Furthermore, the increased exports may result in a surplus of exports over imports, resulting in an increased net foreign wealth. Australia's currency would also appreciate due to increased purchases of Japan's federal bank in regards to Australian dollar based assets.
This resulted in the rightward shift of aggregate demand from AD1 to AD2, since exports are a part of the factors that affect aggregate demand. The average price level increases from P1 to P2, as real output also increases from Y1 to Y2. In Figure 1, the Bank of Japan’s quantitative monetary easing and its effect on the short run is shown. Yet, cautions are spreading as some experts say that an extravagant drop in the price of yen is going to hurt the Japanese economy more than it will help. In the past, when the economy was majorly dependent on its exports, a cheap yen would have made Japanese goods and services very competitive, resulting in the increase in e... ... middle of paper ... ...emand.
However radical cuts to government expenditure and the abolishment of full employment as an objective contrasts the Keynesian theory. Instead, the Labour government decided to focus on promoting the private sector to reduce costs, wages and prices to bring the economy back to equilibrium. They also employed this strategy to obtain revenue for the government. However, because the revenue that was acquired wasn’t distributed throughout the Australian economy, the beneficial qualities of privatising markets, such as airlines and banks, were minimal to assist with inflation. Privatisation offers increased efficiency and effectiveness of markets, corporations and businesses.
Through minimal competition, the conduct of the industry has slightly diminished with an increase in fees, and inquiries into possible collusion. The structure, performance and conduct paradigm of the Australian banking industry threatens the competition evident in the market. Within an industry that has a highly concentrated structure, the conduct of the involved parties tends to initiate anti-competitive behaviours, which improves the firm performance. Competition can be measured within an industry by using various methods, the first is the concentration ratio which is the percentage of the market share owned by the biggest companies within an industry (Young, P 2014). The second measurement tool is the Herfindahl-Hirschman Index (HHI), which calculates the percentage of market shares held by all firms within an industry by square rooting the market share (Bikker, J & Haaf, K 2002).
• New rules and restrictions – Multilateral agreements on trade, services and intellectual property rights, backed by strong enforcement mechanisms, reduce the scope for national governments to develop their own economic policies. What is Globalisation? Globalisation is the growing economic interdependence among nations as reflected in increasing actual movement across nations of: • Trade • Inv... ... middle of paper ... ...ly be quite effective at pushing the Australian dollar down by selling the currency, it is very limited in pushing it up. The RBA only has its limited foreign reserves to buy the Australian dollar. The value of Australia's foreign reserves fell from $22billion US in December 1999 to $16billion US in September 2000.
Tariffs, Quotas and subsidies are all forms of reduction that have been reduced on these goods. The advances that have been made in technology and transport have impacted greatly on the globalisation of Australian businesses. Several forms of unemployment occur due to globalisation and ultimately a loss of Australian industries. Consequences are not always negative however; Australian citizens currently have access to a larger variety of goods than ever before. Since the 1950’s protection on industries such as textiles, shoes, clothing and cars was quite high in Australia.
Similarly, the pollution reduction law also has negative influences. Because of it, businesses that produce pollution are required to pay emission credits, in order to lawfully deliver a specific measure of pollution, also causing a profit loss for firms. Furthermore, Laws on Interest and the minimum wages policies are changing too. In Australia the minimum wage has increased to 2.4% which is $17.70 per hour and in addition interest rates are also raising. Consequently, if government laws affecting organisations continues to deteriorate the success rate of businesses will
International Business journal assignment Globalization Relates to the increased international competitiveness as a direct consequence of the size if the market increasing all the time. Australian business must be ale to compete in a world scale. It involves corporations planning their production processes so that each specialized subdivision of the whole process is carried out in a country where conditions are particularly favourable for that type of work. This has all lead to the lowering the tariffs imposed on countries to protect their local markets. All theses beliefs the consumers greatly because now they have the chose to purchase more products made in foreign countries cheaper.
While Japan remains to be their largest trading partner, S Korea replaced US to take the second place. But at the same time, Australia's share of Asia's total imports is declining, down from 3% in 1985 to 2% in 95. The main reason is that Asian countries are trading more among themselves, and importing more hi-er value-added products, rather than the common Australian exported commodities. However, steering towards value-adding industries is not easy. Besides infrastructure and labor reform, Australian manufacturers will become head on with some of Asia's most efficient operations.
Structural Change and Australian Economy Structural change is the change in the pattern of production in an economy as certain products, processes of production and industries disappear and are replaced by others. The past century has seen the relative decline of agricultural and manufacturing industries, and the rise of services and new technology sectors. Structural change can be caused by a wide range of economic influences including changes in the pattern of consumer demand and technological change. The speed of structural change depends on the ability of an economy or industry to adjust quickly. People's natural resistance to change and government regulation often impedes the process of structural adjustment.