Asia Pacific Business - Coursework Example

Asia Pacific Business Name of Student: Name of Professor: Name of Course: Code of the Course: Date of Submission: Asia Pacific Business Introduction Globalization is viewed as the interdependence amongst countries. Globalization is a result of the increasing development of communication and transportation systems in the world. The fast transport systems allow people and goods to move from one point of the globe to another in a little span of time. Air transport is one of the fastest means of transportation of people and goods in the world. The efficient water transport allows for the transportation of bulk goods. The efficient communication technologies which include telephones and the powerful internet enable people to transmit information from one point of the world to another. Generally, the efficient transport and communication systems have transformed the world into a global village; where every person or country is dependent on another; this is globalization. Globalization has an effect on the political, economical and social sprees of life. Ideally, it leads to interdependence between countries. The Asia Pacific countries have not been left behind in the globalised world. There has been an increased cooperation between the countries in the region with respect to political, economical and social spheres (Australian National University, 2013). The following paper will analyze globalization in the Asian Pacific region. It will start by giving an overview of globalization and its effects on the economy and trade. It will then narrow down to the effect of globalization between Australia and China who are a major trading partner and Thailand, who are a minor trading partner. The essay will analyze the developments in trade between the Australia and the two countries over the past 30 years. Globalization As pointed out above, globalization is the interconnectedness/interdependence between countries. Globalization is a result of the increasing developments in communication and transportation systems which make it easier for people to move around the world and also for information to be transmitted efficiently and fast around the world. Ideally, globalization is a continuous process. With every day dawn, governments are striking deals to increases cooperation, companies are expanding their markets to unexploited markets, more people are getting connected via the internet and other communication systems and more and more people are moving around the world in search of employment, leisure among others. Generally, the world is moving towards being a ‘united’ interdependent one (Christopherson, Garretsen & Martin, 2008). This explains the reason as to why the effects of the recession in America are being felt around the world, why the crisis in the oil rich Middle East is influencing the world oil prices and why the economic crisis Greece is causing financial tremors in the Euro zone. Globalization takes place in three spheres: One of the spheres is the political sphere. On this point, it is important to note that the modern political world is interdependent more than ever. The domestic politics are being affected by the global politics. They are world organizations which try to govern the political atmosphere in individual countries. Over time, countries have to play by the tune played by the global politics. Moreover, powerful countries are trying to gain political influence over smaller countries by the use of specific strategies (Christopherson, Garretsen & Martin, 2008). Specifically put, the political climate in every country is dependent on the politics played on the global scene. The second sphere of integration is economic integration. On this point, it is important to discuss about trade; one of the most important economic activities in the history of man. Over time, there has been a reduction in trade barriers between countries. There has been the formation of trading and economic blocks and unions, each of which are aimed are reducing or eliminating the trade barriers which previously existed between countries (Reilly & Yuan, 2012). This has led to increased trade between countries. There is also an increased global economic integration, with foreign direct investments, global lending and global economic policies. Some of the organizations which have a major influence on the global economics are the International Monetary Fund, IMF, World Trade Organization, WTO and the World Bank. The increased economic integration explains the reason as to why economic problems in one country affect other countries. For instance, an economic/ financial change in the major economies of the world, commonly referred to as the G7 causes a substantial financial/ economic change in the domestic markets of other countries. The last sphere of globalization is social. With respect to this aspect, it can be acknowledged that globalization leads to an increased social integration (Christopherson, Garretsen & Martin, 2008). The increased transportation of people from one point to another and the increased communication amongst them leads to a social integration. This leads to the mixing of cultures, leading to diluted or hybrid cultures. On his aspect, it can be appreciated that almost every country in the world is constituted of a percentage of foreigners and has foreign cultural practices. This is social integration. Changes that globalization has Brought to the World Economy and World Trade Globalization has both positive and negative