Globalisation and Its Impact on Australia - Essay Example

GLOBALISATION AND ITS IMPACT ON AUSTRALIA By Course Professor’s Name University Affiliation Date Globalisation and its impact on Australia The manner that operations are carried out in the world has been changing over the past century. One of the tools that have helped in the change is globalisation. Although globalisation has been in existence for over half a century, it is still a contemporary issue that continues to influence various sectors. The paper will discuss globalisation as a contemporary international business issue and discuss the effects, both negative and positive on Australia. Globalisation has been defined in many different ways. One popular definition is that it is a process that enables many countries of the world and their respective nationals to be interdependent (Sheil, 2001). Globalisation changes a country’s economic sector by affecting the trade, foreign investment and even immigration. Apart from impacting the economic dimensions, globalisation affects other areas including political, cultural and even environmental sectors. Interactions between countries have been inhibited by both man-made and natural barriers. Globalisation, through its various sectors such as technological innovations, has removed the barriers making it easier for countries to interact with each other whereas enabling independence. The most common base of interaction is international trade, enhanced by importation and exportation. Technological advancement has helped in boosting trade by eliminating transportation and communication costs brought up by the difference in geographical locations (Sheil, 2001). The world has become a global village due to globalisation. It has enabled people to transfer the freedom they enjoy on a national level in the various sectors including trade, investment, and work on a global scale (Tazreiter & Tham, 2013). Apart from the freedom, several disadvantages have also been experienced as a result of globalisation. Values that were maintained on a local scale have been lost in many countries due to increased interactions. Although globalisation has been an on-going process since the early 1800s, its effect has been felt in the late twentieth century. The formation of World Trade Organisation (WTO) has been primary in boosting international trade (Tazreiter & Tham, 2013). The establishment of the body was aided by the signing of General Agreement on Taxes and Tariffs in the year 1947 (Sheil, 2001). The members to the treaty have developed economically by focusing on the production of the goods that are cheaper to them. Globalisation has largely impacted Australian economic, political, cultural and environmental sectors. The type of impact, either positive or negative is dependent on many factors. The Australian economy has been operating under mercantilism before the establishment of the World Trade Organisation (Tazreiter & Tham, 2013). Many of the industries in the Australian economy had been protected from competition, both locally and internationally. Some of the sectors include clothing industry, motor vehicle industry and textile industry. After the World Trade Organisation was established, policies that aim at reducing the protection by opening the Australian market to global market have been made (Sheil, 2001). The policies are among the factors that have aided the growth of globalisation rate in Australia by linking the domestic market to the global market. Another factor that has contributed to the growth is the advancement in technology. Technology is an essential tool of globalisation by enabling communication and transport thus aiding trade. The Australian economy has adopted technological means of trade such as the use of the internet that has made it easier to carry out a business transaction with people outside the country (Nault, 2008). Use of technology has boosted both import and export. Multilateral agreements enabling trade between nations have also been primary to the growing globalisation rate. The agreements address such areas as trade on goods and services and even protection of intellectual property rights that are essential to effective competition. An example of a multilateral agreement creating a trade zone is the European Union (Lofgren & Sarangi, 2009). One area that has been impacted hugely by globalisation is the economy by increasing import and export of goods. Globalisation has enabled the enactment of policies and rules that reduce the protection of the domestic industries by growing international trade. The demand for foreign products in the economy has increased thus increasing the rate of import. The increased competition for the market has also seen the domestic industries their efficiency thus producing quality goods (Nault, 2008). The quality products are then sold in the international market and have been the main factor in the increased exportation rate for domestic goods. Exports and imports contributed to 32 percent of the gross domestic product in the year 1975 and the increased imports and export have enabled its contribution to rising to 48 percent in the year 2000 (Lofgren & Sarangi, 2009). Globalisation has also impacted on the structure of trade hence affecting the economy. The Australian economy is made up of several sectors such as manufacturing sector, mineral and fuel sector and the rural industry. Each of the industry has a significant contribution to the economy by helping raise the gross domestic product as well as creating employment. By opening the local market to global market, globalisation has impacted on the Australian economy changing the structure of trade. The manufacturing sector has seen growth in the export with a rise in 12.9 percent in the period 1995 to 1996 as compared to 1985 to 1986 (Sheil, 2001). Explanation for the change can be given to a shift in the manufacturing base. Several multinational corporations have moved their manufacturing practices from industrialised countries to developing nations due to the cheap cost of production (Michael, 2015). Manufacturing industries have found it costly to carry production in industrialised countries due to expensive labour and other inputs to the manufacturing process. The shift has also been facilitated by advancement in the transport sector making it easy to transport the manufactured goods from the site of production to the demand market (Michael, 2015). Companies are able to shift their operations through engaging in foreign direct investment or else subcontracting businesses in the target country when high capital is required. Manufacturing of goods that was done locally has shifted to other nations such as China. Some of the products include textile and footwear and have contributed to increased importation. Production of specialised goods on the other end is depends heavily on technology and skills available in a given country. Australia has an abundant supply of skilled labour and materials making the country an attractive destination for the manufacture of less-labour-intensive goods. The comparative advantage Australia has on infrastructure has aided it to be a prime destination for the production of high-tech products such as Boeing (Sheil, 2001). Australia is second after the United States when operations of Boeing are taken into account. It has contributed significantly to the increased export of goods from the Australian market to the global market. Apart from the production of goods, the Australian service sector has also been affected positively by globalisation. Some