Australian Economic Development

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Introduction to Economic Development

It basically means the policy and the procedures by which any nation improves its entire nation as whole. With the coming years the economic development of any country has grown to a great extent. The economic development is incomplete without the Economic System. Economic System is basically a system of production, distribution and consumption of the goods and services produced in the entire nation. The economic systems cannot function without the relationship between the individuals and the institutions. There are mainly three types of economy present in the worlds which may be defined as the Capitalism Economy, in this type of the economy everything is controlled by the private ownership and nothing is in control of the people from the point of production, distribution and the distribution of the goods and the services. This system is based on the demand and the supply function. The major drawback of this system is the existence of inequality among the society. The next system is the Socialism Economy which includes that the entire systems are under the hands of society from the beginning to the end. The last type is that of the Mixed Economy which is the combination of the capitalism and the socialistic economy. Here the control lays both in the hands of the private entities and the society as well as thus it manages to overcome the drawbacks of both the economic system

The economy of Australia has been a mixed economy and has been the largest economy in the world. The main sectors in the economy may be the Agriculture sector, the manufacturing sector and the service sector but when the economy of Australia is seen, we can infer that the economy has been dominated by the service sector. For any economy there exist many opportunities and challenges which one has to overcome to become a leader over the globe. One wrong step can turn the entire nation’s economy to decline. Hence there comes the importance of the balancing the position as well keeping an eye on the challenges. As the gain of one country makes the other country to lose its position. Hence this means one country at stake for the benefit of other country. Australia being the world’s largest island comprised of the 2.9 million square miles and six states as well with among the one of the wealthiest country as well.

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The economic development of Australia marked its beginning from the year 1980 with the commencement of the economic liberalization which means that the government regulations and restrictions were reduced and the active participation was introduced by the private entities. From the year 1990 this marked the beginning of the recession which resulted in the collapse of the stock market which not only impacted the nation’s economy but created a huge mark on the global economy as well. This was in turning the financial crisis which was met by the government the major organizations began to mark their presence by helping or aiding the nation with the funds so as to stabilized the economy as the whole.

Another impact is that of the mining industry which increase the economic growth in the post war period. This lead to the expansion and the modernization of the transport, communication and urban infrastructure. The development in the export sector has risen to the Gross Domestic Product (GDP) level of the nation. As we know the services sectors has contributed a lot in the development of the economy. As they are the supporting and auxiliary activities which not only provides the employment opportunities but also is a good sign from the investment purposes. The service sector of Australia has contributed around 53% of the economy and the employment opportunities provided by them have increases to 59%.

There were many Political Implications that impacted the economy. Those factors were the political factors which marked the highest political stability among the other nations. The Australian Constitution is a federal system of government which was distributed equally and also it consisted the six states and two territories. It consists of a federation and a parliamentary democracy. There were two houses or parliament and both houses decide on the same thing in same sense. Hence above are the Political Implications which in turn affects the economy as a whole.

Next is the Economic Implication which implies the economic inequality which means the access to the income and wealth as we know the main source of income arises from the wages and the salaries. And the main element which reduced the incomes is the taxes which one pays for the income they earned over the year. It not necessary that a rich country always follows the equality aspect and there are chances that even a poor country may be relatively equal in terms of the other country. The main factor of the inequality is the rising number of poor people residing in the country as they cannot perform as much as the other people can perform. There exists various economic issues such as regarding the health and the safety of the people as this in turn affects the productive levels of the nation.

The education facilities creates a difference among the developed and less developed people of the nation as that has a huge role in shaping the future of the people who are the assets for the nations that reduces the performance of the people. And the overall implications comes is over the economy. The economic growth of any nation marks with the beginning of the equality which will in turn lead to the stable economy. As economic instability comes when the people with money does not spends the money and rather thinks of saving the money for the future use which in turn disturbs the demand in the market and further leads to the slower down of the economy. Hence inequality has a huge impact on the overall economy.

The Public Policy also has the huge implication on the Australian economy. Public policy basically means the policy or rules which the government uses it to control the general public. To solve the public issues and conflicts the framework of public policy is required. There is involvement of lot many people in framing the public policy such as individuals, government, cooperation and some non profit organizations. It plays a major role in developing the economy by providing the equality in their profit sharing and increasing the productivity as well. As the slower increase in the productivity leads to the shortfall in the Gross Domestic Product (GDP) and also the innovation. Public policy also includes threw welfare of the society as well and include the development projects like the construction the roads, bridges, sanitation facilities infrastructure for public health etc. This in turn increases the economic condition of the Australia.

The Australian sector is mainly dominated by the service sector which in turn occupies the 68% of the total share in the gross domestic product. The rise in the Australian economic growth is mainly because of the agriculture and the mining sector and due to this the economy has become stable for the time being. The tax rates in Australia have the highest tax limit of 45% and a flat rate of 30% which is really high tan most of the nations in the world. The regulatory framework of Australia is considered to be one of the most transparent and the efficient in the world.

Due to such a rise in the economy the exports and imports have also been impacted. On totaling the exports and the imports the total comes out to be 41 percent of the Gross Domestic Product. And due to this even the foreign firms try to compete and gain the market share by entering the market with some innovative projects. The main things which impact the economy is the market capitalization which is then denoted by the stock exchanges and as we know the Australian Securities Exchange in Sydney in the largest stock exchange in Australia and which is ranked 14th among the entire world.

