International Business: Economical Overview of Australia - Research Paper Example

INTRODUCTION Australia is a culturally diverse country with a robust economy and a population of approximately 21 million. Comprising one of the world’s oldest landmasses, it is the planet’s only country that is spread out over a continent. It is the sixth largest country in the world and is surrounded by water. Though Australia has been inhabited by humans for 60, 0000 years, its modern history begins with the advent of Europeans on its shores. Willem Janszoon of Netherlands is said to have made the first European contact with Australia in 1606. Australia was claimed for the British Empire by Captain James Cook in 1770. The first European settlement in Australia was established by Great Britain on January 26, 1788. The land area of Australia is 7.62 million square kilometers. Mount Kosciuszko in New South Wales is the highest peak of Australia. 20% of the landmass of Australia is classified as desert. There is a vast variation in climatic zones ranging from deserts, tropical rainforests to snow covered mountains. The climate of northern Australia is tropical; it is arid in the centre, and temperate in the south. Since Australia lies in the southern hemisphere, its seasons are reverse to that of the northern hemisphere. January and February are the warmest months in Australia. On the other hand, June and July are the coldest months. The population of Australia is concentrated on the coastal regions. The interior of Australia is largely infertile and desert plains generally referred to as the Outback. Australian Outback is not fit for human inhabitation or agriculture. The Great Dividing Range divides the Outback from the fertile eastern coast. Only 6 per cent of the Australian land mass is considered arable. With a million native species of flora and fauna, Australia is home to 10 per cent of the world’s bio-diversity (Department of Foreign Affairs and Trade [A], 2009). The Great Reef, made up of coral and algae is inhabited by numerous species of fish, marine mammals, aquatic plants and corals, is a major tourist attraction. The largest deposit of coral in world, the 1250 miles long Reef is the greatest living structure in the world. The capital of Australia is Canberra and the official language is English. Brisbane, Sydney, Melbourne, Perth, Adelaide are other major cities. Queensland, New South Wales, Australian Capital Territory, Victoria, Tasmania, South Australia, Western Australia, and Northern Territory are the states and territories of Australia. SOCIOECONOMIC AND CULTURAL FACTORS Australia is a stable democratic country with a diverse and coherent social milieu. Ethnically, it is a multi-cultural country. Broadly, Australian population is 92% white, 7% Asian, aboriginal and others 1%. It is believed that the aboriginals or the natives have lived in Australia for the past 40000 years. It is also believed that the native aborigines migrated from south-east Asia to Australia. 60 per cent of the Australian population is ethnically mixed and 20 per cent has at least four distinct ancestries (Price, n.d.). People of mixed ethnicity are the fastest growing people in Australia (Price, n.d.). According to the United Nations Development Report, Australia is the third best country in the world, behind Norway and Ireland in terms of Human Development Index (HDI). Australia has the second-lowest unemployment rate in the world. Literacy rate was recorded to be 100 per cent in 1995. In 2009, the average life expectancy in Australia was 81.6 years (Encarta, 2009). As in 2009, the Australian population stands at 21,262,641 (Encarta, 2009). The annual population growth of Australia is 110,704. Australia’s population density is as in 2003 was 2.6 people per square kilometer. Initially, Australia was used as a prison colony by Great Britain. The Australian population witnessed a dramatic increase due to the gold rush in the second half of the nineteenth century. At the time of formation of new Australian nation in 1901, it had a population of 3 824 913 and its largest city was Melbourne with a population of 501 580 (Australian Parliamentary Library, 2009). The immigration policy of Australia has brought 6.6 million settlers to Australia since the World War II. People from 200 countries have made Australia their home. Christians constitute 64 percent of the population. Buddhists and Muslims constitute 2 percent each and Hindus are 1 percent of the population English, spoken by 80% of the populace, is the chief language of Australia. The other languages spoken in Australia include Mandarin, Italian, Vietnamese, Turkish, Hindi and Greek. When the Europeans landed in Australia, there were 250 languages and dialects of Aborigines. Out of them, only a few survive now. Women play an indispensable role in every aspect of Australia’s development including its society, culture, and economy. In 2006, 54.8% of all Australian students in the universities were women. 30 per cent of all members of the parliament, today, are women. As of January 2008, almost 4.8 million women were in some form of paid employment. Women control 34 per cent of all positions on the federal controlled boards, but the figure is only 9 per cent of private board directorships. More than 30% of all the small businesses in Australia are controlled and operated by women. The United Nations Human Development Report ranked Australia second in the world in gender related development index. The country was ranked eighth in the world on gender empowerment measure. The government also provides various kinds of institutional and statutory help to the working mothers (Department of Foreign Affairs and Trade [B], 2009). The right to vote and contest the parliamentary elections was given to women in 1902. Women were awarded ‘equal pay for work of equal value’ in 1969. POLITICAL AND LEGAL CLIMATE Australia is a constitutional monarchy and has the Westminster type of government. The executive powers are vested in the governor-general, who owes