New Zealand’s living standards remain well below the OECD average. This is entirely attributable to persistently low labour productivity, which in turn is related to economic geography as well as structural policy factors. The small size and remoteness of the economy diminish its access to world markets, the scale and efficiency of domestic businesses, the level of competition and proximity to the world’s technology frontier. This points to the need for a “New Zealand policy advantage”, that is, a set of structural policies attractive and welcoming enough to overcome the geographic handicap and attract the drivers of prosperity – investment, skills and ideas – to New Zealand. The reforms of the 1980s and 1990s laid much of the groundwork for creating this advantage and for a pickup in productivity growth. But in recent years, New Zealand has lost ground relative to its OECD peers. The reform focus has shifted away from growth and the government has introduced a large quantity of often poor-quality regulation. Policies should be refocused around the productivity goal in a number of areas, beginning with those covered in this chapter, namely international trade, the business climate for domestic and foreign investment, public-sector efficiency, infrastructure, innovation and natural-resources management. This chapter also evaluates the recently legislated emissions trading scheme through a productivity lens.