Asia- Pacific countries consist of a large number of countries of which Australia is amongst them. In this region, there have been diverse developments that have taken place over the past decades. This has impacted the rate of economic growth of the member countries. Economic growth refers to the positive change in the process of production of diverse products and services of a given country within a given duration of time. The discussion of this paper aims at illustrating the impact of various developments in this region that have impact Australian economic growth. Various factors contribute to economic growth for instance technological development and other external forces. In recent past Australia has been counted amongst the countries with high economic growth globally.
Various factors within the Asian- Pacific region have resulted in economic growth in Australia. These factors include the following.
Trade-in Asia- Pacific region has greatly contributed to economic growth in Australia. Amongst the developments in this region that have resulted in increased trade is the formation of the Preferential Trade agreements. These agreements are related. This has made it possible for international trade to thrive efficiently in this region. The effect is the creation of a trade web amongst the member countries. These agreements are based on regional and bilateral bases (Farid p. 23).
Through these agreements, international trade has been greatly enhanced due to the reduction of trade barriers. Amongst the trade barriers that have been greatly minimized amongst the members of Asia Pacific countries is the trade tariffs. This has made Australia greatly involve itself with international trade about the export and import market amongst the member countries. This has increased the market scale for Australian products. This resulted in increased foreign earnings from the exports. For instance; with regards to bilateral trade, China is one of the largest markets for Australian products. This is because, of all the Australian exports, China dominates as the major export of the Australian market. For instance, due to the increased demand for wool in China, Australia has increased its wool exports to this market at an approximate yearly rate of 10%. During the financial year 2004 to 2005, the total wool exports to this market were worth $1,875 million. This represents a 10% rate of the increment (Australian wool incorporation para.7).
Trade-in this region has also been promoted by the formation of the Asia-Pacific Economic Corporation (APEC) in 1989. Through this body, there has been increased economic integration within the region. This organization has resulted in the adoption of free trade and increasing investment. In line with this, the Australian government has adopted the free market policy in developing its economic system. This enables the member countries to trade within the Australian market. Another strategy that APEC has developed is aimed at reducing the total transaction cost of products and services that move across the borders of the member countries by 5%.
In the recent past, there has been increased advancement concerning investment in the Asia- Pacific region. This is about the securities and the real estate market. In the recent past, the Asian Pacific region has been characterized by an increase in the rate of population and economic growth. This has made this region to be an attractive investment destination in the property market. For instance; according to Fidelity International, there has been the establishment of a property fund relating to the Asian Pacific countries. This fund is aimed at ensuring that member countries invest in the property market across the bonders. This is because the property market in this region is at different phases of growth. Some of the markets have been fully developed while others have increased growth potential. Australia is amongst the countries that present increased opportunities concerning the property market since the market is well developed. The Australian property market has developed a superior real estate security that has a higher potential for growth and a decreased volatility (Fidelity international p.1-2).
Through the free trade agreement by the APEC, there has been increased foreign direct investment in different sectors of the Australian economy. This has increased the growth rate of these sectors. For instance; the mining industry is amongst the sector that has attracted a large number of foreign investors. Australia has expansive mineral resources. The domestic investors have not been able to fully exploit these resources. Through foreign direct investment, more mining plants have been established in the country. This has made it possible for Australia to be the leader in the export market of different minerals such as diamond, lead, bauxite, and rutile.
The increased foreign direct investment of the pacific countries in Australia is also experienced in other sectors of the economy such as wholesale, finance, insurance, manufacturing, and the retail sector. Apart from the increased export revenue, foreign direct investment has resulted in the increased creation of employment. This results in increased revenue collection by the Australian government about the withholding tax of the foreign firm and the personal income tax (Farid, 2007).
About investment, there has been an increased preference for financial securities as an investment vehicle. This has resulted in the development of policy amongst the countries that allow foreign investors to invest in company securities of the member countries. This has resulted in increased growth amongst the listed companies due to the ease with which they can access finance to finance their long-term projects. This has made the Australian securities market to become a significant contributor to its economic growth concerning the increased supply of finances.
In the recent past, there has been rampant development concerning research and development in the Asia- Pacific region. This has resulted in the emergence of superior technology that has been adopted by the member countries in various sectors of the economy. For instance; the mining industry in Australia has adopted superior technology for the exploration of minerals. Because Australian minerals are remote, advanced technology is required. These Asia- Pacific countries offer diverse technologies that enable Australia to explore the minerals more cost-effectively. Amongst such technologies include the special software that can be able to effectively estimate the resource requirements
Development in technology has also influenced the Australian tourism industry. Because Australia is geographically isolated, the development of air travel technology such as the Airbus 340, has enabled more tourists to access Australia. This is because the airbus can be able to travel for long distances and are safer. This has resulted in the tourism industry contributing an amount of $ 37.6 billion which accounts for 3.9% of the countries gross domestic product during the financial year 2005 to 2006(Farid 2007).
Advancements in Information Communication Technology in this region have greatly contributed to economic growth in Australia. This is because these countries have integrated technology into various sectors of the economy. For instance; technology has been incorporated into the transportation industry through the development of ticketless travel. This is has resulted in increased efficiency of tourism travel within the region.
Amongst the services industry in Australia, tourism has had a significant contribution to the country’s economic growth. Over the last decade; there has been a change of trend about tourism. The increase in tourism in this region has been attributed to the increased economic growth of the member countries. This has increased the disposable income of the citizens. There is also a change of trend about leisure amongst the citizens of these countries. The governments of these countries have developed a policy aimed at easing travel restrictions amongst the member countries (Tasmania p.5).
