Australian Dependence on Asian Economic Growth
Australians are influenced by Asia in their daily life due to the country’s geographical position. Australia is situated in the Asia-Pacific region. A large portion of Australian population come from Indonesia, Thailand, Singapore, Malaysia, China, Japan, and the rest of South-East Asia. Thus, Australian dependence on Asian economic growth is evident. Asia has become rather important for Australian growth. Due to the globalization of trade and foreign investments mainly from the Asian countries, Australia has a good opportunity to expand its market meeting fewer obstacles than before.
Economic integration between Australia and Asia is beneficial for both Australian and Asian markets. Nevertheless, Australia has become more dependent upon Asian economic growth. Nowadays, Australia has demonstrated that Asia is a place that can guarantee its economic prosperity. Therefore, economic integration with Asian markets diminishes trade barriers expanding markets and trade and lowering prices. Asian products include food and agricultural supply, farm and factory equipment, raw materials; processed goods and technology have become common in Australian daily life. For example, China is Australia’s largest market for manufacturing exports. Australian business tends to integrate with networks and supply chains in Asia. Australia has commercial relations with Japan. Thus, Australia extends export and import relations with Japan. Japan is a large investor of wine brands, minerals, energy, food, and other products. Many Asian investors are now well established owners.
The research asserts that Australia is dependent on Asian consumer products. Knight and Heazle (2011) noted that over 25 percent of Australian products turn on Asia’s influence on Australian economy. The productivity growth leads to increasing returns. Many experts consider that Australian growth that has become closely tied to Asia’s relation to the national economy is the shift of resources across sectors. Knight and Heazle (2011) assumed that Australia has a better ability than other regions in the world to increase commodity production by shifting capital and labor to the commodity sector. Australia’s ability to shift resources across sectors increases the benefits from emerging Asian economic growth. Moreover, in addition to increasing capital and labor in the commodity sector, resources should be shifted from tradable to non-tradable manufactured goods to benefit fully from the improved terms of trade.
The growing dependence on emerging Asian growth will present challenges for longer-term projections of Australia’s potential growth rate. Unlike other countries that are less open or less integrated with emerging Asia, Australian potential growth will have an important exogenous component. Basing projections on historical trends could lead to large errors in any direction depending on the economic performance of emerging Asia. Becoming more dependent on Asian economic growth also means that Australia is likely to become exposed to larger exogenous shocks (Knight and Heazle, 2011). Australia’s trade dependency on Asia also underpins the potential danger posed by economic crises and political instability in the region. However, many Australians highly rely on Asian consumer products. Most of them cannot imagine their life without these goods. However, others consider that it would be more effective to develop their own production. In conclusion, it should be noted that Australia benefits from the strong relationships with Asia that have grown up considerably during the last few decades.
The research asserts that Australia would lack many goods without Asian consumer products. The fact that Australian daily life is influenced by Asian market is a positive thing for Australia. As a result, Asia has become crucial for Australian economic growth during the last decades. Australia’s economic prosperity depends to large extent on trade with East and Southeast Asia, particularly China, that has become Australia’s largest trading partner.