|
Printable version |
From: | "G Stolwyk" <stolwyk@wave.co.nz> |
Date: | Mon, 16 Apr 2001 22:47:22 +1200 |
Readers: The previous installments were dated:
April 14 and 15.
H: By the way,
some Radio listeners think that more people in NZ will mean
a larger market for businesses: therefore, we should
have a much larger population!
It is also no secret that a larger home market
can be used to support export ventures.
G: The US has an economy, where home
commodities, eg. metals, coal, gold, cotton, farm products, are transformed
into finished goods, be it cars, refrigerators, TV's, farm tractors,
clothes, etc.
If all imports were banned,
then, theoretically - apart from oil -it could nearly sustain itself. It is
also the prime receiver of overseas
talent!
That in itself is a great cost saver! And it gets
returns from massive overseas investments!
Canada and Mexico, some of the larger markets, are
reasonable close! The US is a protectionist country.
H: The economy of NZ is primarily
concerned with commodities and the country has few tariff barriers.
These tariffs are low, anyway!
NZ has no massive overseas reserves or
investments; its residents had high debt levels but these are somewhat
trending down.
The economy needs careful management:
Due to increasing " invisible " payments
- partly as a result of selling key assets to foreigners - we tend to
have reasonable high Balance of Payments Deficits.
However, the resulting lower $NZ is beneficial to
exporters. At least, the farmer won't go broke and farm prices tend to be
higher.
The commodity cycles can cause boom to bust
cycles. Unpredictable droughts can sometimes damage the
economy.
Unless we discover more oil, we may have to
import all needed oil supplies after appr. 2007.
Before long, our sales of wood will increase
markedly; more infrastructure and resulting investment is
needed.
Our exports are encountering heavy trade barriers:
Most Far East countries only want logs. Graded timber meets high
tariffs.
The EEC has forgotten the
contribution made by NZ in the wars and is a
very protectionist bloc.
The trade barriers and long distances to markets
often result in marginal profits.
G: We rely on exports, imports and
skills. The standard of education has to improve
before we can even think about much higher population
levels ! We need skilled people to find new avenues of income generation! They
will create employment and thus support a larger
population!
H: We know that a segment of the population
has a high unemployement rate.
The problem is how
to increase the GDP per person ! If there is no increase in the nation's GDP, then, based on a
growing population, we will be poorer! By the
way, I read that productivity per person is rather flat!
G: What can you expect if jobs have to
be repeated: digging up roads and footpaths frequently to lay cables
or whatever, or putting industry out of action because a cable was cut for
no reason, just to mention a few examples!
The Auckland power
crisis was a costly example of poor management!
H: Yes, we need to work smarter! It is true
however, that a smaller market can
be a barrier to sound investment!
Competitors may enter a smaller market,
they may suddenly appear and they sometimes come from
overseas.
Summing up, the long term NZ
Risk Profile may not be so attractive
to some investors!
These are our opinions.
Gerry
( To be cont.
)
|
|