Australia's Pattern of Trade Flashcards
1
Q
Trade Composition
A
- Exports:
- Australia has an abundance of natural resources and lands which gives us a comparative advantage in rural and mineral goods.
- Therefore we specialise in these types of goods and import manufactured goods.
- Primary products (commodities) for the past 50 years have made up 70% of our merchandise exports.
- In 1960’s rural and agricultural exports (e.g. wheat and wool) made up largest proportion of these exports. This is due to the rapid growth of China and other Asian economies that have created a resource boom in Australia.
- This boosts international demand for coal, iron ore and gas.
- Even though we do not export many manufactured goods, the proportion has been increasing since the 1960’s as well as education services.
- Imports:
- We do not have a huge population hence the size of our labour force is small.
- This makes our manufacturing sector less competitive than bigger sized countries.
- This means we import these goods.
- Almost 60% of our goods imported are manufactured goods.
- Manufactured goods come under two categories:
ETMs – Elaborately transformed manufacturers. Highly processed manufacturers such as machinery and transport equipment.
STMs – Simply transformed manufacturers. Unprocessed goods such as steel and aluminium.
2
Q
Trade Direction
A
- Significant shift in the direction of Australia’s trade from Europe to the Pacific Region, comprising of North East and South East Asia, North America and Oceania.
- Not as strong bond with the UK. They joined the EU and we had to look elsewhere; trade diversion.
- APEC – The Asia Pacific Economic Corporation (trade creation).
- > This group of countries has emerged as the dominant trading group for Australia, accounting for three quarters of Australia’s merchandise trade.
- Had advantage of cheaper transport costs and has advantage of growing population that is near our shores.
Since they have a limited supply of raw materials relative to population, we provide complement in terms of its small population and large endowment of natural resources. - Fast growing economies require long term supplies of cheap energy and home to two thirds of global population.
