Analyse the effects of domestic and global free trade and protection policies on the Australian economy
Analyse the effects of domestic and global free trade and protection policies on the Australian economy
Free trade is the unrestricted purchase and sale of goods and services between countries without the imposition of protection such as tariffs and quotas. This enables economies to focus on their core competitive advantage(s), thereby maximizing economic output and fostering income growth for their citizens. Australian exports rose from $66.6 billion in 1990-91 to $300.4 billion in 2012-13, with an average growth in export volumes of 4.6 per cent per annum since 1990-91. This is reflective of Australia’s proactive actions to phase out protection since the 1970s. The major effects of domestic and global free trade and protection policies on the Australian economy are structural change, competitiveness and efficiency, unemployment, living standards and economic growth.
A move to trade liberalisation since the 1970s in Australia has drastically changed the structure of the economy. Structural change involves changes in the patterns of production that reflect changes in technology, consumer demand, global competitiveness and other factors. Protection polices affect the natural change in the structure of an economy, often leading to a decline in globally competitive industries. In 2011-12 Australia’s net tariff assistance was $1.1 billion, a very small percentage of GDP (less than 0.1%). Tariff levels in Australia have fallen from a massive 36% in 1968-9 to 1.8% in 2011, thus illustrating why Australia is one of the most open economies in the world. However, this has caused both positive and negative effects; the positive being that Australian industries have become more competitive and efficient as they are forced to focus on their comparative advantage; the negative is that heavily protected industries have suffered decline and job losses.
Australia’s rural and manufacturing industries have suffered sustained negative growth over the past decade due to a
Free trade is the unrestricted purchase and sale of goods and services between countries without the imposition of protection such as tariffs and quotas. This enables economies to focus on their core competitive advantage(s), thereby maximizing economic output and fostering income growth for their citizens. Australian exports rose from $66.6 billion in 1990-91 to $300.4 billion in 2012-13, with an average growth in export volumes of 4.6 per cent per annum since 1990-91. This is reflective of Australia’s proactive actions to phase out protection since the 1970s. The major effects of domestic and global free trade and protection policies on the Australian economy are structural change, competitiveness and efficiency, unemployment, living standards and economic growth.
A move to trade liberalisation since the 1970s in Australia has drastically changed the structure of the economy. Structural change involves changes in the patterns of production that reflect changes in technology, consumer demand, global competitiveness and other factors. Protection polices affect the natural change in the structure of an economy, often leading to a decline in globally competitive industries. In 2011-12 Australia’s net tariff assistance was $1.1 billion, a very small percentage of GDP (less than 0.1%). Tariff levels in Australia have fallen from a massive 36% in 1968-9 to 1.8% in 2011, thus illustrating why Australia is one of the most open economies in the world. However, this has caused both positive and negative effects; the positive being that Australian industries have become more competitive and efficient as they are forced to focus on their comparative advantage; the negative is that heavily protected industries have suffered decline and job losses.
Australia’s rural and manufacturing industries have suffered sustained negative growth over the past decade due to a