Changes in Trade & Financial Flows

Question 1

Who was Australia’s major trading partner until 1973?

Answer 1

The UK

Question 2

Why did Australia-UK trade decrease?

Answer 2

Because the UK joined the European Economic Community & increased protection

Question 3

Why has Australian trade with China increased?

Answer 3

Since the early 2000s, China has seen a sustained period of economic growth

In 2007, China became Australia’s largest trading partner

This reflects China’s increasing dominance in the global economy and Australia’s position as a commodity supplier

Question 4

Statistics regarding China/Australia trading relationship

Answer 4

Approximately 36% of Australian exports go to China

Approximately 25% of Australian imports are from China

Question 5

How was Australia’s economic development different to the rest of the world?

Answer 5

Other advanced economies generally developed substantive manufacturing industries in late 20th-century

Australia has continued to rely on its primary exports

Question 6

Why have Australian commodities exports increased?

Answer 6

Relatively inelastic demand for commodities

Reduction of protection has harmed manufacturing industries

COVID-19 pandemic has forced Australia to rely on commodities over services

Question 7

Prior to the 1980s, what constituted the majority of Australian financial flows?

Answer 7

Direct Investment, as this brought the benefits of job creation and technology transfer

Question 8

What happened to Australia’s financial flows during the 1980s?

Answer 8

Deregulation saw Australia place greater emphasis on portfolio investment, as these short-term flows could inject money into Australian companies through loans and share purchases

Thus, over the past three decades, the rate of portfolio investment has grown rapidly and is now more than double the value of direct investment