FINANCE FOR INDUSTRY

Press, Volume XCIX, Issue 29224, 7 June 1960, Page 14

FINANCE FOR INDUSTRY

Opposition To World Bank

The establishment of an industrial development corporation' in New Zealand, with power to borrow overseas on the credit of the New Zealand Government, is urged by Mr W. R. Rosenberg, senior lecturer in economics at the University of Canterbury. Mr Rosenberg has contributed one of the background papers for the coming conference on industrial development. He argues in his paper that equity investment is a very much dearer form of borrowing than any other form of investment. “I would like to single out land companies as a specially undesirable form of foreign equity investment. The ‘unearned’ increment which is difficult enough to cope with if it accrues to residents can become a real threat to a country’s balance of payments if belonging to foreign capital,” he says. “There is no doubt that in certain instances equity investment is necessary, in some desirable. Rarely can it be said, however, that equity investment is necessary in order to provide foreign exchange which could not be procured otherwise and more cheaply.” Funds for industrial development should be borrowed overseas on Government credit and channelled through an industrial development corporation into approved projects. Mr Rosenberg says. In this way “we would not only be able to make sure that foreign funds would be borrowed only where they are required, but also that investment in all fields was carried out with the highest returns and at the same time at the cheapest cost”

World Bank, I.M.F.

Mr Rosenberg discusses the International Bank for Reconstruction and Development—“membership of which is oossible only after a country has ioined the International Monetary Fund.” He

claims that by joining the fund New Zealand would lose some of its autonomy in financial policies. "In 1958 and 1959 our Government borrowed amounts far in excess of what could be obtained from the fund and did so while pursuing a policy which in any respects would have been unacceptable to the fund—increase of family allowances, reduction of interest rates, over-all import controls. borrowing from the Reserve Bank, maintenance of subsidisation of consumers goods, etc "Yet. had we been members of the fund not only would we not have obtained sufficient resources from the fund while having severe conditions imposed on ourselves, but also we would have been unable to borrow elsewhere unless we complied with the requests of the fund in regard to economic policies. . . .

"Obviously, if we want to finance accelerated industrial development in New Zealand we will have to obtain our foreign funds from sources other than the T nternational Monetary Fund and the I B.R D.." he says.

World Forestry Atlas.—A world forestry atlas is being made bv the West German Federal Research Institute for Forestry and Timber trade at Reinbek, near Hamburg. A total of 46 maps have so far been prepared with texts m German. English, French, and Spanish Mans still being prepared cover South America. Africa. India, Pakistan, Burma, and Ceylon.—Reuters.