I consider that the central threat arising from foreign investment in New Zealand arises through its effect on the balance of external payments. There have been years when New Zealand has had a surplus of exports over imports - but recently never enough to pay for the cost of profit and interest on foreign debt and foreign investment; the latter contracting now the entire additional loans incurred by the New Zealand economy and now exceeding $NZ100 billion by a substantial margin. This means that every time you buy a railway ticket, or you turn the light on or buy a loaf of bread or drink a glass of beer you increase the national debt. In the long run it is the creditors who determine how our country should be run and "Democracy" is only a fig leaf which the public relations experts of the foreign controlled media, etc, use to hide from the view of New Zealand and indeed, world citizens, the power of transnational corporations - financial and non-financial - which have penetrated the world.

I looked, therefore, in this, as in past reports of the UN Conference on Trade and Development (UNCTAD), on the effect of, and statistics concerning, the effect of profit and interest remittances originating in FDI (Foreign Direct Investment). The present World Investment Report mentions the term `Balance of Payments' once, on p.xxii ("Overview"). Indeed, this is a 570 page volume describing the tragedy of Hamlet without ever letting him appear on the stage.

Is the report then entirely worthless? No, not by any means. On the one hand the volume presents a lot of very useful information on Foreign Direct Investment worldwide, including the year 1998. On the other hand, one has the impression that there are some people in UNCTAD who know that the basic assumptions of official economics are false and, therefore, the conclusions concerning the need for a form of totalitarian free trade system (as proposed by the World Trade Organisation, Multilateral Agreement on Investment, etc) are not sustainable by sound economic argument.

Finally, in its critique of the MAI (Multilateral Agreement on Investment - defeated by popular argument which included in New Zealand that by CAFCA) and its careful arguing for the Infant Industry argument of protection, the UNCTAD sceptics give some vent to their opinions.

Now, coming to some of the valuable statistics contained in the volume, UNCTAD has constructed an index of the importance of foreign investment inflow into countries. This consists of an average of FDI inflows as a percentage of gross fixed capital formation for the years 1996, 1997, and 1998; FDI stock as a percentage of Gross Domestic Product (GDP), "value added" of foreign affiliates as a percentage of GDP, and employment in foreign affiliates as a percentage of total employment.

Foreign Investment In NZ Is The Highest

Of all 22 developed countries enumerated New Zealand has by far the highest percentage of total influence by foreign investment on the economy. With about 32%, New Zealand is followed by Belgium at 29%; Greece 25%; and Australia 17%.

In the underdeveloped world ("developing countries") Trinidad and Tobago shows 48%; Malaysia 43%; Singapore 35%; but then lower than New Zealand, Egypt with 30%; Costa Rica 20% and so on.

When it comes to the total of foreign investment in the world - that is, to the basis of what politicians glowingly describe as "globalisation", painting a false picture of "world democracy" based on a thoroughly internationalised economy, we find that the new rulers of the world, the transnational corporations (TNCs), number some 60,000. These 60,000 firms that, in fact, increasingly want to dominate the fate of the six billion people who inhabit this planet, have about 500,000 foreign affiliates.

As in previous Reports there is no explicit analysis of financial TNCs as opposed to non-financial ones. The Report enumerates only the top 100 TNCs in the non-financial field. These controlled 22% of the total TNC sales and 15% of their assets. Thus concentration of wealth - the characteristic of TNC capitalism of the 21st Century - extends to the rulers themselves: less than one fifth of 1% of TNCs control 22% of sales - mainly in petrol, automobiles, pharmaceutical and chemicals in general, electronic and electrical equipment. These 100 super TNCs are situated in the USA, the European Union, and Japan, the old heartlands of imperialism.

There are some TNCs burgeoning in underdeveloped, so-called "developing", countries. China and Hong Kong are TNC owners (in New Zealand, China owns a huge quantity of forests); the South Korean Daewoo Corporation figures even amongst the biggest 100 although it has recently gone through very harsh times and may slip into another imperialist country's orbit.

Production of TNC affiliates in 1998 was about $US11,000 billion worth, but international foreign trade was only $US7,000 billion. Trade within TNCs and between them amounted to about two thirds of all world trade, intra-firm trade alone to one third.

Taking into account the ever increasing flood of mergers and amalgamations, international trade thus is far removed from the imaginary arms length, "competitive" activity of millions of anonymous participants. "Free trade" means, in fact, becoming part of the transnational empire of monopolists and oligopolists for the benefit of the shareholders and executive personnel who make up the ruling class of the world.

Recent hypocritical hurrahs for the judicial declaration of Microsoft as a monopoly under the Sherman Anti-Trust Act, of the USA, should be seen in the light of the fact that that Act does not apply to international operations of US companies. Anyway the (unlikely) replacement of the full monopoly of Microsoft over computer software would only be replaced by an oligopoly of a few firms who give an outward appearance of "competition" but know where not to go too far.

In fact, the word "competitive" in the journalese of today merely means low wages and supply prices to TNCs - it does not mean that in the fields of international trade there is fair competition between the small and the TNCs.

On the other hand, to the extent that the intensity of monopolistic centralisation of TNCs is concentrated in a few industries, national industries can still exist, be born, and grow in developing countries such as New Zealand. The Report therefore recommends tariffs and protection for "infant industries" so they can grow up under a national protective shelter to give employment and resource diversification.

The Report is unsatisfactory because of its omission of the problem of how countries engulfed in "globalisation", that is foreign ownership of their assets, can find the foreign exchange to pay profits and interest on the "borrowing" which precedes global takeover.

The December 1999 New Zealand Balance of Payments shows how disastrous and indeed insoluble this problem is - a good reason never to mention it as far as economists and Government go?

Thus, we have traded positively in all years, except 1999 when the hypnotic addiction of National with free importing reversed even that positive factor. But we must, to pay the accumulating debt from unearned interest and profits abroad, restrict imports further and expand exports if possible. That is the cost of foreign investment for New Zealand. No mention of this vital fault of foreign investment ever either by the UN or by our own Governments!

Year   Total  Deficit   Servicing balance
1995   4.7    6.0       +1.3
1996   5.8    6.9       +1.1
1997   6.5    7.3       +0.8
1998   5.0    5.8       +0.8
1999   8.2    7.3       -0.9   

Since this was written, the balance of payments deficit figure for the year ending March 2000 has been released. It was $8.5 billion, or 8.2% of the Gross Domestic Product. Ed.