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 debt 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, Asians 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 OECD 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%.
• The Australian 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 economic knowledge, and hopefully will improve the level of debate on foreign investment.