The Contribution of Foreign Borrowing to the New Zealand Economy
Anthony Makin,
Wei Zhang and
Grant Scobie
No 08/03, Treasury Working Paper Series from New Zealand Treasury
Abstract:
New Zealand’s unrelenting current account deficits, its trade performance and high external debt level remain central to ongoing economic policy debates. However, what has been overlooked in the discussion of New Zealand’s economic relations with its trading partners is the positive contribution that foreign capital inflow makes to the nation’s economic development. International trade in saving between New Zealand and the rest of the world has potentially contributed more to its economic growth than international trade in goods and services. This paper views New Zealand’s current account deficits as symptomatic of an economic growth process in which the rate of the economy’s capital accumulation exceeds its domestic saving rate. Expansion of the domestic capital stock attributable to foreign saving leads to higher national output and national income per head, net of the servicing cost of foreign capital.
Keywords: Foreign borrowing; national income; current account deficit; national wealth; New Zealand (search for similar items in EconPapers)
JEL-codes: F30 (search for similar items in EconPapers)
Pages: 23
Date: 2008-07
References: Add references at CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
https://treasury.govt.nz/sites/default/files/2008-07/twp08-03.pdf (application/pdf)
Related works:
Journal Article: The contribution of foreign borrowing to the New Zealand economy (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:nzt:nztwps:08/03
Access Statistics for this paper
More papers in Treasury Working Paper Series from New Zealand Treasury New Zealand Treasury, PO Box 3724, Wellington 6140, New Zealand. Contact information at EDIRC.
Bibliographic data for series maintained by CSS I&T Web & Publishing, The Treasury (web.publishing@cass.govt.nz).