allegiance to the monarch of Australia, Queen Elizabeth II. The Queen appoints the governor-general on the recommendation of the Australian prime minister. The governor-general is advised by the prime minister and his cabinet colleagues. In 2008, Ms. Quentin Bryce, was sworn in as the first woman governor general of Australia. Kevin Rudd is the prime minister of Australia. The Australian federal system has two houses of the Parliament—the lower house and the upper house. The party or coalition that has majority in the lower house or the House of Representatives forms the government at Canberra. Each member of the lower house represents 80,000 people. The upper house or the Senate has twelve members from each state and two from each territory. The term of the office of the government is three years. The lower house has 148 seats. Citizens above the age of 18 can exercise the right to vote. The Australian political system is composed of three branches—the executive, the legislature, and the judiciary. The government is chosen from the parliament and is answerable to the parliament for its actions and those of the public sector (Department of Health and Ageing, 2008). Judiciary, with High Court as its head, has the important function of interpreting and applying the law. The subordinate courts of the High Court are called the federal courts. The Australian constitution took effect on 1st January, 1901. The day is celebrated as the Federation Day. The Australian Labor Party, the National Party, and the Liberal Party are the chief political parties of Australia. IV. ECONOMIC CLIMATE Today, Australia is the 14th biggest economy in the world. In terms of per capita income, Australia is placed 6th in the world. Australia has recorded 17 consecutive years of growth since 1992 averaging 3.3 per cent a year. The robustness of the Australian economy can be measured from the fact that according to OECD Economic Outlook, the country was performing best in face of economic recession (Labor Party, 2009). Whereas output in OECD countries is going to contract by 4.1 per cent, the Australian economy will contract a meager 0.4 per cent in the current year. OECD also states that the country will be subjected to mildest recession in the current year (Labor Party, 2009). In a survey conducted by IMD World Competitiveness Yearbook in 2009, the Australian economy was found to be the most resilient in the world after Norway and Qatar. Thus, the effect of global recession on the Australian economy is mild (Glynn, 2009). However, it is also predicted that unemployment rate could increase in times to come. In 2007, the exports and imports of Australia were valued at $457 billion. In the same year, the Gross Domestic Product of Australia was $821 billion and per capita GDP was $39,066. On the other hand, Australian investments abroad totaled $884 billion in the same period (Department of Foreign Affairs and Trade[C], 2009). Sydney and Melbourne are major international trading markets. Australia is a supplier of high quality goods and services to over 200 countries. It has important mineral resources and vast areas are given over to sheep and cattle farming. Australia has large tracts of grasslands, which now increasingly are being put to agricultural use and cattle farming. Sugarcane and wheat are the major crops of Australia. Besides, there are large grape vineyards. Sheep farming is the mainstay of the Australian agriculture. Sheep are raised both for meat and wool. Besides, agriculture, mining is the next big industry Australia is rich in coal and iron ore. Other minerals in which Australia is rich include gold, aluminum ores, crude petroleum, and copper. In 2007, Australia exported coal, iron ore and non-monetary gold worth $21 billion, $16 billion, and $11 billion respectively. Australia is also a major exporter of beef, cereals and textile fibers. The chief export markets of Australia are Japan, United States, Korea, China, Singapore and New Zealand. The rate of growth of Australian exports over a five-year period has been 8.7 per cent of the GDP in the past five years. In 2007, Australia’s international trade accounted for one per cent of the world trade (Department of Foreign Affairs and Trade[C], 2009). Australia also has the lowest debt and the lowest debt deficit in the world. Australian Trade Commission (Austrade) is the umbrella organization for promotion and facilitation of international trade. Lately, education service has emerged as a key revenue earner for Australia. Students from different countries study in Australian universities and colleges for graduate and post-graduate degrees. At any given time, more than 300 000 international students study in Australian campuses while 100000 students avail the Australian education through correspondence or off-shore campuses (Department of Foreign Affairs and Trade [D], 2009). The Reserve Bank of Australia ensures stability of the banking sector by monitoring performance of macro-economic factors, financial markets, and institutions. Australia’s financial regulatory environment is classed as one of the best in the world for promoting stability and certainty. The banks of the country are well managed, profitable and governed by strict Reserve Bank of Australia guidelines. Sound structural reforms and macro-economic factors have increased the responsiveness of the Australian economy to the shifts in the global economy. Australia has the best and unbiased competition laws with an independent judiciary that protects the rights of one and all. Australia’s intellectual property protection is ranked number two in Asia-Pacific and number ten globally (Department of State and Regional Development, 2009). Australian dollar is the national currency. One Australian dollar is equal to 100 cents. One Australian Dollar is equal to 82 US cents. ANALYSIS Australia presents great investment opportunities. Australia is an economic power horse with a stable democracy, diverse population, 100 per cent literacy rate, a highly skilled workforce, advanced