KEY POINTS:
New Zealand has shortcomings in research and development, transport infrastructure and broadband and should look at salaries for scientists and university staff, says the OECD.
It warns that per capita incomes will remain in the bottom half of the OECD ladder unless there are changes.
The review was commissioned by the Government and released yesterday.
It paints a picture of a country with a solid framework for innovation and with potential, but urges more effort to improve spending on research and development.
The Government is confident it has already begun addressing many of the issues raised in the report, and is pointing to the Budget announcement of tax credits for research and development as well as several other changes across relevant ministries.
Among the challenges the OECD identified are infrastructure bottlenecks - particularly in Auckland land transport - energy delivery and broadband internet access.
It also points to a lack of investment in business research and development and a lack of management, marketing and distribution skills.
The OECD warns that the weaknesses of New Zealand's innovation system may produce some "undesirable" medium to long-term consequences, including a failure to return GDP per capita income to the top half of the OECD, and possible marginalisation for investment in innovation.
The OECD found a "sound macroeconomic framework" and a "predictable and good business environment".
The report recommended continuing to improve the supply of seed and venture capital, correcting mismatches in the demand and supply of skills, and improving the availability of broadband internet access.
It suggested closely reviewing university and scientist salaries.
Prime Minister Helen Clark said last night that the report provided a valuable international perspective and its recommendations were already being addressed.
National MP Paul Hutchison said the revelation that investment in business research and development is less than a third of the OECD average came as no surprise.
