Australian economy Essay
This is comprehensive research paper whose purpose is to investigate the economic status of Australia. It is comprised of three parts; part one, two and three. Generally, part one provides a basic background in the formality of the current economic situation. It gives a broad view of the historical epochs that have characterized the country since World War II. It provides the demographic interpretation as well as the current variables of the existing market situations.
Part two is comprehensive investigation of the nature and scope of institutions which exists in the country. It also analyzes the operational framework with which the economy operates in. Elsewhere, a deep analysis of the fundamental conceptions that define the nature of the economic planning by both the government institutions as well as the underlying planning tool of business structures operate within the economy. Here, a comprehensive analysis of various variables such as the rates of unemployment, and economic growth functions are investigated.
Part thee is highly fundamental as it seeks to relate various future prospectuses to the current economic situation. This is not paradoxical. However, it is an elaborated array of how the future would be in correspondence to the current state of economic
Need essay sample on "Australian economy"? We will write a custom essay sample specifically for you for only $ 13.90/page
Various historical epochs have characterized the Australian economy since World War II. Since then, the modernization came in to provide adequate tools for economic development and growth. According to Australian Bureau of Statistics, great interventions in industrialization, manufacturing, corporate business, change in business law, demographic changes and changes in both monetory and fiscal policy have considerably changed to pave in a highly growing and developing economic activity. Demographically, Australian population was 7million after World War II. However, statistics shows that the same is now up to 21,221,372 on February 2008. Great economic activity has been seen to motivate this changing and adversely growing growth rate. The system of healthcare, change in social-economic dimensions and the general changes in social dimensions have led the Australian population to the development critique it assumes currently. (http://www.indexmundi.com/australia/demographics_profile.html)
Since World War II, Australia has been compounded by various economic structures with a complementary mixed economy. The economy control is both by the state forces and individual market forces of demand and supply. However, it has a strong purchasing power which makes it to be above the France, UK and Germany. Elsewhere, the United Nations ranking on human index for 2007 gave Australia as third most developed country in terms of human life index. However, the major weakness in the country is the lack of manufacturing industry which is oriented in export. Therefore, through lower manufactured exports, the country usually experiences a huge draw back in monitoring and stabilizing its balance of payment (BOP). However, coherent economic structures have even provided high export inflow through other industries such as tourism, banking and finance, agriculture and others. On the world standards, the other Australian exports are priced highly with a huge demand in the international market. Elsewhere, tourism does a lot in the Australia which provide around 32% of its GDP. Its current deficit on accounts is marked as being the fourth largest in the world which occupies 7.4% of the countries GDP. Such a deficit is a big economic draw back in the international trade and business relations where it brings the characteristics of expensive/cost trade terms with a low rate of interest which provides low rates of foreign debt servicing. (http://www.abs.gov.au/)
Economy reformation was started in 1953, when its government floated the countries dollars (Australian) and led to a partial deregulation of its financial system. Various contentions on microeconomic reformation also followed suit with labor market deregulations for low rates of economic unemployment of the labor force. Elsewhere, there was a move for the business owned by the states being privatized to bring better tools of management and reformation. In 2000, a great reformation was also done on its system of indirect tax where the goods and services taxes were brought to 10%.
According to Australian Bureau of statistics, the country had 10.1 million employed people in 2007 with its existing rate of unemployment standing at 4.6 %. Generally, a 2-3% rate of inflation has been experienced since 1994 with its constituent rate of interest standing at 5.5%. The better part of the GDP (70%) is allocated to their service sectors which include education, tourism and the financial institutions. Natural resources and the agriculture industry constitute 5% and 3% respectively of the GDP with a better percentage going for exports. It has market partners which includes South Korea, Japan, U.S, New Zealand and China. (http://www.abs.gov.au/)
Demographically, the country has been characterized by an increasing state of population growth. The same grew from 3.75 million in 1900, to 8.3 million in 1950 and 21.2 million in 2008. It is characterized by high immigration where 6.4 million people have entered the country since World War II. Like the case of the developed countries it has a high shift on demography towards the old age persons. (http://www.indexmundi.com/australia/demographics_profile.html)
Politically, Australia is governed by constitutional democracy with its basis on power division of the federal governance. It has a constitutional monarchy government system where of the parliament is applied. The government is comprised of the legislative which is the parliament of the commonwealth, the executive which is the council of the federal executive and the judiciary which comprises of the Australian high court. (Milliken, 2008, pg. 1)
Australian economy is characterized by various economic thresholds and characteristics. Its main economic system is a mixed economy where the forces of both the government and the hidden hand of the market operate in its activities. Conventionally, the role of the government in the economic activity is to develop the most adequate business modalities to ensure both business thrive without exploitation and the consumer sovereignty which seek to avoid consumer exploitation by the business men. Either, the government has a fundamental role to play in providing a coherent business and economic environment through instituting various legal and economic requirements and prescribing the most adequate tools to be followed in providing an adequate economic activity. Economically, the government influence on Australian economy is to provide the most adequate tools for preventing the influence of capitalism by the businessmen. This is basically through legal amendments that seek to define the legal framework with which the economic tools are to operate in. (http://www.abs.gov.au/)
Either, the threshold of mixed economy is defined by the market system of economy operations. Generally, the market of operations is competitively defined with the influence of market supply and demand schedules operating to produce a standard state of equilibrium point which defines the level and the amount of prices and goods. High competition in Australia is synonymous in providing high quality output at a competitive price level. Elsewhere, the market system seeks to provide a state for reduced capitalism.