Another implication for the fall in the economy is the unemployment prevailing in the nation. This has negative impact on the economy as compared to the other nations in the world. Even if the good employment opportunities exist in the market of Australia but the lack of knowledge among the people makes it difficult for the people to sustain in the market and hence they are thorn out of it because of lack of education and knowledge among them. This has stopped the wages rise as the people are uneducated and thus not able to earn their livelihood to sustain themselves and their family. This has kept the levels of consumption very low as the disposable income is low.

Another factor is the inflation in the economy as due to this the food prices in the country would rise and the poor people will not be able to afford the food at such high prices hence this will lead to the misery as the demand for the food remains irrespective of the inflation and even the rich people are ready to pay the higher prices for the same food item they used to pay before. Due to this inflation the food retailers may face the cost pressures and also the competition from all over the globe. Hence inflation to some extent is good for the economy as it increases the flow of money in the economy and thus improves the Gross Domestic Product.

The currency of Australia also has an impact over the economy and this can be measured by the appreciation and the depreciation of the currency in comparison with the US dollar. As off course the currency is the sole criteria for deciding the growth of the nation. As the currency is depreciating the exports are getting reduces and this is increasing the exports and due to this the trades are falling which will create a pressure on the government revenues. But when talking about the current scenario, the economy of Australia shows the rise in the trades. The major component of the trade includes the iron ore, Coking ore and steel etc. as the demand from China is increasing continuously.

Another factor is the geographic location of the country on the map as if the nation is at distance with the world markets then to grow in such increases the transportation cost and this in turn reduces the reach to that country. If the distance is lesser than the productivity can be increases and the raw materials, labor and other factors can reach the destination and further the finished products can be served as well but if this is not proper than it may result in the decrease of the trade hence this reduction in the distance can have various benefits as lower labor and material cost, many options of suppliers availability of the competitors which in turn improves the quality of the products in the market and reduction in the monopoly power in the country.

There are budget deficit and the surplus which occurs with the difference between the revenues and the expenditure of the economy. Deficit in the budget means the adverse balances of the differences between the revenues and expenditures. The main source of revenues is from the taxes which the government collects and that of the expenditures is the payment done in form of the interest and also in providing the facilities such as education, healthcare, sanitation, defense etc. whereas surplus in the budget means the revenues of the government is more than the expenditures done by the government.

Before the trade was limited to the Europe and North America to that Japan and some East Indian Nations. But with the rising population the Gross Domestic Product has reduced due to this which is negative aspect for the growth of the economy. There were many mergers and acquisitions took place from the year 1991 and 2013 which were around thirty six thousand and the worth of US $2040 billion. The takeover which marked the milestone in the history of the country was that of the Coles Group by Wesfarmers, for the worth of A$ 22 billion.

The financial year 2010 and 2011 marked the beginning of the tourism industry which has also contributed to the Australia’s Gross Domestic Product for about 2.5% and the value was $35 billion for the national economy as domestic tourism has been a significant part of the Australia’s tourism sector. This sector also resulted into many employment opportunities for the people whether the part time work or take it as the full time work which in turn contributed a lot in the earnings in the year 2010 and 2011.

The ultimate aim of any nation is to improve the quality of living of the people residing in that nation which was seen by the growth in the Gross Domestic product. There are many factors influencing the GDP of any country which comprises of the economic geography which refers to the location of the products the distribution system if the nation on the economic activities which involves the production, distribution and the consumption of the goods and services. This happens with the increase in the human capital over the country. There are many aspects which have resulted in the growth of the economy and factor such as innovating culture the rise in the research and development over the years which have resulted in the shifting of the interest of many people towards that country as better growth opportunities are found there.

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Australia being the most vibrant economy as it has everything which is needed for the success the natural resources are in abundance as compared to the countries. Even after facing the recession for as long as twenty five years and now the economy of Australia has depicted a huge global expansion because now the entire system of Australia has developed a lot. With the development of the efficient legal systems there is less number of cases prevailing in the nation which has increased the power of the legislative authorities. Now due to the availability of the workforce in Australia there is more employment opportunities available in the country and even the people from other countries think of moving to that country as there people find better working opportunities in Australia.

Not only the working environment but also the investment avenues in Australia have become very attractive over the course of time and now it has become everyone’s choice when it comes to investment in the country because of the availability of the great amount of resources available in the country which is a great aid for any sort of investment. With the growing economy of Australia the competition in the market has also increased a lot very competitive as this in turn not only increases the choices for the consumers but also provide growth opportunities for the industries as to sustain in the market the industries has to come up with more innovative ideas which attracts the consumer towards them than form the competitors. As the economy of Australia has been increasing this has undoubtedly has risen to the increase in the government debt but the same is considerably lower than most of the other developed countries.

References

  • McCombie, J. and Thirlwall, A.P., 2016. Economic growth and the balance-of-payments constraint. Springer.
  • Baker, D., Merkert, R. and Kamruzzaman, M., 2015. Regional aviation and economic growth: cointegration and causality analysis in Australia. Journal of Transport Geography. 43. pp.140-150.
  • Herndon, T., Ash, M. and Pollin, R., 2014. Does high public debt consistently stifle economic growth? A critique of Reinhart and Rogoff. Cambridge journal of economics. 38(2). pp.257-279.
  • King, R., 2015. Return migration and regional economic development: an overview. Return migration and regional economic problems, pp.1-29.
  • Ville, S. and Wicken, O., 2013. The dynamics of resource-based economic development: evidence from Australia and Norway. Industrial and Corporate Change. 22(5). pp.1341-1371.
  • Lee, J.W. and Brahmasrene, T., 2013. Investigating the influence of tourism on economic growth and carbon emissions: Evidence from panel analysis of the European Union. Tourism Management. 38. pp.69-76.
 
 
 
 
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