Evaluate_the_Impacts_of_Globalisation

Analyze the impacts of globalization on Australia’s trade and financial flows - Globalisation: o Investment TNCs o Technology o Business cycle ABS – statistics Department of Foreign Affairs and Trade Since the 1970s, globalization has been a world-wide phenomenon, changing the structures of many of the developed economies at present. Australia has been one of these countries that has been affected by globalization and therefore has impacted on Australia through investment in TNCs, an advancement and increase in technology and a more global business cycle. Imports and exports have also been gradually changing since the deregulation of our markets and has been changing the nature of the composition, value and direction of financial flows through Australia. This change has been allowed due to globalization and its components. Globalisation has developed international trade inflow and outflows Australia through investment as TNCs have become Australia’s major investment and has allowed Australia to become a player in the market. Due to the deregulation of the market, Australia has attracted overseas investment into Australia whilst free trade policies have allowed Australia to extend overseas. Along with this, the accelerating nature of technology has occurred due to the innovation of present goods which has allowed the expansion and improvement off current technology goods. Another component of technology that has expanded the global economy is the use of internet as businesses, individuals and nations have been linked to one international economy. The international business cycle has been linked as well with the economic growth of the world determining this cycle. With globalization, the levels of economic growth in various countries are connected to create a global cycle of growth. The composition of Australia’s grade has been changing gradually after globalization, especially with the less competitiveness in the manufacturing industry along with a shift from agriculture to mineral exports. Due to globalization, Australia has still heavily focused on primary industries and rely on other countries for goods such as manufactured goods, medicine and technology equipment. This reliance is due to the fact that globalization has allowed Australia to import at an on-going cheaper rate which is more efficient than actually producing the goods here in Australia. It also relates to the fact that globalization has allowed the reduction in tariffs and local content rules. ETMs still base around 60% of our total imports whilst services have been stable at 20% since 2004 to 2010. Exports have been based upon our primary products now as it now exceeds 50% of the composition of exports. In this, over 36.4 billion is traded in coal whilst 7.8 billion is traded in natural gas since 2010 which have actually decreased due to the GFC. This is due to globalization as our deregulation of the markets have meant bilateral agreements or trading blocs with our neighbouring countries like China which has allowed a freer trade within this region and thus increased our exports of minerals and decreased products such as agriculture. Australia’s direction of trade has shifted from trading mainly in European countries to now countries in the Pacific like China and America. This change in direction has been lead by several factors, one including globalization. Since the joining of the EU, Australia’s trading with Britain has been limited since the EU restricted countries that were in the organization to trade freely with countries outside the border. This meant Australia needed to find new trading partners and one of the first being Japan, which Australia sought after due to its rapid expansion in the 1960s. This then continued to trading with other neighbouring countries such as China and America, and with globalization allowed a more flexible entry into the markets. This eventually led to free trade agreements which has allows both countries to trade freely and equally with great benefits. China has been Australia’s largest individual two-way goods and services, accounting for 17.6 % of total trade (90.3billion dollars) whilst Japan has accounted for 11.5 % (58.9 billion dollars) since 2009 and 2010. Australia’s trade inflow and outflow has substantially increased since globalization in the 1970s. With the opening of markets overseas, reduction in tariffs and barriers and deregulation of many of the world’s developed economies, has allowed more trade within countries. Foreign investment has increased in great amounts from around 47 million in the 1980s to over 1.3 million in 2006. Australia’s investment overseas has also increased from 13 million to around 760 million, both massive increases due to the changing pattern of Australia’s financial flows. Prior to deregulation of the financial sector, financial flows that came into Australia were mainly in the form of direct investment but after, there has been a steady increase in portfolio investment, overtaking direct foreign investment in the 1990s. This situation occurred due to the removal of restrictions of financial flow and also the attraction of foreign investment into Australia.