This paper overviews structural reforms that promote the diffusion of digital technologies and investment in intangible capital that maximises the potential of these technologies in New Zealand. Effective use of digital technologies enables New Zealand citizens to participate in society in a more inclusive way, firms to strengthen competitiveness and better integrate into the global economy, and the government to offer better services. New Zealand has room to boost its relatively low productivity level by removing the structural bottlenecks holding back the expansion of its digital sector and digital innovation. There are severe shortages of specialised ICT skills owing to COVID-19-related border restrictions and a weak domestic pipeline of these skills that partly results from school students’ poor mathematics achievement. Some regulations have not kept pace with technological change and risk constraining digital innovation while failing to prevent harmful activities. More intensive use of digital tools is also held back by the low availability of high-speed Internet connections in rural areas and a lack of financial support for small businesses. Weak coordination between export promotion and innovation support prevents young firms investing in digital innovation from reaping high returns through exporting. New Zealand should rigorously implement its new national digitalisation strategy so that government agencies and social partners can advance digital transformation.