effects on the economy depending on the perspective taken. The increased economic interdependence between countries leads to a positive impact on the world economy in addition to increasing trading activities in the world (Christopherson, Garretsen & Martin, 2008). On this aspect, it can be acknowledged that trade is a major economic activity in the world. It has a very big impact on the world economy. From the famous trading activities in the Roman Empire to the transatlantic trade to the modern global trade, trade has always been a major economic activity. Globalization has the following effects on world trade: It leads to the fast and efficient movement of people and goods from one place to another. One of the major barriers to trade is transport. However, the efficient transport systems in the world have led to an increased trading activity around the world. Currently, it is possible to get the highly perishable horticulture products from Africa to Europe with hours. It is possible to ship the bulky crude oil from Iraq to USA within a short duration of time. Equally fast is the transportation of the bulky iron ore from Australia to China. This has revolutions trade. Transport is no longer a major barrier; hence international trading activities have been growing gradually. With respect to the efficient transport systems in the world, it can be noted that there has been a movement of labor around the world. On this point, it is important to note that skills play a very important role in trade. If a country is able to get competent and adequate man powered, it is able to increase its productivity, hence increasing its trading activities. This explains the reason as to why Australia has the immigrant policies, which are aimed at ensuring that the county is able to attract and retain skilled foreigners. This is the same motive behind the USA green card program. Globalization also leads to an increased transfer of information around the world. On this aspect, it is important to acknowledge the fact that information plays a big role in trade. Ideally, trade cannot exist without communication. With the growth of the internet and telecommunication usage, there has been the growth of e -commerce, a very important element of modern trade. Currently, it is possible for an Australian to order a specific automobile from China over the internet and also pay for it via e commerce options. For the same person to order the high quality Thailand’s rice over the same media and for Chinese and Thailand to do the same with Australian traders. Specifically put, information transfer is revolutionizing the way of doing trade in the world. Trade is slowly moving from the physical market place to the virtual internet market place (Christopherson, Garretsen & Martin, 2008). Moreover, it can also be acknowledged that the ability to transfer information from one part of the world to the other has led to an increase in trading activities. Globalization has also led to the reduction of elimination of trading barriers which existed previously among countries. On this aspect, it can be noted that there were very many trading barriers which existed in the Asia Pacific region. The communist China found it hard to trade with the capitalist Australia and vice versa. However, the reduction or elimination of trade barriers between the trading partners has led to an increased trading activity. From the arguments above, it can be concluded that globalization leads to increased trade which ultimately leads to a good world economy. On the contrary view, it can be argued that globalization has a tendency to disadvantage poor and developing economies. This is due to the fact that the economies are exposed to the competitive and harsh global market conditions which intern crumbles them instead of growing them. Australia – China Relationship Currently, China is largest trading partner to Australia. The main trading commodities include iron ore, agricultural products, automobiles, machinery and manufacture products (Australian National University, 2013). Labour is also a major commodity of exchange between the two countries. It also important to note that China has invested heavily in the Australian mining industry. China and Australia have been in a trading relationship for a long time although it is sometimes argued that the relationship is young (Australian Government, 2013b). It is believed that the Chinese started arriving in Australia in the 19th century, a time when they were mainly interested in exploiting the mineral rich Australia; these were the Bendingo miners. Many years later, China is a major investor in the Australian mining companies (Mackerras, 1996). Diplomatic relations between the two countries in 1972. However, trade interactions between the two countries had taken place previously as described above (Weiqiang, 2012). However, the gold rush in Australia escalated the trading relations between the two countries (Australian Government, 2013b). There are several changes which have occurred in Australia as a result of their trade with China. The first change which has occurred as a result of the globalization between the China and Australia is an increase in trading activities (Weiqiang, 2012). In 1970, the bilateral trade between the two countries was valued at 113 million Australian dollars. Four decided later the value of the bilateral trade is 113 billion Australian dollars (Australian Bureau of Statistics, 2013). This shows that there has been a 999% increase in the trading volumes