Small is good in global market

By LIBBY MIDDLEBROOK

New Zealand may be small, but that should not stop it from becoming one of the big business achievers this millennium.

So says globalisation expert Yair Aharoni, an Israeli professor who is in New Zealand this week to talk to university students about the effects of globalisation on small countries.

"Globalisation is a blessing for small countries because it allows them to become part of the world," said Mr Aharoni, who is based at Israel's College of Management.

"There was a theory that small countries like New Zealand would not be able to continue existing due to globalisation because they would be totally dependent on forces not controlled by their Governments. That view is outdated."

Mr Aharoni said small economies like New Zealand's could break further into the global market by setting up satellite business units around the world while maintaining home-based head offices. He said parochial attitudes towards the shift of home-owned companies overseas were detrimental.

"One of the biggest problems we have with small countries is the parochial feeling that if someone goes outside of their own country, they're doing something wrong. It's much better to have a firm working in Australia as well as in New Zealand rather than being an inefficient company."

Small countries also needed to encourage more exports across a wider range of industries to avoid reliance on selected markets.

Small countries such as Saudi Arabia were particularly vulnerable to downturns in the petroleum industry because crude oil generates such a high percentage of the country's earnings.

"That creates very huge problems if something happens to that specific scene. It's much better for a large number of small firms to go to the capital market outside their own country."

It was difficult for small countries to be cost-competitive on a global scale because of the size of their domestic markets. Companies should concentrate on exporting and manufacturing products that attract premium prices.

Allowing foreign companies to set up divisions in New Zealand could encourage growth and competition. Mr Aharoni believes Government policies ideally should not interfere with trade issues.

"The idea that a country should protect something in its territory is totally outdated ... If you don't have too high taxes and if the Government doesn't interfere too much, you will be in very good shape."