Describe the main features of the global economy and examine the extent of interdependence between economies has affected the Australian economy.
The global economy refers to the expansion of economies beyond national borders, in particular, the expansion of production by transnational corporations to many countries around the world. The global economy includes the globalization of trade, finance and communication, investment and labour. These main features of the global economy affect Australia through primarily structural change and the resource boom.
Globalisation was characterised by high levels of integration. This era began in the 1980’s with the introduction ...view middle of the document...
The daily turn over in global foreign exchange markets in 3.2 trillion, this is predominately the cause of financial deregulation in currency markets, foreign capital, bank interest rates and overseas investment in shares around the world in the 1970-80s.
Global investment is the long term flow of money to buy or establish business as investments. The expansion of global investment refers to foreign direct investments (FDI) which demonstrate to the movement of funds between economies for the purpose of establishing a new company or buying a substantial proportion of shares in an existing company. There has been a serge in FDI flows from the 1980s. From $US201 billion in 1990 to $US1.8 trillion in 2007, this is a nine fold increase.
The labour market is far less internationalised as people are more restricted in their movements internationally, although there is an increase in individuals moving countries to seek better work opportunities. The World Bank (WB) estimates that around 200 million individuals or 3% of the world’s population have migrated to work in other countries.
These features of the global economy are the underlying reason that economies have become interdependent. Their effect on Australia (Aust) has been heavily linked to China’s growth and Aust ‘two speed economy’, which is predominately the resources sector and non-resources sector.
Recent economic (ec) growth in Aust has been heavily influenced through its international ties, particularly China and their continuous economic growth. Chinas hight demand for inelastic natural resources and Austs capacity constraints have led to a fixed supply meaning prices for Aust’s natural resources are high (shown in graph bellow). Australia’s uranium production is an inelastic commodity and as productivity increased by 1 per cent to reach 2659 tonnes in the December...