Australia's Pattern of Trade

Question 1

What are Australia’s export and import industries primarily made up of?

Answer 1

Primary industries (rural and resources) have always dominated Australia’s exports while manufactured goods have been our most important import category.

Question 2

What is Australia’s composition of trade?

Answer 2

The composition of trade reflects Australia’s comparative advantage. Traditionally, Australia has been a major exporter of primary commodities.
This is not surprising given Australia’s large natural resource/population ratio and substantial mineral wealth.
Australia has a comparative advantage in the production of primary goods- specifically agricultural and mineral products.

Notice that most imported goods are manufactured goods- either in the form of consumer goods or as inputs for Australian industry.
Australia has a very efficient and internationally competitive primary sector while our manufacturing sector is smaller and relatively less efficient. Over time, we would expect trade in services to increase as incomes in East Asia rise.
Australian industry is heavily dependent on the overseas sector for capital equipment.

Question 3

How has the relative importance of mineral and energy exports and rural exports changes? What is the reason for this change?

Answer 3

There has been a significant increase in the relative importance of mineral and energy exports and a decline in the importance of rural exports.

1970's
Rural- 40%
Resources- 26%
2016
Rural- 16%
Resources- 46%

This change has been driven by the rapid growth of China and other Asian economies that resulted in a major resource boom in Australia from 2001-2012, boosting the demand for resources such as iron ore, coal and natural gas.

Question 4

What have been the major trends in Australia’s pattern of trade?

Answer 4

• Dramatic decline in rural exports.
• A significant increase in resource (mineral and fuels) exports.
• A relative decline in manufacturing exports.
• The increasing importance of service exports.

Question 5

What are Australia’s top 5 exports?

Answer 5

1) Iron ore
2) Coal
3) Education services
4) Natural gas
5) Personal travel

Question 6

What are Australia’s top 5 imports?

Answer 6

1) Personal travel
2) Passenger cars
3) Refined petroleum
4) Telecom equipment
5) Freight services

Question 7

What are Australia’s top 5 export markets?

Answer 7

1) China
2) Japan
3) United States
4) Republic of Korea
5) India

Question 8

What are Australia’s top 5 import sources?

Answer 8

1) China
2) United States
3) Japan
4) Republic of Korea
5) Thailand

Question 9

Describe the sift in the direction of trade.

What is APEC?

Answer 9

There has been a significant shift in the directed of trade primarily from Europe to the Pacific-Est Asian region.
The Asia-Pacific Economic Cooperation (APEC) has the purpose of facilitating economic growth and prosperity in the region by encouraging trade and investment liberalisation.
The APEC group of countries is the dominant trading group of countries for Australia, accounting for nearly 80% of aus exports and 70% of imports.

Question 10

Which two countries account for nearly half of Australia’s exports?

Answer 10

Just two countries account for nearly half of Australia’s exports- China and Japan.

Question 11

Where are Australia’s top trading partners located?

Answer 11

The top eight countries are all in the Asia-Pacific region.

Question 12

How has Europe’s share of Aus exports changed over the past 40 years?

Answer 12

Over the past 40 years, the share of exports to Europe has fallen dramatically, from 45% of the total to less than 10% today.

Question 13

Which three countries are Australia’s top trading partners?

Answer 13

If we could both the value of exports and imports, then Australia’s most important trading partners are China, Japan and the United States.

East asia has become the dominant region for both imports and exports.

Question 14

Explain the reasons for the shift in Australia’s trade pattern.

Answer 14

• When the UK joined the European Union, Australia was forced to establish new markets.
• The Asia-Pacific region has the advantage of much lower transport costs.
• The Asia-Pacific region has a very large and growing population (and so a large demand for our exports).
• East Asia has a limited supply of raw materials relative to its huge population, so Australia provides an obvious complement in terms of its very small population and rich endowment of natural resources.
• The fast growing economies of East Asia require long-term supplies of cheap energy such as coal and natural gas, as well as minerals including iron ore, coal, aluminium and copper, which they source from Australia.
• The Asia region is also home to two thirds of the global population and Australia has a comparative advantage in the supply of food crops and livestock.