KEY POINTS:
Trevor Mallard, ironically, prefaces the announcement of a new Government focus on encouraging firms to expand abroad by admitting its policies to facilitate inbound investment have been ineffectual and costly.
But when the level of foreign direct investment in New Zealand ($90 billion) is five times larger than the equivalent New Zealand investment overseas ($18 billion) there is, on the face of it, a problem.
Ownership matters. We are deluded if we think that if we sell the farm, blow the proceeds, but stay on as tenants we are no worse off.
Mr Mallard is right to acknowledge that the traditional focus of Government assistance on export market development presupposes a business model increasingly out of date.
In these globalised times typically the goods we buy embody inputs from many countries. No country has a comparative advantage all along the chain. In such an environment international integration is not a growth strategy, it is a survival strategy.
Will what the Government proposes make much difference, though? Without more specifics than are available yet it is hard to say.
Mr Mallard has made it clear firms should not expect much in the way of direct grants. Rather, support will take the form of information gathered at the taxpayers' expense. Information is critical.
Investment is a much bigger commitment. The sum of everything an expansion-minded New Zealand firm would need to know, but doesn't, is daunting indeed.
It sounds as if eligibility will depend heavily on the prospect of spillover benefits to other companies.
But why? Surely what ought to matter is the total pay-off to the economy (and tax base), not how many companies it is spread over.
Some companies that have expanded successfully overseas have ended up moving their head offices there as well. That outcome is not inevitable, however. And in the meantime the jobs preserved or gained are worth having.
