Wednesday, 4 August 2010

Farm sales to foreigners

David Farrar makes two points about foreigners buying farms in New Zealand.
Foreign investment is generally beneficial to New Zealand. If you restrict foreign owners from purchasing land in NZ, there are two potential negative impacts:

1. The current owner of the land is unable to sell the land for as much as they otherwise would have got. This means less wealth in NZ.
2. The foreign owner of the land, as they valued it more highly, may be able to put it to better economic use (as they need higher returns to cover the higher capital) and this can contribute to a more efficient economy.
He is right on both points. I'm not sure why people think selling land to foreign investors is so bad. Do they think these evil foreigners are going to dig the land up and take it back to their homes in their suitcases? Also why are the people who want to stop foreigners buying "our" land also not trying to stop New Zealanders buy foreign land? It's just economic xenophobia.

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