A report commissioned for the Government has found that if New Zealand is to become more competitive, it has to improve its infrastructure and seek to exploit international markets more effectively.
The report by Hong Kong-based academic Michael Enright also finds that, in order to promote exports, the tax burden should be shifted away from incomes.
Professor Enright did a similar report in the 1980s and has again taken a look at New Zealand's international competitiveness.
He found that although the economy is performing well compared with similar developed nations, its quality of infrastructure still lags behind those countries.
Professor Enright said despite the commonly held view that New Zealand has an internationally oriented economy, it is fundamentally domestically focused with only a very small number of businesses involved in international activities.
His report said the amount and effectiveness of research and development is a cause for concern, as product innovation is essential to breaking into overseas markets.
Professor Enright said to encourage exports the tax burden should be moved away from incomes and more towards value-added tax, for example GST and tax on land and property.
Economic Development Minister Steven Joyce told Radio New Zealand's Morning Report programme on Friday he was disappointed with the report.
He said it makes assertions without providing evidence and is not up to date with some of the initiatives taken by the Government.
Mr Joyce is not sure how much the Government paid for Professor Enright's report, but thinks it was probably too much.
However, the Labour Party said it agrees with Michael Enright's finding that New Zealand companies need to more effectively exploit overseas markets. Finance spokesperson David Parker said New Zealand is too reliant on the pastoral sector.
"Our pastoral sectors are internationally focused. But he makes the fair point which is, we need to do far better in our exports to the rest of the world that we need to broaden our export base beyond its over-reliance on the primary sector - which is not to decry the primary sector and the importance of that."
Export New Zealand said on Friday it is unfair to compare the country's export volumes with some European countries, as its markets are so much further away.
Improvement in mass transport urged
The report recommends that mass transportation be improved in New Zealand's major cities.
Michael Enright said a target should be set that at least 50% of trips are in transport other than cars.
He said the proposed Auckland central rail link would be a good place to start, as well as a rapid rail linking different cities.
The Green Party's transport spokesperson, Julie Anne Genter, said the suggestions make sense.
"We've got to invest in transport that moves the most people and goods, and we really haven't been doing that.
"And unfortunately, the Government's going in the exact opposite direction right now. They're throwing most of the money on a few motorways that aren't going to do anything for productivity."
Report backs Auckland strategy - Brown
Part of the report was commissioned by the Auckland Council and reviewed a raft of new plans the council has developed for the city.
Mayor Len Brown said it endorses the key elements of the city's 30-year strategy.
"And that is that the old style ... of urban sprawl and of motorways chasing out suburban growth is not the way to build the most liveable city in the world at all."
Professor Enright said rather than expanding, Auckland should shrink its urban boundary and use more land for industrial use and recreation.
He said the proposed downtown rail tunnel is essential to revitalising the downtown area and should be a top priority.