Foreign Direct Investment in New Zealand: A brief review of the pros and cons

Abstract

As the world has become more interconnected Foreign Direct Investment (FDI) has increasingly become a hot topic. For New Zealand how we connect with the world is a major issue since we import most of our technology and have a relatively shallow domestic capital base. Yet many New Zealanders are sensitive about FDI. Polling consistently shows resistance to further FDI, especially into farmland and the housing market. Misperceptions abound and the debate quickly becomes emotional and sometimes irrational. In this paper, we look at the nature and drivers of FDI in New Zealand, the main costs and benefits according to the literature, and use two brief case studies to illustrate these issues.