of the services include communication, education, tourism and provision of healthcare (Tazreiter & Tham, 2013). Financial institutions that provide financial services such as banks have seen significant development. Among the ten largest companies that have established their operations in Australia, half of them provide financial services. Globalisation has enabled Australian companies to increase their operations in other countries through direct investment and sub-contracting. An example is the provision of healthcare services where the Australian firms are the leading exporters of the services to the Asian market. Improvements in communication have also aided in carrying out of business activities in different time zones reducing transportation costs. The labour market has also been affected by globalisation. The advancement in technology has increased the ability of workers to work for a different country apart from that of their birth. Globally, it is estimated that more than 2.5 percent of the world’s population reside away from the country that they were born whereas 1.5 percent of the workforce work in countries other than that of their birth (Tazreiter & Tham, 2013). The change in labour patterns has been facilitated by technological improvement and the increased use of the internet. By providing job opportunities both locally and internationally, globalisation has helped reduce the rate of unemployment in Australia. The increased competition for skilled labour has benefited the Australian workforce by demanding reforms in the workplace. Industries are in turn competing for skilled labour through increasing the salary and good working environment. The Australian Government is increasingly subjecting the private sector to domestic competition and international competition through the enactment of policies (Sheil, 2001). The cheap cost of importation of goods through the advancement in technology and communication has helped increase the amount of products in the market at an affordable cost. Companies have been competing on the quality of goods and services to gain a competitive advantage. That competition has benefited the consumers by increasing their access to high-quality gproducts and services. Foreign investment contributes to a significant percentage of the gross domestic product in a country. Policies favourable for policies need to be established to attract foreign companies. The Australian government has been striving towards making the country a prime destination for Multinational Corporations by making policies beneficial for the economy. The change has seen structural reforms, changes in the labour market and even in the taxation policies (Nault, 2008). These changes have also made the economy favourable for the establishment of domestic industries creating more employment opportunities for the Australian nationals. Globalisation has enabled the Australian to integrate technology in their activities. Such has been seen by the change in shopping patterns where technology has enabled Australian to carry online shopping. By the year 2000, more than 1.2 million adults had purchased goods from online stores (Sheil, 2001). Globalisation has hugely impacted Australian agriculture. The favourable climate, as well as large farm, has facilitated farming in Australia. The advancement in technology has also enabled Australian farmers to produce high-quality produce at a lower price (Lofgren & Sarangi, 2009). Globalisation has created a large market both locally and internationally for the farmers. Exportation of the agricultural produce has enabled the creation of employment opportunities through the different chains involved. It also forms a large composition of goods exported by Australia. Globalisation has increased the demand for minerals products, especially in developing countries. Increasing rate of development has led to increased consumption of energy and mineral materials affecting the mining industry (Tazreiter & Tham, 2013). Globalisation has enabled the creation of a market for the mineral products produced in Australia. The mining firms have used innovative measures so as to increase efficiency to satisfy the increasing demand. The rising concern regarding environmental pollution has also impacted on the Australian market. One area that has been affected is the mining industry where coal is the number one export product by Australia. The use of coal as contributes towards emission of greenhouse gas that contributes towards climate change (Tazreiter & Tham, 2013). The revolution has led the companies to invest in the innovation to ensure that cleaner coal is produced. Globalisation also poses negative effects for the Australian economy in several ways. In the culture aspect, globalisation has enabled increased migrants in the country. The integration of their culture in the form of food, music and foods has led to the loss of the Australian culture (Nault, 2008). Western culture has been adopted as people are increasingly being exposed to the western world. Another way that globalisation has an adverse impact on Australia is by creating a high demand for foreign products discouraging the consumption of locally produced goods. Globalisation enables multinational corporations to open their operation in a given country. Due to economies of scale, such companies can provide high-quality products at a lower price (Lofgren & Sarangi, 2009). The demand for the cheaper but quality goods and services lead to reduced demand for the domestically produced goods, frequently offered at a higher price. The reduced sales for the domestic products, in turn, affect the profitability of the companies leading to their collapse eventually. Such are motor vehicle industry, foot ware and textile product that are now imported. The easy movement of labour across nations created by globalisation has led to increased loss of skilled workforce. The government has invested hugely in training and provision of skills. Globalisation has enabled labour sourcing where multinationals are drawing skilled labour from Australia and offering them a high salary (Lofgren & Sarangi, 2009). The condition has contributed to brain drain. Government use fiscal policy and monetary policy tools to adjust the economy of its country (Nault, 2008). Globalisation has made it difficult to use both the fiscal and monetary policy therefore incapable of adjusting the macroeconomy. Globalisation has enabled the Australian economy to continue growing by impacting all the sectors of the economy. Business organisations benefit greatly from globalisation through increased market. Australian has benefited positively from economic growth. Efforts should be made to maximise the advantages brought by globalisation whereas minimising the negative impact. References LÖFGREN, H., & SARANGI, P. (2009). The politics and culture of globalisation: India and Australia. New Delhi, Social Science Press. MICHAEL, M. S. (2015). Reconciling cultural and political identities in globalised world perspectives on Australia-Turkey relations. NAULT, D. M. (2008). Development in Asia: interdisciplinary, post-neoliberal, and transnational perspectives. Boca Raton, Brown Walker Press. NERAD, M., & EVANS, B. K. (2014). Globalisation and its impacts on the quality of PhD education: forces and forms in doctoral education worldwide. SHEIL, C. (2001). Globalisation: Australian impacts. Sydney, UNSW Press. TAZREITER, C., & THAM, S. Y. (2013). Globalization and social transformation in the Asia- Pacific: the Australian and Malaysian experience. Read More