Foreign Investment in New Zealand Manufacturing

Abstract

While there is no shortage of personal opinion on the subject of foreign investment in New Zealand it is nevertheless an outstanding example of poor documentation. The outcome of such a situation is all too often grossly misinformed opinion. Misunderstanding occurs by no means solely because of a lack of knowledge of basic facts. It extends also to considerable confusion surrounding the likely theoretical effects on the economy of a foreign capital inflow. This is especially true of overseas investment in New Zealand's manufacturing industry, and perhaps doubly unfortunate in view of the increasing importance of the sector. Over one quarter of the country's total 1963-64 factory output was attributable to companies with substantial foreign financial affiliations. In the same year, they accounted for 20 per cent of the total factory employment, and 5 per cent of the total number of establishments. Yet prior to this study there was complete ignorance of facts of this type. Apart from information on capital flows and income accruals as they affected the balance of payments, detailed empirical evidence simply did not exist.