Handbook on Small Nations in the Global Economy
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Handbook on Small Nations in the Global Economy

The Contribution of Multinational Enterprises to National Economic Success

Edited by Daniel Van Den Bulcke, Alain Verbeke and Wenlong Yuan

This unique, extensive Handbook illustrates that multinational enterprises can contribute substantially to the competitive advantage of small countries. It advances the notion that small nations increasingly need to rely on both home-grown and foreign multinational enterprises to achieve domestic economic success in industries characterized by international competition.
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Chapter 10: New Zealand and the Challenge of Global Competition

Peter Enderwick and Joanna Scott-Kennel


Peter Enderwick and Joanna Scott-Kennel With a population of just 4 million and a location on the geographical periphery of the world economy, New Zealand certainly qualifies as a small economy. Its historical and economic development, heavily dependent on the inflow of foreign resources (capital, technology and migration), and the export of primary commodities, means it is also an open economy. However, its economic structure, with a small domestic market and traditional reliance upon natural-resource-based industries (tourism, dairy, meat, forestry, fruit and aluminium), means that it is primarily a trade-based economy. While inward investment flows and stocks in New Zealand are well above the average for all developed countries, the absolute amounts of such investment are low and have declined markedly since the late 1990s (Enderwick, 1998). On the other hand, outward investment flows and stocks are well below those of comparable developed economies, reflecting the commodity- and trade-based nature of the economy. While there is a high level of foreign ownership of New Zealand industry, particularly among larger manufacturing firms (Rosenberg, 1998), few New Zealand-based companies appear able to sustain successful international operations (Akoorie, 1993).1 The intention of this chapter is to examine three of the most internationally successful New Zealand industries – forestry, export education and information and communications technology (ICT) – and to consider the role that international investment plays in these sectors. The choice of industries for New Zealand is not straightforward. The largest export earners – dairy, meat and tourism – are either subject to considerable barriers to...

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