International economics and trade Essay
Abstract Australian Economy is one of the world’s most prosperous economy, Western-style market economy dominated by its services sector (68% of GDP), though the agricultural and mining sectors (29. 9% of GDP combined account for 65% of its exports. Rich in natural resources, Australia is a major exporter of agricultural products, particularly grains and wool, and minerals, including various metals, coal, and natural gas. The Service industry occupies a great position in the economy.
Australian economic reforms is often considered as the key factor behind the continuing strength of the economy. The total GDP (PPP) was 645. 3 Billion $ (2006 Est. ) was the world’s 17th highest GDP and the growth grate was 3. 8% and the per capita income was 32,900 and we have seen the performance of Australian Dollar in the recent months in which inflation is every high, Now the Australian Dollar is most equal to United States Dollar. The Total Inflation rate of the economy (CPI) is 2. 1% (2007 Quarter 2). Labor Force and Unemployment The total Labour force of Australia is 10.
66 Million (2006) which is spread across Agriculture, Mining, Industry, Services and Business. Even though Australian economy was rising the Governments show a
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The main Page 2 industries of employment as seen as Mining, Industrial and Transportation Equipment, Food Processing, Chemicals and Steel. Balance of Payments of Australia Nowadays, in the situation of quick development of cooperation between countries and rapid progress within national economics, it is necessary to elaborate efficient indexes of economic status. Modern methods are used to estimate progress and regress in the economy of some certain country as well as of the general situation at the international market.
The most widespread method of monitoring economic conditions is known under the name of the balance of payment. The notion of the balance of payment (BOP) is one of the most important in the modern economic theory, especially when the sphere of international trade is concerned. The term balance of payment (BOP) is determined as the method of measurement monetary inflow and outflow of some certain country; in other words – total amount of international monetary transactions of the country during some temporal period.
All trade operations – both of public and private sector are taken into consideration when estimating the BOP. Balance of payment reflects payments to foreigners (when country gives/pays money) which are called debits alongside with all payments obtained from foreigners (when country receives money) which are called credits. Balance of payment serves as one of the most significant indicators of the country’s position in the net of international trade.
Theoretically the BOP index must be equal to zero, presupposing the equality of debits and credits and their balance, but it happens very rarely. Thus, the main function of the balance of payment is to show what elements of the economy are functioning improperly thus leading to surplus or deficit. As a rule, balance of payment is derived from the range of country’s trade operation over the time of one year. The balance of payment is subdivided into several components (accounts) which are: current account, capital account and financial account (The ABS and Balance of Payments Statistics 2008).
A current account includes inflow and outflow of goods (cars, wheat or wool); services (transport, tourism, education, travel) accompanied by earnings on investments in public and private sectors. Goods include raw materials (wheat, wool) or manufactured goods which may be bought, sold or given away in the form of material aid to some country that needs it. Services presuppose incomes from tourism, transportation, travel, education or copyrights and patent royalties. The combination of goods and services forms the balance of trade (BOT) of come certain country, which represents the core element of a country’s balance of payments.
In relation to this term, two economic parameters arise: first is trade deficit balance (it occurs when country’s import prevails its export); and second is trade surplus balance (it occurs when country’s export prevails its import) (Heakal 2008). Capital account is the indicator of a total amount of international capital transfers, and can be viewed as purchase or management of such non-financial assets as land, and those assets that are required for manufacturing but are not manufactured themselves, such as diamond-extracting mine.
Capital account also derives from the migration of people (emigration and immigration – capital transfers), from death levies, gift taxes and some others. Financial account represents international monetary transactions based on foreign investment or foreign assistance in developing country’s infrastructure (Balance of Payments, Australia 2008). In addition, financial account includes monetary means of some assets that are in possession of the government, such as gold and foreign reserves; foreigners-owned tangible property and private assets situated outside the country.