International investment : its principles and application to New Zealand companies investing in Thailand : a research report presented in partial fulfilment of the requirements for the degree of Masters of Business Administration at Massey University
1.1 Overview of the problem The future of the New Zealand economy lies in expanding its markets and investments overseas. With an annual population growth rate of only 1.5% and a current market size of only 3.3 million people, the potential for domestic economic expansion is not encouraging. The decision to consider a foreign market often stems from the fact that the home market is too limited to attain a sales volume with a sufficiently attractive yield (OECD, International Investment, 1983). The Minister of Overseas Trade in the present government administration stated that the only way New Zealand will increase employment and revenue is through exports... that is where the recovery of the economy lies (National Business Review, 15 Apr 85) The signing of the Closer Economic Relations (CER) agreement with Australia in April 1982, dismantling many of the protective barriers precluding the free flow of trade between the two countries, was a step in the right direction in providing market opportunities for New Zealand companies. Many domestic industries are entering the mature stage of their life cycles, characterised by stagnant demand. This together with a general contraction of the market, necessitates that the future growth of these industries rests on the exploitation of offshore markets.