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Australia’s Protection PolicyIntroductionInternational trade is the exchange of goods and services between countries. By trading internationally, countries are able to use their resources more efficiently, since every country is endowed with different assets and natural resources. Another advantage of international trade is that when a country cannot efficiently produce an item, then it can obtain it by trading with a country that has it (Reem). To better understand the benefits of international trade, let’s take a simple example. Suppose there are two countries X and Y. Country X produces ten apples and six oranges a year, while country Y produces six apples and ten oranges in a year.

Both can produce sixteen units in total. Suppose country X produced the ten apples in three hours and the six oranges in two hours. Country Y, on the other hand, takes one hour to produce ten apples and three hours to produce six oranges. Now both the countries realize that they can be more efficient if they only produce in which they have a comparative advantage. Country X will produce only apples and country Y will produce only oranges.

There are two contrasting views on the level of control placed on trade international trade: free trade and protectionism. Free trade advocates the fact that there should be no regulations or tariffs when trading between countries. It assumes that demand and supply factors will ensure that the market keeps on functioning smoothly. In contrast, protectionists argue that some sort of regulation is necessary. Protectionism refers to the policies that are designed to protect the business inside the country from foreign competition (Reem).

Those who advocate free trade highlight the comparative and absolute advantage as the benefits that lead to efficiency and a rise in productivity. They argue that by protecting industries the government is breeding inefficient businesses. In contrast, the protectionist argue that ‘infant’ industries, those industries that are newly established, need some sort of protection from the big international businesses so that they can grow and compete at a similar level. They argue that these newly established industries are being protected till they are big enough to compete in the international areana. According to the Index of Economic Freedom, Australia is one of the most open economies of the world.

It has got the fifteenth largest economy and is known as a global trader. Its main export destination are the US, Korea, Japan and Indonesia. Its main export products are agricultural based like wheat, wool, iron ore, gold and coal. Although geographically it is located at a distance, Australia still manages to handle its export through increasingly affordable and reliable communication networks. (Christopher)Brief Economic HistoryDuring the colonial years, Australia’s agriculture was developed as the main driver of the economy.

From the start only the economic growth was based on the production of wool and other rural commodities that were exported to Britain and other industrializing economies of Europe. Then in 1850s gold was discovered, along with other minerals. The gold rush in the 1850s led to an increase in population, which resulted in more and more fertile land became less available to the population. The primary and the secondary sector expanded accordingly with the population. The population was highly concentrated in the urban areas, and therefore most of the development took place there.

The mining sector, because of the gold, attracted large investment from the Britain, which naturally developed the communication, transportation and urban infrastructure (Richard H. Snape).

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