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Free Trade and Foreign Direct Investment in Australia, Britain, China - Term Paper Example

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This paper 'Free Trade and Foreign Direct Investment in Australia, Britain, China" focuses on the fact that China’s demand for iron ore has driven the growth of Rio Tinto. BHP Billiton, Vale and Rio Tinto, control about 70% of the world's trade in iron ore…
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Free Trade and Foreign Direct Investment in Australia, Britain, China
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Download file to see previous pages Demand for goods and services in the Pilbaras state, Western Australia, grew by 11% in 2007. Studies have touted the benefits of foreign direct investment. (China Elections and Governance, May 8, 2008). Chinese investment in Australias iron-ore business is increasing. Gindalbie, an Australian iron-ore miner, and Ansteel, a Chinese steelmaker, agreed to invest A$1.8 billion in a joint venture to develop a mine in Western Australia in 2007. This new investment translates to to5,000 new jobs. (China Elections and Governance, May 8, 2008) Foreign direct investment (FDI) should be free from the strict controls which are implemented by host governments. (Main Idea Statement).

Foreign direct investment has speeded up the economic development of Australia. If the foreign direct investment in the iron ore and coal mining sector continues, Western Australia will need an extra 400,000 workers within 10 years ding to the Australian Chamber of Commerce. Australia has entered its 17th year of uninterrupted growth. The pace of domestic demand that monetary authorities have pushed interest rates to their highest in close to 12 years in order to combat inflation. Inflation has been identified as the country’s chief economic ill. Skills shortage and infrastructure bottlenecks at congested ports continue to hound the growing economy. Due to the massive foreign direct investments, Australia’s unemployment record is at a 33-year low, net immigration is at a record high and the prices paid for Australia’s most important exports such as iron ore, coal and have risen.

Moreover, household wealth has more than doubled in 15 years, the national car fleet is younger than before and contains more luxury brands, while homes are replete with high-end consumer electronics. The federal and state governments have registered budget surpluses and A$31bn (US$28bn, £14bn, €18bn) in tax cuts will soon be handed to the twenty-one million population. The China-led boom in Australia is expected to last for many years as China is heavily dependent on imported raw materials for industrial production.  ...Download file to see next pagesRead More
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