It is my great pleasure to address you on the occasion ofthe launch of the Monash Institute for the Study of Global Movements. Monash University has responded creatively and very successfully to the opportunities and challenges of globalisation. It has adopted a global strategy, establishing campuses and research links in Europe, Asia and Africa. Today, I want to highlight the benefits globalisation brings and how the Government is ensuring Australians and our regional neighbours can capture these gains.
Thought it was an interesting topic as theories are still very relevant and so are most of the examples. I have removed the bibliography and related charts for this blog.
Globalization is a process by which national economies become more integrated and interdependent with one another. It is shaping the world around us in ways and at a rate that was unimaginable just two decades back.
To many it may seem like a new phenomenon, but in reality it is a process which goes back to the roots of human civilization. Along the way it has created number of challenges and opportunities for the different countries and industries.
Medina states that Globalization is a controversial issue which for some may mean development and affluence, while for the others it may mean destruction, misuse and end to individual cultures Medina, n. Globalization has been an on going process for many centuries now.
Adam Smith, in his book went against the mercantilist theory and advocated for free trade where by countries would produce what they can produce cheaply Carbaugh, And after that several economists have worked to improve on his theory.
Ultimately, world also started to embrace the globalization process in a proper form. This treaty paved the way for globalization and ultimately led to the formation of the World Trade Organization WTO in the s.
Through WTO, globalization is spreading around the world. It was suffering from a declining economy, high unemployment rate and joblessness prior to opening its economy.
We need to understand how globalization is taking shape in Australia and how they are impacting the 4 major business sectors i. Manufacturing, Service, Agriculture, Mining of Australia. Based on the mercantilist theory, they believed in selling more and buying less from other countries Hill, and there were restriction on foreign investment as well.
As a result of its vast gold reserves, other abundant natural resources and due to its mercantilist practices at the turn on 20th century it was one of the richest nations in the world Arnoldy, But with any mercantilist practices, it gradually gave raise to unemployment and high inflation and as result of which, it slowly lost its competitive advantage Porter, Since that time, Australia has opened up its economy to foreign investment and privatized significantly.
Globalization has given access to foreign firms and investors to do business here more freely which has pushed out the inefficiencies in the economies and made the market more competitive and innovative which ultimately has led to improvements in the living standards.
End of protectionism has made Australia mostly a winner of the globalization process Arnoldy, Shift in the Manufacturing base: As the economy develops further, highly labor intensive jobs such as manufacturing of common items shifts to low-wage countries thanks to globalization.
When the labor cost form a major percentage of whole manufacturing of a product, companies relocate manufacturing to low-wage nations Jones, Most consumer goods are highly labor intensive and requires low technical skills. Australian companies which were previously doing basic manufacturing have now outsourced their production of goods either through foreign direct investment or through subcontracting to low-wage countries in order to retain their competitive advantage.
It is because, the major factor of production for most consumer items is cheap labor which is scarce in Australia, so it would import the products made from locally scarce factor Heckscher-Ohlin.
Based on Porters competitive advantage theory and Heckscher-Ohlin theory of factor endowment, Australia is increasingly importing these labor intensive products like textiles, footwear, paper etc.
While Australia is losing out on the low-tech manufacturing, its high-tech manufacturing industries and jobs have been growing. Comparative advantage theory states that trade compel a nation to specialize in the production of the good of its comparative advantage and import the goods of its comparative disadvantage Carbaugh, As an knowledge based economy, Australian firms designing and producing specialized and high-tech products are getting most benefited in the manufacturing sector with globalization.
Decentralized manufacturing and wide availability of infrastructure as mentioned by MacCormack Et Al has made General Motors-Holden to use Australia as a center of excellence for the design and production of Rear Wheel Drive RWD cars in its Global alignment of design and production.
Furthermore, there are some costs that cannot be measured directly which should also be considered in location decisions if manufacturers decide to service global markets Canel and Das.An understanding of the pressure that “globalisation ” brings to bear on the Australian Economy is fundamental to an understanding of Industrial Relations.
Australia’s economy is very much dependent on the global economy. Nov 01, · But, how globalization impact’s a business organization varies from sector to sector as was depicted in this article.
As a result, based on a business’s approach to the market and level of dealings with foreign countries, the impact varies. This report finds globalisation is producing major gains for Australia and helping reduce world poverty.
For example, it highlights a recent World Bank study of 72 developing countries that finds, in the s, globalising economies, or ones that increased their ratio of .
Nov 10, · In effect, Australia lost many of its export markets in the process, this resulted in a lower productive capacity of Australia which in effect caused the stagnation of growth for Australia's economy.
Effect on unemployment: Since , there has been a clear correlation between the reduction of tariffs and the unemployment rate.
Furthermore, the impact globalisation has on the Australian environment is largely negative. Conclusion In summary, the political, social, economic and environmental effects of globalisation on Australia are primarily positive.
The Impact of Globalisation on Australia’s Trade Australia’s trade policies, since the middle of the ’s, have been geared to opening domestic industries to the global market (Graph 1).
A prime focus of structural reform has been to ‘subject the private sector in Australia to more competition from both domestic and international.