Australia’s Place in the Global Economy
The economic impacts of international trade on the Australian economy. Also, the impacts of free trade and protection on Australia’s economy as a whole.
TRADE and FINANCIAL FLOWS
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Trends in direction of trade began with UK, then when excluded from EU responded to Japan’s rapid eco growth and need for minerals. Then expanded to other Asian economies once Jap slowed down. Our M>X when it comes to trade with other adv economies like US and Germany.
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Trends in composition of trade continue on primary industries such as agriculture (wool, wheat, beef) and minerals (gold, coal, iron ore). Shift to manufacturing and services exports as rural exports decline, minerals continue to boom. imports have changed a bit over past 25yrs as consumer exports rises and part-made goods decrease due to shift from assembly prompted by less protect. Capital and services are 1/5 of all imports.
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Trends in financial flows show pre-’70s and deregulation that international. Financial. Flows were seen as unimportant. Have since grown as int. capital markets opened and tech has grown for. Investment in Australia. 80/81 $46.8m, Investment in Australia 05/06 $1.3bn. Australia is typically a net capital borrower as for. Investment is usually more than double our own inv o/s. Shows lacking national savings and how in “04 Aust became 7th most preferred FDI destination.
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Australia”s Balance of Payments is a record of transactions b/t Aust and world. Consists of CA and C&FA.
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The CA shows receipts and payments for goods and services trade, transfer payments, income flow b/t Aust and world during a given period.
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NET GOODS: X value – M value. Aust has $15.8bn deficit 05/06
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NET SERVICES: balance of X and M services, shipping, air, commissions, brokerage, tourism, insurance. $700m debit (outflow).
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Balance on goods and services: combined net S and net G. Aust -$23.1bn as July 08
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NET income: Aust biz, dividends, royalties, rent profits made o/s LESS payments of the same kind made here to those o/s. Net debit $37.5bn.
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NET CURRENT transfers: unearned one way transfers like aid, gifts, insurance, payouts, and pensions. Debit of $400m 05/06.
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Combined, these create the BALANCE ON Current Account which is:
Balance on goods and services + net income + current transfers
Big Current Account deficits since the “80s and as of July 08 -$70.3bn that is -6.4% GDP.
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The C&FA records borrowing, lending, sales/purchase of assets b/t Aust and world. Inflow when supply of for. Exports rises, outflow when it decreases.
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CAPITAL: 3 transfers – migration, foreign aid and the sale of non-produced non-financial assets e.g. intellectual property. +$1.1bn 05/06.
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Post Commentneelam pandey
On December 9, 2008 at 4:20 pm
very informative article in the context of cureent global economic crisis. thanks for sharing!!
psychobutterfly
On December 9, 2008 at 4:56 pm
nice! very informative!
James DeVere
On December 9, 2008 at 7:49 pm
Nicely laid out but definitely for those in the know.
The Sydney Morning Herald has reported that the mineral boom is finished. BHP is struggling with too much debt ( as a result of spending more than earing ) during the boom.
Will have to take time with this one; good work . j