Other strategies that have been adopted in these countries are the incorporation of a policy aimed at promoting tourism amongst the countries. The governments of these countries have continued to stress the importance of tourism in increasing its foreign earnings. Other developments in these countries include the liberalization of their air transport. Most people prefer the Asia- Pacific region as their tourism destination (Tasmania p. 9).
Increased growth of tourism in Australia has resulted in economic growth in two main ways. These include the direct and indirect means. The direct means involve the creation of employment within the Australian economy while the indirect contribution involves the foreign revenue that results from the direct expenditure by the tourists. Due to the increase in the number of tourists, there is an increase in demand for certain tourists’ products. This results in increased production by these firms to meet the demand resulting in the growth of these sectors.
Energy is a key determent of a countries economic growth. This is because it affects the rate of economic growth. Most of the Asia- Pacific countries do not have the energy of their own even though most of their industries such as mining and manufacturing are energy-intensive concerning oil. This makes them be net importers of crude oil. Over the past decades, crude oil has been characterized by soaring prices and a reduction in supply. This greatly affected the economic growth of countries in this region. To caution themselves from the risk of increased fuel shortage, these countries have devised various mechanisms of developing alternative energy sources. For instance, in the recent past, these countries have greatly researched biofuel production as an alternative source of energy. Through the production of bio-fuel, these countries have devised other methods of increasing energy efficiency. This is through a combination of the biofuel produced with the fossil fuels while there is a little modification of their production and manufacturing machinery.
Through the Asian Pacific Partnership (APP) which is an initiative that consists of the private and the public business organization of countries that include Australia, Japan, India, South Korea, and the US, they have developed a policy that is aimed at developing energy security within the region. Amongst the energy sources that they have projected investing in are biofuel, solar energy, and wind energy (Biofuel to answer energy crunch in Australia Para 6).
The Australian government has greatly invested in solar energy. Through this partnership, Australia has been able to tap its vast solar energy resources. This is because most of the Australian landmass receives a high amount of solar energy which is approximately1950 kilowatts hours for every kilometer squared within one year. Heavy investment by the Australian government in the solar energy sector has resulted in increased efficiency in the operation of the economy. This is because energy has become more reliable and cheap. The growth that has been witnessed in the Australian solar industry is enormous at a 30 % rate per year.
Other alternative sources of energy that have been supported by solar energy include photovoltaic, solar thermal, and solar hot water (‘Clean energy’ Para 7).
Human capital is one of the major determinants of the economic growth of a country. To effectively tap the various natural resources; there is a need for skilled human capital. In the Asia –Pacific countries, there is a heavy investment into the education system. This has resulted in the emergency of a strong labor market for human capital. The economic growth in Australia has also been supported by a strong human resource base. This is because the region has increased labor mobility. After all, these countries have free movement agreements. The effect of increased labor mobility has been experienced in different sectors of the economy such as the mining and the energy sector.
The mining sector forms one of the largest contributors to Australia’s economic growth. For the success of the mining industry, intense and skilled human resource is required. The education system of the region ensures that there is a skilled supply of human resources in the mining industry.
The energy sector in Australia is characterized by high skills, this enables the country to efficiently tap solar energy for use in its production and manufacturing sectors of the economy. (Clean energy Para 8).
The quality of human resources in Australia is also boosted by the increased free movement of people within the Asia Pacific region. This is because when people associate, there is sharing of ideas on how to improve the business. This results in the efficient performance of the private sector.
Australia has witnessed increased economic growth over the past five years. This has resulted from several factors that are associated with the development in the Asia Pacific countries. This has enabled Australia to reap from these developments since it is a member country. Amongst the development includes the formation of the Preferential Trade Agreement. This has enabled Australia to involve itself in international trade with the member country. This is due to the reduction in the cost of transaction in trade amongst the member countries such as the elimination of trade barriers in form of tariffs. The formation of the Asian Pacific incorporation has enabled Australia to boost its international trade.
Economic growth has also been boosted by the country’s free trade agreement with the member countries. This boosted the level of foreign direct investment into Australia resulting in increased government revenue in form of withholding tax and personal income. Technology has also boosted economic growth due to the formation of free travel agreements within the region. It has also resulted in increased accessibility of Australia through the development of air travel. This has contributed to boosting the Australian tourism industry. The tourism industry has contributed to economic growth both directly and indirectly. The adoption of energy security strategies by these countries has resulted in the development of new strategies aimed at increasing the energy supply. The Asian Pacific Partnership of which Australia is a member has supported a strategy aimed at higher energy security. Australia has incorporated this strategy through the development of alternative sources of energy such as solar, wind, and biofuel energy. The geographical location of Australia gives it an enormous resource of solar energy which it has been able to tap resulting in increased energy supply for the industries. To tap the different natural resources, the Asia- Pacific region has provided the needed human resource. This is due to the advanced education system resulting in advanced human capital. Human resource has also been boosted by the free movement within the region resulting into an exchange of business ideas.
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- Cherly, Pelliyn “Partnership countries endorse clean energy projects: Embassy of US.” Washington file staff writer: New York, 2009.
- Tasmania, Frecy, “Tourism contribution to the Australian economy, 2005-2007.” Swanzon Publishers: Australia, 2000.