Official overseas borrowing of New Zealand, 1950/51 to 1967/68, with particular reference to drawing from the International Monetary Fund

Abstract

Overseas borrowing has been a subject of considerable controversy in New Zealand. Although the two main political parties no longer hold diametrically opposed views on the subject, the academic controversy remains as strong as ever. The form in which capital should be imported - whether public or private, whether equity investment or loan capital; the terms of borrowing and the sustainable level of debt which would not be a net burden on the economy are among the principal unresolved issues. Above all, the contribution of foreign capital to the economic growth of New Zealand in the past itself has been questioned. See for instance, W. Rosenberg, 'Capital imports and growth - the case of New Zealand - Foreign investment in New Zealand, 1840-1958', Economic Journal, Vol.71 (March 1961) Pp93-113. This study does not aspire to provide answers to all these issues. Solutions to some of them, in fact, lie beyond the scope of the economist; these have to be settled in the political field. Some others, which essentially lie in the field of economic analysis, cannot be dealt with in a manner that yields definitive conclusions owing to the inadequacy of the available techniques and the unresolved issues that still exist in the associated fields of study particularly in the theory of economic growth. Nor are all other aspects which are amenable to critical analysis undertaken in this study.