Economics Analysis MRC 1513 /05 Manizheh Adli MATRIX NO.: MR111188

Economics Analysis
MRC 1513 /05
MANIZHEH ADLI
MATRIX NO. : MR111188
1
AUSTRALIA’S EXPORT
Australia is a country in the Southern Hemisphere comprising the mainland of the Australian continent
as well as the island of Tasmania and numerous smaller islands in the Indian and Pacific Oceans. It is
the world's sixth-largest country by total area. Australia has maintained a stable liberal democratic
political system which functions as a federal parliamentary democracy and constitutional monarchy.
Australia Population
The total population in Australia was last reported at 22.5 million people in 2010 from 10.3 million in
1960, changing 119 percent during the last 50 years. Australia has 0.33 percent of the world´s total
population which means that one person in every 307 people on the planet is a resident of Australia.
The following chart shows the growth of Australia’s population from 2002-2011.
Australia Gross Domestic Product (GDP)

Australia GDP is worth 925 billion dollars or 1.49% of the world economy, according to the World
Bank. Historically, from 1965 until 2009, Australia's average Gross Domestic Product was 287.02
billion dollars reaching an historical high of 1039.42 billion dollars in December of 2008 and a record
low of 25.44 billion dollars in December of 1965. Australia's economy is dominated by its services
sector, yet its economic success is based on abundance of agricultural and mineral resources.
Australia's comparative advantage in the export of primary products is a reflection of the natural
wealth of the Australian continent and its small domestic market. The country is a major regional
financial center and a vital component of the global financial system. The following chart indicates the
Australia’s GDP from 1998-2010.
Australian Unemployment Rate

The unemployment rate in Australia was last reported at 5.2 percent in January of 2012. From 1978
until 2010, Australia's Unemployment Rate averaged 7.11 percent reaching an historical high of 10.90
percent in December of 1992 and a record low of 4.00 percent in February of 2008.
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Australia Exports
Exporting activity has long been a significant element in the Australian economy. Exporting activities
are considered to be critical to the wellbeing of the Australian national economy. Foreign markets for
Australian goods and services provide opportunities to increase national turnover, achieve economies
of scale, diversify production and contribute to growth and employment.
Rich in natural resources, Australia is a major exporter of agricultural products, particularly wheat and
wool, minerals such as iron-ore and gold, and energy in the forms of liquified natural gas and coal.
Although agriculture and natural resources constitute only 3% and 5% of GDP, respectively, they
contribute substantially to export performance. Australia's largest export markets are China, Japan,
European Union, South Korea, India and the USA.
As well as quite significant changes over the years in the goods and services that Australia exports, the
destinations to which it export have also been changing. During the 1930s, Australia's export trade was
dominated by the traditional trading partners from Europe, especially the United Kingdom, France and
Germany. These countries took almost 60% of Australian exports. The importance of these countries
has declined since then, and by 1996-97 they accounted for only 7% of Australia's total exports of
goods and services. Countries in the Asia-Pacific region, on the other hand, had been relatively less
important trading partners for Australia in the 1930s. For example, the United States took less than 4%
of Australia's exports in the 1930s, while Japan took about 10%. By 1996-97, Japan was taking $19b
(18%) of Australia's exports, and is Australia's largest market for both its goods and its services
exports. In 2009, China became Australia's largest export market, surpassing Japan. China has
overtaken the United States to become Australia’s largest services export market in 2009-10. As shown
in the following chart the total export of Australia increased during the past decade, which it shows the
potential of Australia as well as the approach of the government to improve export.
Australia's comparative advantage in the export of primary products is a reflection of the natural
wealth of the Australian continent and its small domestic market. Its vast landmass along with a
relatively small population has naturally led to Australia having strong comparative advantage in
agricultural commodities, particularly in extensive livestock and crop production such as beef, sheep,
wheat and sugar. The level of competition in the domestic Australian market is also an important
element in stimulating an improved productivity performance. Openness and engagement with the
global economy has delivered stronger economic growth for Australia than would have been possible
under more restrictive policies and is essential to long term productivity growth.
Australia also has a strong comparative advantage in the extraction and refining of minerals and ores.
The mining sector has evolved to the point where it is highly internationally competitive and is the
largest export sector in the economy. Australia has a comparative advantage in production of mineral
commodities compared to most other countries. This stems from its rich and diverse mineral
endowment, high quality regional scale geoscience information which lowers the risks of exploration,
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advanced exploration, mining and processing technologies, a skilled work force, generally benign
physical conditions and low population density. In recent decades, improvements in mining techniques
(including large scale mining equipment and automation) have reduced mining costs and allowed
economic extraction of deposits, so it caused to export the products with lower price and higher quality
than other countries. Australia’s mineral exports also grew by 55 percent to US$139 billion in 2010
and reached US$180 billion in 2011.
In addition to the sources and technology the other advantage of Australia in export competes is credit
policy which, as a strategy seems to be well established among Australian exporting firms, supporting
the view that the development of credit policies is contingent on country of export destination. Also in
export of important mineral compound like uranium, and with less reason for inhibition on security and
safety grounds, Australia could materially affect international confidence in electrification of transport
by facilitating the expansion of investment and exports in rare earths. Regarding to the Australia’s
export policy the key tenets which government follows are support for open trade and the successful
culmination of the Doha Round of multilateral trade negotiations, particularly for agriculture and
services.
Analysis Export Challenges

The big challenges confront the Australian economy among them; the reality of ongoing economic
change and competition, the ageing of Australian population, climate change, and the continued
projected expansion of China and India. The Australian must be ready, and must devise ways to grasp
the opportunities presented in a way that reinforces Australian national values of opportunity and
fairness.
The emerging themes identified through qualitative analysis indicated that domestic structural
elements could hinder the export operations of Australian firms. Bureaucracy and transportation costs
were found to be major export barriers. Cultural understanding must also be addressed to improve both
product appeal and business relationships in foreign markets. The firm activity factors identified as
important to export operations are consistent with prior research and include market research, effective
overseas agents, and financial capital.
In the other hand Australia must improve its infrastructures in order to redress the bottlenecks that have
been restricting exports for a long time, so as to allow it to better integrate in global trade.
Conclusion
Over the past decade or so, Australia's exports of goods and services have been growing strongly, Also
the export destination of Australia recently focused on Asia especially china. The powerful points of
Australia is agriculture and mineral sources which in some cases Australia is the biggest producer in
the world, also agricultural and mining sectors account for the bulk of Australia's exports.
Improving Australia’s international competitiveness will be critical to Australian capacity to succeed in
international markets and to attract foreign investment.
In the face of Australia’s challenges the Australian government must embark on a renewed program of
economic reform. The program needs to build on the success of previous reforms by looking to
eliminate the remaining impediments to international competitiveness of the Australian export sector
and thereby secure further advances in prosperity for all Australians. Also Australia must raise its
productivity more to improve its export growth as it struggles with a record trade deficit.
Finally, Australia’s integration in the global economy is beneficial in terms of securing access to
export markets as well as in promoting a more competitive and dynamic economy with the capacity to
respond to future economic challenges.

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Economics Analysis MRC 1513 /05 Manizheh Adli MATRIX NO.: MR111188

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Economics Analysis

MRC 1513 /05

Australia Gross Domestic Product (GDP)

Australian Unemployment Rate

Analysis Export Challenges

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