Australia in the Global Economy - Research Paper Example

Australia in the Global Economy Studies reveal that Australia is one of the richest and most industrialized countries in the world. It is a capitalist state and has a GDP of approximately US$1.57 trillion. However, the overall wealth of the country is estimated to be $6.4 trillion. In 2011, the country was regarded as the 13 largest country in terms of nominal GDP. Moreover, it is the 19th largest importer and exporter in the world. The service sector dominates Australia whereby is comprises of 68 percent of the country’s GDP. The growth of the economy is heavily reliant on the mining and agricultural sectors (Lowtax). Most of the employment in the country takes place in the capital cities of the states. Moreover, the Australian Securities Exchange is ranked 9th in the world and it acts as the home of the largest commodity companies in the world such as Commonwealth Bank, Westpac Telstra and BHP Billiton. The country is also a member of WTO, G20, APEC and OECD. In addition, globalization has allowed the country to enter into free trade agreements with countries such as Thailand, US, Chile, New Zealand and ASEAN (Lowtax). Therefore, the advances that have been observed in the global economy have contributed to improved living standards and poverty reduction. Moreover, the economic integration among countries has played a vital role in terms of boosting the prosperity of nations. For example, the advances that have been observed in the global economy have allowed Australia to increase its domestic competition thereby improving its economic performance significantly. Moreover, Australia is competitive internationally since it is regarded as one of the largest importer of goods and services (Economy Watch). Therefore, this paper will discuss the geographical, economic and political attributes that have allowed Australia to participate in the global economy effectively. It will discuss the forces that hook Australia into the global economy and illustrate the functions that it plays in the world economy. Geographic context The Australian continent is the smallest in the world. However, it is the sixth largest country and it lies between the Pacific and Indian Oceans. It consists on the mainland and other numerous Islands. The country has varied climatic conditions, incredible wildlife, beaches and fabulous landscapes which serve as tourist destination sites for people who visit from diverse countries around the world. It has a low plateau which are either deserts or semi-arid areas. It also has a fertile plateau in the south-east region. Moreover, it has large deposits of minerals which service the local and international markets. The mining industry serves as the main driving force of the economy (Beer). Therefore, the geographical context of Australia plays a vital role in terms of fostering the participation of Australia in the global economy. Political attributes Though Australia appears to be isolated, it is an active participant in world politics. The political links of Australia are mostly favored by its geographical location as well as the priorities that its sets with regard to trade and foreign policies. For example, Australia is seen to be facing challenges in the near future. In this case, it is feared that the performance of the global economy may deteriorate. Australia also plays a vital role by impacting on the trends that are being realized in the international business environment. For example, the foreign policies in Australia impact on globalization and the transactions that are carried out internationally (Red Apple Education Ltd). The priority areas of Australia include the US and Asia-Pacific countries such as China and Japan. Australia is linked with other countries politically because of the viability of its international treaties, investment agreements, foreign affairs, trade agreements and defense treaties. Therefore, it is evident that Australia is a major player with regard to influencing the manner in which international business activities are formulated and implemented (Red Apple Education Ltd). The political links between Australia and major market players in the world economy are also being shaped by the advances in technology which have allowed the country to participate in international issues efficiently. Economic attributes In the past few decades, Australia has been able to transform itself into an internationally competitive market. It has been able to manifest itself as one of OECD’s fastest growing economies. For example, in 2011, the per capita income of the country was estimated to be USD 40,000. The service sector is the dominant force in the economy whereby it represents approximately 70 percent of the country’s GDP. Moreover, the mining and agricultural sector account for 10 percent of the Australia’s GDP. These sectors account for about 60 percent of the exports that the country sells to international markets (Beer). However, since the export base in Australia is narrow, the balance of payments has been undermined. As a result, Australia has huge current account deficits thereby forcing the government to invest its funds in developing the manufacturing sector. Since the export prices in Australia are high, the economy of the country has realized tremendous growth in the past few years. For example, the GDP growth rate in 2009 was estimated to be 1.4 percent, 2.5 percent in 2010, and 2 percent in 2011 (Economy Watch). Moreover, though the country was heavily affected by the global economic recession, it was able to recover at a faster pace while compared to other advanced economies in the world (Lowtax). Moreover, Australia has shifted its trade from North America and Europe into the South-East Asian markets such as China and Japan because these countries have demonstrated huge growth potential thus boosting the overall competitiveness of Australia in the world economy. Forces that bind Australia to the global economy Therefore, it is true that Australia is an active player in the world economy. This has been demonstrated by the political links that it has with other major players in the world economy. For instance, the foreign policies that Australia makes have significant influence in the performance of the international market. Moreover, the international treaties and investment agreements that Australia agrees to influence the pace of globalization (Beer). Therefore, it is true that Australia holds a vital position in the international market relations thus forcing other dominant market players in the world to relate with it politically in order to help them gain active participation in the world market. Why Australia is in its present state today There are various factors that have contributed to the competitive state of Australia today. For example, Australia is one of the largest importer and exporter of minerals and agricultural products. Moreover, its service industry is so large thus forcing it to attract labor and expertise from outside countries. However, though Australia seems to be isolated based on its location from other countries, it is a major participant of the transactions that take place in the international market (Red Apple Education Ltd). Moreover, with the advancements that have taken place in technology, Australia is now able to relate with other countries more efficiently thus boosting its growth potential and competitiveness in the international market. Conclusion From the analysis therefore, it is true that Australia is a dominant player in the global market. The competitiveness of this country has been powered by its stand on foreign policies, international treaties and investment agreements. Moreover, the amount of exports and imports that the country transacts with other dominant market players in the world contributes to the sustainability of global transactions. Works Cited Beer, Andrew. "The economic geography of Australia and its analysis: from industrial to post-industrial regions." 2012. Research and Evidence Base. web. 27 Feb 2013. . Economy Watch. "Australia Economy." 2010. Economy Watch. web. 27 Feb 2013. . Lowtax. "Australia: Country and Foreign Investment." 2013. Global Tax and Business Portal. web. 27 Feb 2013. . Red Apple Education Ltd. "Political Links." 2013. Skwirk. web. 27 Feb 2013. . Read More