between the two countries. The following table illustrates the growth of the bilateral trade between China and Australia. China Bilateral Trade (Reilly & Yuan, 2012). Currently, China provides a market to 25 % of Australia’s total exports as compared to 5% ten years ago (Australian Bureau of Statistics, 2013). The Australian economy is dependent on the mining industry. Its main mineral is iron ore. On the other hand, the Chinese economy is dependent on industry and manufacturing. For this reason, it is dependent on Australia for iron ore, which is a major raw material to Chinese companies. The increased trading activity between the two counters has led to an improvement of the economy in the region (Weiqiang, 2012). China has grown into an industrial powerhouse in the world. Presently, China can practically manufacture anything in the world (Weiqiang, 2012). This is owing to the bilateral trade between it and Australia. On the other hand, Australia has continued to flourish economically as a result of the increased trading activity between it and China (Australian Bureau of Statistics, 2013). On this point, it can be acknowledged that Australia is one of the few countries in the world which were not hit by the recession which has hit the world recently. This is owing to its steady and high value exports to China and the wider Asia Pacific region. China is also one of the major foreign investors in Australia. The actual foreign direct investment by China in Australia is valued at about US$7, 000, 000, 000. The Chinese have invested heavily in the mining industry, manufacturing, finance and energy (Australian Government, 2013b). The Chinese have been interested in the Australian Mining industry for a long time. From the onset of the gold rush to the iron ore mining, the Chinese have always stayed attached to Australia. The foreign direct investments in the country have enabled Australia to develop its economy by a great margin. As it has been pointed out above, the mining industry has proved to be very instrumental to the country’s economy in the wake of the global financial crisis (Mackerras, 1996). On this point, it is important to note that the mining industry is capital and labor intensive. Therefore, the foreign direct investment by the Chinese have enabled Australia exploit its mineral resources by a large extent (Australian Government, 2012c). Foreign direct investment is a major elements associated with economic integration, which is a product of globalization. China and Australia have also benefited each other with manpower. China is well endowed with manpower; with over a billion people while Australia has a deficiency in manpower. China has continuously provided the Australia with the much needed skilled manpower. Moreover, China provides a stable market for the Australian tourism industry. This further strengthens the Australian economy (Australian Government, 2012c). There has also been an increased reduction in trade barriers between the two countries which has resulted to an increased trading activity (Australian Government, 2012c). The main historical event which shaped the modern bilateral trade between the two countries was the onset of diplomatic relations between them in 1971. Since then, the governments have been engaged in activities and policy making which has continuously reduced the trade barrier which existed between the two countries. One of the most recent moves by the governments to reduce trade barriers was the discussion on a possible move of establishing a free trade agreement FTA, which would lead to increased trade interconnectedness (Australian National University, 2013). Among the major elements in the FTA are issues related to agricultural quotas and tariffs, tariffs on manufactured products, exchange of services, movement of people between the two countries and foreign direct investment. The finalizing of the agreements will boost the already thriving trading activities between the two countries (Australian Government, 2012c). The Australia China Business council if one of the organization s which strengthens the trade relationship between China and Australia. Australia Thailand Thailand is not a major trading partner to Australia, at least as compared to China. The bilateral trade between China and Thailand is valued at 17.7 billion Australian dollars. The major trading commodities between the two countries are machinery, steel, automotives, ferrous and non-ferrous metals, pharmaceuticals, plastics and agricultural products. The hall mark of the bilateral trade between Thailand and Australia was in the establishment of the Free Trade Agreement in 2005, the Thailand Australia Free Trade Agreement, TAFTA. Prior to the FTA, trade between the two countries was associated with many trade barriers which included tariffs, quotas and legislative restrictions (Australian Government, 2013a). The FTA had the following effects on the trade relations between the two countries. TAFTA saw the elimination of 94 % of tariffs and quotas levied on Australian imports. This has led to an increased trading activity between the two countries (Australian Government, 2013a). Since the conception of the agreement, FTA led to a 200% increase in the volume the bilateral trade between the two countries. According to the FTA, the tariffs and quotas are due to reduce to zero by 2025. The agreements have also made it possible for Australian companies and individuals to access the Thailand market, hence being able to exploit the young and developing region. The