The report analyzes the political, legal and economic structure of New Zealand. Political economy is the overall wealth and business laws of a country ("Intelligence Literature — Central Intelligence Agency", 2016). In relation to this, the country's foreign investment is also discussed since these are all interlinked. Foreign direct investment is setting up of business in another country by an individual or by an organization to earn revenue or spread business. However, this foreign investment in a foreign land mainly depends on the legal, political and economic condition of the country. In this paper, the scope of foreign direct investments in New Zealand is discussed. However, the report in a systematic way discusses the political, legal and economic aspects of the country and thereby talks about how the country influences or promotes foreign investments.
Economy of New Zealand:
The economy of New Zealand is primarily dependent on international trade and is a growing market. It has trade relation with countries like China, United States of America, Japan, Australia, European Union and so on. However, it is observed that the trade relation of New Zealand is closely connected with Australia. Over the time New Zealand has improved its economy and the due to this the country now has many work opportunities, and the living standard of the people is quite good. Per capita earning of the people has also increased over the time, and it is near about 62. 99% ("Financial Markets Conduct Act | Ministry of Business, Innovation and Employment", 2016). The country has also progressed globally and has ushered in many foreign investments, which is conducive to the economic growth of the country. Maximum investment in New Zealand comes from America, Europe and Australia, which is near about 59%. However, investment of about 33% also comes from some of the Asian countries. The gross domestic product has also increased over the time, and it is conducive for the growth of foreign investments. However, it is not a huge market, and in the year 2010, the rate of Gross Domestic Product decreased considerably ("Sectors of opportunity", 2016). This phase has undergone a change and now New Zealand has quite a considerable amount of investment in the dairy firms. For example, foreign investments like Heinz, Enacde, Oceania Dairy are some of the successful foreign investments in New Zealand.
Legal System of New Zealand:
For international investments or business, the legal system of a country plays a major role. Protecting the foreign business by the implementation of some advantageous laws and norms will usher in foreign investments. The law of immigration allows sourcing of materials or services from other places and relocation of employees if necessary. New Zealand law provides investors with a fishing allowance with which they can form some fisheries or fishing business (Fabling & Sanderson, 2014). The legal system of the country allows foreign investors to have near about twenty-five percent of the ownership of land, business or asset in New Zealand. The law for the financial market in New Zealand is concerned with the production of commodities and responsibilities of the producer for a sustainable growth of the business market. The same applies to any foreign investment in New Zealand.
Politics and Political Economy of New Zealand:
Political economy is a broad term and includes several points in it. Political economy is all about the wealth, economic transactions, laws and business norms of a country. New Zealand has an open economy, and new companies are investing in this country for a prosperous business venture. Politics in this prospect of foreign investment is mostly about the norms and way of working of a business firm. The business of a country mainly depends on the political economy of a country and is interrelated with the legal system of the country. Innovations, new strategies, new ideas are now being appreciated by New Zealanders. Otherwise, they had a very self-centric view (Fabling & Sanderson, 2014).
Country’s Influence or Attractiveness for Foreign Investment:
The market size, the monetary profits, and the business deals help in attracting the foreign investors (Moosa, 2016). The expanding market size of New Zealand and the high level of profit margin help in attracting foreign investors.
Gross domestic product or GDP is another yardstick for measuring the economy of a country. The GDP of New Zealand has increased over the time, and it is the deciding factor of the prospect of growth and business success. In New Zealand in late 80’s the GDP was near about $22, 976, whereas the latest record reveal that the recent GDP is $199. 117. This has increased the trade attractiveness of the country ("Financial Markets Conduct Act | Ministry of Business, Innovation and Employment", 2016).
An Early entry in the market has some positive advantages while late entry will lead to some disadvantages for the business firm. Early entries in the expanding New Zealand market will help the business firm to build a trust and will be beneficial in understanding the market of New Zealand. Whereas late entry may not get enough, market exposure and holds which are not at all conducive for a business to grow (Zealand, 2013).
The cost of doing an overseas business is also an important factor for the establishment of business. From the economic perspective of the country, it can be said that New Zealand being a developed country, the cost of investment in this country is also quite high. The cost of maintaining the legal norms is also quite high in New Zealand (Moosa, 2016). However, in spite of all these constraints the business returns in New Zealand is quite good and lucrative.
Politically New Zealand has no such huge issues in conducting business, therefore in the recent past, many companies have invested in this country. However, any social tension, chaos and unrest can create an imbalance in the business market. The government policies in New Zealand warmly welcome foreign investments, and this way attracts foreign direct investment (Friel et al., 2013)
New Zealand is a country with huge farmlands, and this gives an opportunity to the investors for investing in the farmlands for building a business. The lucrative land laws also contribute towards increasing the attractiveness of the country.
Amendment of the overseas business act in the year 2005 is directed towards the development and growth of the foreign direct investment. The act states about the withdrawal of any barriers or hindrances that stops the incoming flow of foreign investment (Kelsey 2015).
The report broadly and systematically discusses the political economy of New Zealand along with the legal system of New Zealand. The Key factors like politics, law, and economy of a country decides the potential of foreign investment and thereby decides the future growth and success of the country. New Zealand does not have a huge market like that of America or other European nations. However, it has a growing market and has good scopes for foreign investments. Foreign direct investment of FDI is primarily setting up of business in another country, and it requires a thorough analysis of the country. Unless the law and economy are not for the growth of the foreign business, the FDI of a country will remain low. In today's world of globalization, foreign investment is a very common trend, and all nations are aiming towards the development of it.
Fabling, R., & Sanderson, L. (2014). Foreign acquisition and the performance of New Zealand firms. New Zealand Economic Papers, 48(1), 1-20.
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Friel, S., Gleeson, D., Thow, A. M., Labonte, R., Stuckler, D., Kay, A., & Snowdon, W. (2013). A new generation of trade policy: potential risks to diet-related health from the trans pacific partnership agreement. Globalization and health, 9(1), 1.
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Kelsey, J. (2015). The New Zealand experiment: A world model for structural adjustment?. Bridget Williams Books.
Moosa, I. (2016). Foreign direct investment: theory, evidence and practice. Springer.
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Zealand, S. N. (2013). Global New Zealand–International trade, investment, and travel profile: Year ended December 2013.