It is possible to describe Māori economic activity before Europeans arrived in New Zealand in terms of investment and disinvestment.
Examples of Māori infrastructure investment include pā fortifications, which involved trenching, terracing and building palisades. Pā protected gardens, and enabled large-scale crops, some grown for gift or exchange. Investment was also made in routes for the portage of waka (canoes) between adjacent bodies of water like the Manukau and Waitematā harbours, and Pelorus and Queen Charlotte Sounds, to reduce the costs of transport.
Investment in land improvement included clearing land for growing crops. Soils were modified in cooler areas where growing kūmara was a challenge, by adding small chips of stone which retained heat into the night and reduced the risks of frost. Low walls were built to provide protection for crops from winds.
Eel weirs and seine nets for fishing were sometimes constructed on a big scale.
The most marked forms of disinvestment were the hunting of moa to extinction and of seals to near extinction, and deforestation, which made some resources scarce. But they allowed increased consumption of other resources, such as fern root.
Early European investment
In response to the numbers of Europeans visiting New Zealand and settling in Australia, some Māori, especially in the north, produced potatoes and wheat for sale from the 1820s onwards. They invested in land clearance, and built vessels for the coastal trade and flour mills for grinding wheat. Church and school buildings were another form of investment.
Early European economic activity in New Zealand concentrated on sealing, whaling, flax buying, and the gathering and rudimentary processing of native timbers. These activities, except for logging, needed little in the way of physical capital apart from vessels, and these were generally imported.
Settler investment, 1840–1890
From the 1840s organised European settlements invested in buildings such as houses, commercial premises, churches and government buildings, and in infrastructure including local roads, land clearing and rudimentary port facilities.
From around 1870 public and private investment grew rapidly as more settlers arrived in the country, and farming increased in economic importance. Residential property and agriculture were key private-sector investments. Rail dominated public investment, especially during the 1870s.
The disinvestment involved in the substantial forest clearance and swamp drainage in the North Island is hard to measure, and it is difficult to estimate whether this was sufficiently compensated by the rapid rise in agricultural production.
Private houses and farm assets such as woolsheds, yards, fencing and equipment like ploughs accounted for about 65% of total private investment spending over the last 30 years of the 19th century.
There was some investment in manufacturing, especially for the production of goods which were low-priced but bulky to ship, like beer, or for which production from largely local raw materials for the local market was efficient, like timber and joinery for buildings, and foods such as biscuits and jams.
From the mid-1880s until the mid-1890s there was a period of economic stress, culminating in a financial crisis in the banking sector in the mid-1890s. But while there was a significant drop in residential property investment from the mid-1880s to around 1895, there was no noticeable drop in farm investment, apart from the impact of generally falling prices.
Public investment was largely in infrastructure, in response to farmers’ need to transport goods to market. About 75% of public investment was in transport and communication, with rail alone accounting for approximately 40% of public investment spending.