agreement also made major changes to the legislation on foreign direct investments. With the agreement, Australian had an increased access to the Thailand market (Australian Government, 2013a). Currently, the value of foreign direct investments in the Thailand by Australia has increased drastically. This has been beneficial to the two economies. Investment protection has also been a major element of TAFTA. With more efficient policies, Australian companies have more liberty and rights over their investments in Thailand. Lastly, the agreement has made it possible for the free movement of people between the two countries. This has been very instrumental to the trading activities in the two countries (Australian Government, 2013a). Future of Globalization- Current situation Globalization is a continuous process. There is a continuous development of communication and transport technologies which will see an increased moment of people and information’s. Just when people thought that Concorde was the best place, Boeing was manufactures and amazed the world, just when the telephone was considered the most sophisticated communication media, the internet overshadowed it. For this reason, it is expected that the number of movements around the world and also the communication amongst the people will increase, hence imparting positively on trade and the world economy. Recently, China and Australia established a direct currency trading program which saw the direct trading of the Australian Dollar and the Chinese Renminbi as from 10th April 2013 (Government Press, 2013). This illustrates that globalization is a continuous process and the two countries will continue integrating economically. With respect to the trade relationship between Australia and Thailand, it is expected that the tariff and quota barriers between the two countries will zero by 2025. This shows that the countries have plans to integrated economically in the future. Moreover, foreign direct investments by Australian nationalities and companies are increasing gradually. Thailand is becoming industrialized slowly and starting to depend on the Australian mining industry. This illustrates that the trading activities between the two countries is due t increase in the future and lead to an increased economic interdependence. It should be acknowledged that as long as globalization exists, the above countries will continue to integrate economically, politically and socially Conclusion In conclusion, it can be revealed from this essay that globalization has a major influence on the political, social and economic spheres of nations. Globalization is caused by the increased movement of people and information transfer around the globe, leading to interdependencies between the countries involved. This paper has focused on trade relationships between countries which lead to an economic integration between countries. The essay has given reference to the Australia-China relationship and the Australia – Thailand trade relationship. The essay has identified that China is major trading partner to Australia while Thailand is a minor one. From the essay, it can be acknowledged that the bilateral trade between Australia and the two countries is thriving. China and Australia are becoming more economically interdependent; with the heavy Chinese Manufacturing industry relying heavily on the Australian mining industry. Thailand is also benefiting from the foreign investment by Australia and also benefits from the free trade agreements stashed between it and Australia. From this essay, it can be concluded that globalization, a continuous process, has had and will continue having a major influence in trade and economy of Australia and its trading partners. References Australian Bureau of Statistics, (2013). Australia’s Bilateral Relationships, Australian Bureau of Statistics, Retrieved on 24th April 2013 from < http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0~2012~Main%20Features~Australia%27s%20bilateral%20relationships~210> Australian Government, (2013a). Thailand – Australia Free Trade Agreement, Department of Foreign Affairs and Trade, Retrieved on 24th April 2013 from < //www.dfat.gov.au/fta/tafta/> Australian Government, (2013b), Australia China Free Trade Agreement Negotiations, Australian Government, Retrieved on 24th April 2013 from < http://www.dfat.gov.au/fta/acfta/ > Australian Government, (2012c). China’s Relations With Australia and China’s Global Role, , Retrieved on 24th April 2013 from < http://au.china-embassy.org/eng/sgjs/sghd/t947925.htm > Australian National University, (2013). Australia and China, A Joint Report on the Bilateral Relationship, Australian National University, Retrieved on 24th April 2013 from < http://ciw.anu.edu.au/joint_report/ > Christopherson, S., Garretsen, H., & Martin, R., (2008). The World is Not Flat: Putting Globalization in its Place, Journal of Regions, Economy and Society, 1(1); 343-349 Government Press, (2013). China and Australia Announce Direct Currency Trading, Office of the Prime Minister, Retrieved on 24th April 2013 from < http://www.pm.gov.au/press-office/china-and-australia-announce-direct-currency-trading > Mackerras, C., (1996). Australia and China, Griffith University Press Reilly, J., & Yuan, J., (2012). Australia and China at 40, New South Publishing, South Wales Weiqiang, C., (2012). Strengthening Win-Win Cooperation for More Promising Bilateral Relations, Retrieved on 24th April 2013 from < http://melbourne.china-consulate.org/eng/news/t938071.htm > Read More