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Salient. Official Newspaper of the Victoria University Students' Association. Vol 41 No. 26. October 2 1978

Exporting into Dependence

Exporting into Dependence

As everyone knows, New Zealand faces a severe balance of payments deficit. Our exports just do not have the purchasing power they once enjoyed and it is unlikley they will ever regain it. The growth of light industry may be opening up some new markets, but the development of similar forms of light industry in the countries we are exporting to, and the threat of protectionist policies by those countries mean that we cannot regard light manufacturing as a secure prospect for solving economic ills.

Furthermore, many of the exports New Zealand manufacturers are being exhorted to produce do not have a stable home market. This means that any reduction in the overseas orders will have severe repercussions in the state of the given industry. With no capacity / to absorb fluctuations by turning to the home market, companies would be forced to lay off staff, increase prices and in some cases, even fold up.

Perhaps more significant than all this, however, is the role that overseas investment plays in New Zealand's light industry. Most of our imports (about 75%) are in the form of raw materials, fuel, transport equipment, components, and capital goods. This means that the products of New Zealand industry which do have the little kiwi on the bottom have a significant import content in them. Furthermore, many industries are financed by overseas capital. Heavy borrowing (in both the private and the public sectors) has increased this dependency.

The result of this is that when we do manage to reduce import quotas, without developing our own industrial base to replace the goods lost, the light manufacturing sector is denied essential components and further recession follows. Far from protecting us from the vacillating international economic situation, the policy of semi-industrialisation means we are increasingly being drawn into it.