Generally, Australian economy is comprised of both domestic and foreign economic activity. Indeed, domestic activity seeks to advice on the economic parameters and variables within the economic boundaries of the country. Ideally, domestic economy is a compound activity within the country and capturing a diverse institutional framework of both service and good sector. To the economy, both sectors are substantially important with their importance sharing almost an equal state of balance (50% important). Domestic economy is basically comprised of low economic structures exchange activities between themselves for the production of goods and services for the use in the country. Domestic economy describe the phenomena with which the circular flow of the income is persuaded between the firms, people/consumers and the government .The operational frame work of the domestic economy activity defines how the three factors interact with one another to answer the basic economic questions of how, what, how much and to whom to provide to. (Milliken, 2008, pg. 1)
Generally, domestic economic situation is well elaborated and provides (46%) of the economic activity to the country. Accordingly, the three-factor level is adequately important where the firms provide employment to the people, goods and services and tax to the government. The government implements legal framework that supports operational sovereignty to both the firms and the consumers. The people are the consumers of the goods and services produced by the firms. They also offer labor services to the firms above the provision of the income through consumption effect. To the government, the households/people contribute to the government income through taxation. Such government income is an important fiscal policy variable in which the government spends for the economic development. (http://soer.justice.tas.gov.au/2003/source/393/index.php)
The foreign market is also an important arm of the economy which is promoted through international trade and business with the global market. To the country, both trade inflow and also outflow forms on important benchmark in its economic thrive. Generally, this is an important activity which defines the scope of the balance of the payment with its trading partners. However, the balance of payment is highly favorable with higher export benefits than the import costs. High tourist capital inflow is an important component in defining the scope of the economic flows of the income through international trade.
Currently, economic modalities are supplied by economic legal framework from the regulatory framework by the government through the chamber of commerce and industry and the ministry of economy. The institutional framework provides an analytical tool with which the various economic tools interact cohesively with one another to provide a stable state of economic situation. (Smith, Murphy, 2006, 1)
Generally, the economy situation is provided by threshold of various economic markets which operate interchangeably to provide adequate economic performance. Various markets such as the money market, capital market, goods market and labor market operates substantially to provide and adequate environment of operation. The capital market is substantially developed providing variables useful in defining the scope with which capital investment both through the bonds and securities operate within the economy. Internationally, the capital market in Australia is performing adequately, where huge and flexible turnovers have been experienced in the Australian market. The shares and the treasury bills and bonds have also been performing well since 1996. (Milliken, 2008, pg. 1) Globally, The Australian capital market is defined to have been the third most functional capital investment attracting both big and small investors of both domestic and international capacity. The capital market occupies 39% of the states resources. However, the basic inhibitor in the capital market is where the market is flawed by huge asymmetry through huge investors having the most adequate knowledge of the market place. However, this economic situation has been provided by first share allotment to every initial public offers (IPO’s) where the small investors are given the first investment opportunity before waving in for the huge investors. (http://soer.justice.tas.gov.au/2003/source/393/index.php)
The goods market is controlled by the influence of the market forces of the demand and supply. In Australia, the goods market is stable providing support for adequacy in the both aggregate demand as well as aggregate supply. Through the forces of demand and supply, the commodity market interacts to provide an equilibrium threshold for goods and price.
