1 Globalization and Australia Alan Oxley Australian APEC Centre, Monash .
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Transcript of 1 Globalization and Australia Alan Oxley Australian APEC Centre, Monash .
1
Globalization Globalization and and
AustraliaAustralia
Alan OxleyAustralian APEC Centre,
Monashwww.worldgrowth.org
4
The wealth gap is The wealth gap is narrowingnarrowing
Gap between richest 20 percent and poorest 20 percent falls
- from 15 to 1 in 1970
- to 13 to 1 in 1997
- i.e. by 10 percent
5
Incidence of poverty is Incidence of poverty is fallingfalling
1987 1998
East Asia 26.6% 15.3%
(- China) 23.9% 11.3%
Europe/Central Asia
0.2% 5.1%
Sub-Saharan Africa
46.6% 46.3%
WORLD 28.3% 24%
6
Quality of life Quality of life improvingimproving
1970 1990’s
People undernourished
920m 810m
Average life expectancy
58 66
Infant survival rates/1000
44 67
Global literacy 80% 67%bb
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Countries open to trade Countries open to trade grow fastergrow faster
-1
01
23
456
7
63-73 86-92
Open Mod Open Mod Closed Closed
8
The evidence shows that the The evidence shows that the poorest people within countries poorest people within countries share in the gains from share in the gains from national national income growth. Generally, as a income growth. Generally, as a country ’s average income country ’s average income rises,the poorest share rises,the poorest share proportionately in those gains. proportionately in those gains. More specifically,the poorest 20 More specifically,the poorest 20 per cent in an economy gain by the per cent in an economy gain by the same percentage as the country same percentage as the country does. And as a country ’s average does. And as a country ’s average income per person rises,the income per person rises,the proportion of its population living proportion of its population living in extreme poverty falls.in extreme poverty falls.
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Defining globalizationDefining globalization
An open economic system
Non-discrimination
Global brands
Global structures
12
Exports % share of world Exports % share of world productionproduction
0
5
10
15
20
25
1913 1950 2000
13
Annual % Growth of trade and Annual % Growth of trade and GDPGDP
1959 – 961959 – 96
0
2
4
6
8
10
12
World USA
GDP GDPTrade
Trade
14
US investment now more US investment now more globalglobal
Percentage of foreign stocks held by US
investors
Cumulative US direct
foreign investment
% of GDP
0
5
10
15
20
1980 1995
1975 1996
One percent
Ten percent
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Effects of globalization on Effects of globalization on businessbusiness
Cheap offshore production
Reduced transport costs
Virtual communication
Standardization of logistics
Global marketing
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Bigger and smallerBigger and smaller
Greater scale in manufacturing
- commodities are globally priced
Specialization in manufacturing
Globalization of specialist manufacturing
18
New importance of New importance of BrandsBrands
Selling Fords like Coca Cola?
- Ford sold its components business for $1.5 billion
- That business, Visteon, supplied 22% of a new Ford vehicle
- Ford spent $9 billion buying brands: Jaguar and Volvo
19
Globalized businessGlobalized business
Greater specialization of production - Hewlett Packard
More outsourcing – Soap and medicines
Greater increase in brand values- LG
New technology niches – steel mini mills
20
Effects of globalization on Effects of globalization on workwork
Jobs in services rather than manufacturing
Workers provide services rather than “do a job”
End of “lifetime” employment
Individuals manage more of their own affairs
21
A globalized worldA globalized world
Greater freedom of movement of goods, services, capital, people
Global citizens
The Information Age – has only just begun
22
Australia and Australia and GlobalizationGlobalization
How is Australia positioned?
Examples of globalized industries
The Future
23
Australia: globalization’s Australia: globalization’s childchild
Australia has grown on
- trade- foreign investment- immigration- adaptation of
technology
Australia is the branch office model of development
25
Australia’s opennessAustralia’s openness
One of the most open economies in the world
- average tariffs – 5 percent
- open financial and telecoms
- open to foreign investment
26
Australia’s IT/EreadinessAustralia’s IT/Ereadiness
Ranking Score (of 10)
US 1 8.73
Australia 2 8.29
UK 3 8.10
Canada 4 8.09
Norway 5 8.07
Sweden 6 7.89
Singapore 7 7.87
Source: Economist Intelligence Unit
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Australia’s globalized Australia’s globalized economyeconomy
Global industries - mining and agriculture
Services – distribution, logistics, transport, financial services
Manufacturing – a new contender
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Manufacturing Manufacturing exportsexports
0 5 10 15
Exports
Manufactures
Growth in manufactured exports vs
all exports 1980 - 2000
29
Globalized industriesGlobalized industries
Toyota - manufactures and exports a global carHowe Leather – a tier one supplier
to FordRosemount/Southcorp – exporter & offshore producerWestfield – real estate management
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The futureThe futureThe information Age
- computing power continues to expand exponentially
- More global distribution of activity- Greater interconnectivity- Bigger organizations- Greater fragmentation- Greater personal freedom
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Australia ready to Australia ready to thrivethrive
Globally oriented economy
High adaptation of IT
Workforce adjusting
Open society