Costs and Benefits of Foreign Direct Investment for New Zealand
New Zealand Report
1.0 Introduction
Throughout the production of this report I will aim to explain an analysis of the costs and benefits of foreign direct investment for New Zealand both in theoretical and empirical terms. When it comes to defining FDI different countries may define it differently and because of this it is arbitrary, but foreign direct investment can be described as:
"Foreign Direct Investment is the purchase by the investors or corporations of one country of non-financial assets in another country. This involves a flow of capital from one country to another to build a factory, purchase a business or buy real estate." (http://www.afsc.org/trade-matters/learn-about/glossary.htm).
In New Zealand foreign direct investment plays a pivotal part in the country's economy growth, this is shown by the fact that over the past two decades the flow of F.D.I in New Zealand has increased substantially and that FDI stocks have risen from around NZ$ 300 million in 1981 (pre-economic reforms) to NZ$49.3 billion for the year ending March 2001, this will be looked at in more detail in section 1.2. "Foreign direct investment (FDI) has the potential to generate employment, raise productivity, transfer skills and technology, enhance exports and contribute to the long-term economic development of the world's developing countries. More than ever, countries at all levels of development seek to leverage FDI for development" .
2.0 Multinational Enterprises A Multinational can be defined as the following:
"A firm, usually a corporation that operates in two or more countries. In practice the term is used interchangeably with Multinational Corporation".
(http://www-personal.umich.edu/~alandear/glossary/m.html)
The phenomenon of multinationals is not entirely recent as you can go back to before World War I and see that American firms had factories in foreign countries, but it became far more common after World War II and today it may be difficult to find a major company
1.0 Introduction
Throughout the production of this report I will aim to explain an analysis of the costs and benefits of foreign direct investment for New Zealand both in theoretical and empirical terms. When it comes to defining FDI different countries may define it differently and because of this it is arbitrary, but foreign direct investment can be described as:
"Foreign Direct Investment is the purchase by the investors or corporations of one country of non-financial assets in another country. This involves a flow of capital from one country to another to build a factory, purchase a business or buy real estate." (http://www.afsc.org/trade-matters/learn-about/glossary.htm).
In New Zealand foreign direct investment plays a pivotal part in the country's economy growth, this is shown by the fact that over the past two decades the flow of F.D.I in New Zealand has increased substantially and that FDI stocks have risen from around NZ$ 300 million in 1981 (pre-economic reforms) to NZ$49.3 billion for the year ending March 2001, this will be looked at in more detail in section 1.2. "Foreign direct investment (FDI) has the potential to generate employment, raise productivity, transfer skills and technology, enhance exports and contribute to the long-term economic development of the world's developing countries. More than ever, countries at all levels of development seek to leverage FDI for development" .
2.0 Multinational Enterprises A Multinational can be defined as the following:
"A firm, usually a corporation that operates in two or more countries. In practice the term is used interchangeably with Multinational Corporation".
(http://www-personal.umich.edu/~alandear/glossary/m.html)
The phenomenon of multinationals is not entirely recent as you can go back to before World War I and see that American firms had factories in foreign countries, but it became far more common after World War II and today it may be difficult to find a major company