Question 1. Why are exports so important to Australia?
The fundamental reason which underpins the importance of exports to Australia is economic growth. Exporting within Australia is important on both a macro and micro level. On a Macroeconomic level exports assist the success of imports within the nation and therefore help the expansion of the economy. Furthermore exports help Australia take advantage of economies of scale. Due to the fact that Australia is a small country, known in exporting mostly agricultural and mining products the domestic market is limited in growth, exporting is therefore needed to expend into different markets. On a Microeconomic level exports encourage companies to develop and expand as they are competing with different companies all around the world. In order to be successful companies must strive to better themselves to become attractive in a diverse market, this can be achieved through utilizing technological advances. Through such advances companies can enhance productivity and improve the exporting reputation of Australia on a whole. A consequent issue which illustrates the importance of exporting to Australia is the concept of comparative advantage. Through exports Australia can take advantage of products which are not available in the country (such as oil) and share their specialised products (such as sheep wool other agricultural products) to overseas markets, therefore mutual benefits are gained. ‘It is argued that if one nation specialise in what they are good at and trade with another nation for what they are good at then both nations will ultimately benefit’[i]. Exports have also proven to be beneficial to the labour market. ‘A comprehensive study of 540,000 Australian companies by the ABS does confirm that overall; exports are good for workers’[ii]. This is due to the fact that exporting creates more jobs for Australians and pay a better wage/salary then non-exporters, thus enchancing the overall living standard for...
Please join StudyMode to read the full document