Money market forms relatively an important part of the economy. Ideally, the money market has seen development since 1983 when the Australian dollar was floated in the global market. The money market is highly important in defining the level and scope of the rate of inflation which has since 2000 decreased to 2.5%. The stability in the money market is provided by the interactive phenomenon of the money supply and money demand where an equilibrium point is reached to secure a stable environment of operation for the economy. (http://www.abs.gov.au/)
Various tools of monetary policy have been used to provide an adequate system of money market where the purchasing power of the Australian dollar fetches a high demand in the capital market. Strong purchasing power of the dollar has provided various economic advantages with the domestic exports demand been high in the international market. Through both tools of absolute and the comparative advantages, the international trade has provided an adequate situation for higher demand of Australian exports. The monetary policy tools secure an environment for most adequate business operation environment where the other markets of the economy are in support by the stronghold of the money market. Either, strong money market can be echoed as a chief significance towards the low rates of inflation which stand at 2-3%. Through the arms length of various monetary tools such as reserve ratios, discount window, open market operations (OMO), discount rate, and the use of the fund rates are significant monetary policies which are used to provide coherent environment for low rates of inflation. (Smith, Murphy, 2006, 1)
The employment market is booming with institutional and legal framework standing to provide various laws and requirements on the labor markets. The rate of unemployment is currently at 4.6%with more than 10 million people absorbed in formal employment. Again, the thresholds of the employment market operate to provide the most adequate state of equilibrium between market supply and demand. (Dunquay, 2001, pg. 1)
Like the monetary policy, the fiscal policy also works to provide adequate structures for an operational economic microclimate. Locally, the fiscal policy is controlled and safeguard by fiscal policy tools which include government spending, use of taxes and the role of interest rates to control the inadequacies of the economy. Generally, the interest rates in Australia has since 1984 been low on account of current deficit in the international relationship. Interest rates have helped to define the stability and success with which sourcing of capital for investment and the benefits thereon got from investments can be. However, this is an important tool in defining the trade off in the affairs between investment and consumption. The government standing is also allied to creating economic revolutionary through the use of government expenditure multiplier influences. Elsewhere, taxation system and authorities provide a coherent support for adequate macroeconomic structures. (Peter, 2004, 1)
Generally, Australian economy posits great modalities of even further expansion in support for various economic advantages. Various variables and parameters stand to define the economic correlation between economic inputs and outputs. Basically, through adequate challenges and operations on reducing the rate of inflation, increasing the income per capita, increasing the growth rate of employment and creating various economic freedoms in the markets for both social goods as well as services remain in been an important step that would define the manner with which the stronghold of the economy would be. The success of the economy would be achieved through adequate measures which would improve the current levels of the consumer price index and levels of Pareto optimality. The economic portfolio is sanctioned by various tools which interact with each other to provide an attractive economic microclimate. Generally, Australia can be voted and being amongst the world’s most prolific and economically stable states with even greater and more variable frontiers of economic expansion. The basic control policies of the markets are both the fiscal and monetary policies. These have actively interchanged to provide an authentic state of economic stability. It remains highly important to define the portfolio within which the foreign markets operate in. (Dunquay, 2001, pg. 1)
Basically, Australia proclaims a wide range of foreign markets institutional framework in which case, a strong threshold of the foreign market implication is provided. The foreign trade outflows as well as the inflows are major factor of consideration towards Australian economy. (Dunt, Harper, 2002, 1) However, the same has a well-defined favorable relation where major foreign source of economic implication is the tourism industry. Through a stable state of trade relation, there is a positive state of balance of payment which is a great significance in providing the current state of economic
Need essay sample on "Australian economy"? We will write a custom essay sample specifically for you for only $ 13.90/page
Through the enormous economic trend and relationship through which the country has passed through, the future states of the country posits to been highly influential and highly performing. Since the epochs of the World War II, Australia has evolved through an enormous state of economic vigilance and reformation which has since then moved the country from its former low performance during the old age historical epochs to a highly developed and operational economic state. Through the same structures of the economic pursuit and institutional framework which the country has evolved through, the future of the country is held high to been at greater frontiers of reformation, growth and development been the major characterizing variables. (Kelly, 2008, 55)
Various economic variables will seemingly develop to greater heights with reformation activities bringing forth new policies that are more adequate for the situation within the economic framework for the most adequate system of economic activity within both domestic and foreign frontiers.
Using supportive tools of both statistical and conventional theories, if the same trend of economic activity is to compound the country down the next few years, the future of its performance would exorbitantly grow in being enormous. Through both statistical tools such as correlations, simulations, variances, moving averages and other stereotypic tools for measuring the relational capacities over periods of times against fundamental objective functions, the future of the economy which is now great but what used to be pathetic in the past, would be highly operational and fabulous with wide support of development and growth conception. (Kelly, 2008, 72)
The various markets will seemingly be highly grown, with low level of unemployment and inflation whose limits will approach to zero after a certain time variable. Elsewhere, the future domain of the GDP would be highly developed calling for expanded frontiers in the states of living and changing socio-economic dimensions. The consumer price index would be strong with every economic activity, seeking to yield standards that promote optimality. This would be a revolutionized and reformed way of economic activity within the Australia.
Allen George. State of Play. An indices Economic Special Report, pg. 114
Australian Demographics Profile, 2007. Retrieved from, http://www.indexmundi.com/australia/demographics_profile.html
Australian Bureau of Statistics, 2007. Retrieved from, http://www.abs.gov.au/
Australian Bureau of Statistics, 1997. Retrieved from, http://soer.justice.tas.gov.au/2003/source/393/index.php
Dunquay, Mardi. The Australian Economy in the 1990’s. Proceeding’s of a Conference. Economic Record, Vol.77, 2001, pg. 1
Dunt, Emily & Harper Ian. E-Commerce and the Australian Economy. Economics Record, Vol. 78, 2002, pg. 1
Kelly, Paul. 100 Years. The Australian Story. Cross Nest, N.S.W, 2001
Milliken Robert. Australia’s Coal Question, 2008, pg. 55-78
Peter Sutton. Aboriginal Economy and Society; Australia at the Threshold of Colonization. Australian Aboriginal Studies, Vol. 2004, 2004, pg. 1
Smith, Jeremy & Murphy, Chris. Macroeconomic Fluctuations in the Australian Economy. Economic Record, Vol. 70, 2006, pg. 1