Facts and myths on foreign investment

The NZ Initiative have released today a comprehensive 75 page report detailing the facts and myths around foreign investment in New Zealand.

A summary of some key findings:

  • Despite popular myth, New Zealanders actually earn more than they spend. National resident unit savings has been positive for the last 38 of the last 41 years.
  • High is not the fault of the private sector. While levels of private debt may be high, these stem from the legacy of historical government policies between 1974 and mid-1980s.
  • The future debt burden will depend on future internal competitiveness and the gap between New Zealand's growth rate and the yield in the debt.
  • Despite concerns to the contrary, are not taking over New Zealand.  In fact, in 2012 Australians owned 55% of foreign investment in New Zealand, while ASEAN nations owned only 3.1%.
  • Offshore investment is a two-way street. New Zealand is not a ‘takeover' target by foreign investors. In fact, the regards New Zealand's regime for screening inwards investment as one of the most restrictive in the world; and
  • New Zealand has been heavily dependent on international capital since colonial days, and this is normal for a young, growing country.

Some facts I found interesting are:

  • Foreign investments in NZ exceeded NZ investments abroad by 4.4% of GDP in 1973 and 64% in 1989. Today it is 72%.
  • share of FDI in NZ increased from 32% in 2001 to 56% in 2012.
  • The Asian share of FDI in NZ increased from 1.9% in 2001 to 3.1% in 2012.

The report is full of facts, figures and charts. A great contribution to our knowledge, and hopefully will improve the level of debate on foreign investment.

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