That is, the ability of firms in Australia to compete on the international market for the sale of goods and services. Increased international competitiveness will result in more demand of goods and services from Australian firms as they are cheaper compared elsewhere, resulting in more demand for the AUD thus appreciating the dollar. There, however, can also be a reverse effect. A high Australian dollar will make goods and services purchased from Australia relatively more expensive when compared with other countries offering the same goods/services. An example of this effect in today’s economy is the mining boom in Australia.
It is this force that essentially created this gap. Western nations taking valuable resources, including humans, from “third-world countries” allowed for those countries to be set back. Through economic means, the western countries underdeveloped their colonies by changing the industries to provide only raw materials. Yet, it is claimed that those countries created their own conditions and are the only ones to blame for their lack of advanced culture. Overpopulation is another idea used to blame the “third-world countries” while countries in Western Europe have a higher density.
This combined with the current fuel climate and oil prices result in a lot of demand for bio-fuels which is why 20% of American grown corn goes on bio-fuels. Like a rise in income this also shifts the demand curve to the right and results in demand pull inflation. This can be illustrated by the same diagram and the same shift from P1 to P2. In conclusion the prices of grains such as corn and wheat have risen as a result of multiple demand side factors. In 2007 was when the rise in disposable incomes in China and the rise in demand for bio-fuels saw significant rises which in combination caused a large price rise as a result of demand pull inflation.
How do you reconcile the difference in stock performance between FedEx and UPS over two time periods of pre and post 2004 (entry into China)? What expectations do you have for future stock performance? The stock performance between FedEx and UPS changed drastically before and after the entry into China. Both of the company’s prices steadily increased as the talks in China began. Slightly after, FedEx’s share price began increasing at a high rate of five times faster than UPS’s share price.
For example if Engineering Tech pay suppliers in Australian dollars, wages/salaries and utilities in Ethiopian currency but receives payments in US dollars, unfavorable shifts in the exchange rate of the currencies may affect Engineering Tech’s profit margin. A foreign exchange guarantee facility can help ET protect its profit from exchange rate fluctuations by locking in exchange rate and allowing ET to hedge its currency exposure. The more of foreign exchange it can hedge, the greater the control over foreign exchange risks. d) Political Risk Insurance: Political risk insurance is critical in this project because it involves commercial risks and it’s a project in a least developed country, with an uncertain political environment. E.g.
The Influence of China’s demand for Australia’s resources on our Economy Globalisation has been occurring rapidly in the recent decades throughout the world which has resulted in the free movement of people, the advancement in technology and an increase in global trade. This has allowed countries around the world to integrate and influence foreign economies more dramatically. Trading can even go back to the times of World War 2 to the times of 2000 when Australia’s globalisation was increasing trade with Asia like China. China is a small country who has a population over just over 1.3 Billion, there economic growth rate stands at 9.6% [1] and as a result they have a reasonably high inflation rate of 6.2%. [2] The influence of China’s
In recent years, Australia’s population has increased significantly due to immigration. The growth rate of its population was 2.1% in 2010, which is higher than that of in China, US and Canada. It is predicted to reach 36 million in 2050. However, both positive and negative impacts come into being because of ‘Big Australia’. It impacts on environmental, social and economical issues in Australia.
In determining which goods to import from which country and which goods to export, I encountered some of the advantages and some limitations of the international trade. According to the theory of comparative advantage, a country should specialize in the production and export of commodities that it can produce at a lower opportunity cost than other countries while it should import commodities that are produced at a lower opportunity cost than other countries. Limitations such as imposing a quota or tariff can raise the price of products and lead to a loss in consumer surplus or cause retaliation from the country therefore reducing the goods a country is able to export. There are factors that influence the foreign exchange rate which also has an impact on a country’s importing and exporting. Regardless of these things, international trade is important to a countries
from China goes to Wal-Mart. This made Wal-Mart China’s eighth largest trading partner. Governments, businesses, communities, and individuals in countries around the world face both challenges and opportunities as a result of rapidly expanding economic globalization. Changes in a country’s economy can happen very quickly and can deeply affect people and institutions. The fact that Wal-Mart is a company not even a country; and is China’s eighth largest trading partner; just makes us realize how much economic growth depends on businesses to produce more goods and services faster and more efficiently.
They distort prices by imposing trade costs on the trading parties involved. Hence the first effect of a preferential trade arrangement is to reduce tariff adjusted prices of imports from members in relation to the prices of imports from non-member countries. This shifts expenditures, reshapes trade flows and affects output levels. The tariff-adjusted prices of intra-union imports fall in relation to the prices of imports from the Rest Of the World (ROW). As a result, expenditures are shifted away from extra-union produced goods, thereby increasing profits for and encouraging production by union firms.