regulatory environment and proprietary laws, and sound and transparent governance structures. Australia offers a lucrative investment opportunity due to its transparent macroeconomic policies. Australia has a strong GDP and has weathered the current recession with a minimum effect to its rate of growth. Despite the fact that the entire world is reeling under severe economic depression, the country’s GDP continues to grow, though at a little slower pace. The population density is less and the country is free of problems related with overpopulation. Australia is by far a peaceful country with minimal law and order problem. The country has never faced political instability or political unrest in over hundred years of its existence. People from diverse ethnic backgrounds, religious affiliations, and linguistic groups live in perfect harmony with one another. These factors coupled with world class information technology and communication infrastructure, modern transportation, easy availability of technology add on to ensure business success. The country’s strategic geo-political location makes it easily accessible to the potential Asian, Pacific and American markets. Australia enjoys peaceful and cordial relations with international community with no dispute of serious concern with any country. The country has not only strong trade relations with established markets like the EU, the US and Japan, but also has strong economic ties with upcoming markets like China and India. Australia is an active member of trade groupings like OPEC and OECD. In fact, Australia played a key role in formation of Asia-Pacific Economic Cooperation (APEC) in 1989— a prominent trade organization dedicated to promotion of trade in the Asia Pacific region. The government of Australia is negotiating with different trade blocs and countries for establishing free trade relations. Once free trade agreements come into force, it would lead to significant lowering of duties and taxes on manufacture, trade, export and import of goods. The local and foreign companies have a similar standing before the Australian law. The government policies are transparent and flexible and the business environment contains lowest risk. Efficient control and compliance to law, transparency and thorough dedication of public servants make Australian system nearly free of corruption, red tape, and unnecessary bottlenecks. Australia has a unique time zone advantage. It spans the closing of the business day in North America and opening of business in Europe. Australia has enough statutory provisions to protect interests and intellectual property of business entities. Sufficient laws are in place to protect proprietary and intellectual capital. Local and foreign companies have an equal standing before the court of law and no discrimination is practiced against anyone. Australia welcomes immigrants and any vacancy that cannot be filled locally, specialist staff from anywhere in the world can be allowed entry into Australia, on temporary or permanent basis. Australia is rich in natural resources, which makes it easier for companies to source raw material. Further, all its major cities are located on the sea-cost having direct sea connectivity with the rest of the world. All the major cities of Australia are connected to the rest of the world through direct air routes. Major cities are also connected to one another through sea routes, rail network and highways. The information technology infrastructure and communication network of Australia is truly world class. Since Australia is taking positive steps for moving towards knowledge-based economy, it is the right period for information technology companies to move and exploit the opportunity. Australia, thus, offers tremendous opportunities for exploration, establishment and growth of new business ventures. If a multi-national or small or medium business enterprise is keen on investing, now is the right to invest in Australia. References Australian Labor Party (2009). Australias economy outperforms all others Retrieved July 20, 2009, from http://www.alp.org.au/media/0609/mstres240.php Department of Foreign Affairs and Trade, Australian Government [A], (2009). Retrieved July 20, 2009, from http://www.dfat.gov.au/aib/environment.html Department of Foreign Affairs and Trade, Australian Government [B] (2009). Women— Towards Equality, Retrieved July, 21, 2009, from http://www.dfat.gov.au/facts/women.html Department of Foreign Affairs and Trade, Australian Government [C] (2009). Trading with the world, Retrieved July 22, 2009, from http://www.dfat.gov.au/aib/trade_investment.html Department of Foreign Affairs and Trade, Australian Government [D] (2009). Australian society, Retrieved July 21, 2009 http://www.dfat.gov.au/aib/society.htm Department of State and Regional Development, Australian Government (2009). Business environment, Retrieved July 22, 2009 http://www.business.nsw.gov.au/investment/environment/ Department of Health and Ageing, Australian Government (2009). Work as a doctor in Australia, Retrieved July 23, 2009, from http://www.health.gov.au/internet/otd/publishing.nsf/Content/work- Australias+political+system Department of State and Regional Development, Australian Government (2009). Business environment, Retrieved July 23, 2009, from http://www.business.nsw.gov.au/investment/environment/ Encarta, msn (2009). Australia facts and figures, Retrieved July 22, 2009, from http://encarta.msn.com/fact_631504716/australia_facts_and_figures.html Glynn, J. (2009). Australian economy grows. The Wall Street Journal, Retrieved July 20, 2009, from http://online.wsj.com/article/SB124399458004780095.html Parliament of Australia, Parliamentary Library (2009). Research Note 23 2000-01, 1901: A socio-economic profile of Australia at federation, Retrieved July 23, 2009, from http://www.aph.gov.au/library/Pubs/rn/2000-01/01RN23.htm Price, C (n.d.) (2009). Australian population, ethnic origins, Retrieved July 20, 2009, from, http://elecpress.monash.edu.au/pnp/free/pnpv7n4/v7n4_3price.pdf Read More