Having lived in NZ for a couple of years working at Victoria University of Wellington, the other piece of the puzzle is NZ suffers from crippling brain drain: their best and brightest students immediately head over to Australia where they can make more money and use the exchange rate to pay off their student loan quicker.

My read is that kiwis tend to come back when they're ready to start a family, but during those vital 18-25 years when the entrepreneurial spirit is strongest, they're simply not in the country. They're elsewhere.

The kiwis I talk to that are in that demographic here at Google all seem to be want to go back to NZ, but only if the prospects are there, such as Google opening a real-deal engineering office. But it's hard to convince companies that that is a worthwhile venture when Australia and NZ have freedom of worker movement.

Without the population to lead NZ forward, and with no companies willing to invest to drag it forward, I don't think we'll ever see NZ be richer and more productive. But as other commenters have noticed, I think NZ is perfectly happy with that, because they're happy with their lot, which is something to be envied.