw commodity exports and runs one of the world's largest - often the largest - external deficits. We simply do not pay our way and the danger is that after all this time we might stop worrying about it. After all, if foreign lenders have been content to finance our lifestyle for most of those 35 years, why should they ever cease to do so? We continue to refinance our debts when they are due. Our credit is not bad.

For that we have to thank our public institutions. Foreign lenders know they are buying a non-inflating currency at true exchange rates and that it has the backing of laws that enforce property rights and a free, educated society providing social welfare and political stability. One of the features of the Knowledge Wave series, particularly the latest conference, has been the recognition that social welfare and constitutional arrangements matter as much as business and finance in building a better economy.

In fact one celebrated contribution suggested that social diversity, unconventional lifestyles and concentrations of creative people made probably the best seeding ground for economic improvement. Economics is not necessarily about factories and finance houses; it also encompasses films and all forms of fun. It is about anything somebody can provide that many others will value. The variety of human imagination and tastes is far beyond the vision of any planning committee or economic conference, which was well recognised by the conveners of the Knowledge Wave forum.

The principal instigator, Auckland University vice- chancellor John Hood, concentrated on "macro" economics and "societal incentives" - which normally mean the tax policies and social benefits that influence people's decisions to work, save, spend or invest. Many would like Governments to go further and try to influence the kinds of work and investments people choose. New Zealand's present Government is moving tentatively in that direction with a more selective tertiary education system.

This Knowledge Wave forum, like the last, was convinced that technology and sciences, particularly genetics, are the most promising fields of educational investment. Stanford University economist Paul Romer noted that NZ lagged behind most European and advanced Asian countries for the number of 24-year-olds with science or technology degrees.

However, an Auckland professor of education, John Hattie, pointed out that maths and science graduates had among the highest unemployment rates of all graduates, suggesting there is not much call for more of them unless the science or technology industry grows.

No conference can produce instant economic elixir. It can only concentrate minds on the task. And that, once again, it did.

Herald Special Report - February 18, 2003: