The economic rationale of recent government innovation policies.

Abstract

This literature review investigates the economic underpinnings of recent Government innovation policies. These policies have been implemented to assist New Zealand's attempt to return to the top half of the OECD in terms of income per capita. Human capital, foreign direct investment, innovation and agglomeration form the economic basis for these policies. Each of these areas is analysed in turn to try to gain some understanding of what has motivated the New Zealand Government to focus on these factors. This discussion has been divided into two sections focussing on both mainstream and more recent factors that lead to increased economic growth. The Government does not appear to have chosen one set of theories at the exclusion of the others, as they look for a balanced approach to improve New Zealand's growth performance.