Australia's International Trade

Trade Patterns

There are 4 key linkages between countries
- Trade
- Tourism
- Migration
- Investment
Trade patterns refer to the composition and direction of goods and services a country trades
- The composition of goods refers to the different categories of goods and services a country can import/export
- The direction refers to the export destination and the origin of imports in terms of countries or groups of countries
Note:
- Patterns refer to composition (type) and direction of exports and imports
- Trends refer to how and why the composition and direction of exports and imports have changed over time
The direction of Australia’s is reflected in its close proximity to the Asia-Pacific region, while the composition of its trade reflects the nation’s natural resource wealth
Australia is rich in natural reosurces
- It has an abundant supply of mineral and energy wealth and has vast tracks of land that can be used for crops and livestock

Trade intensity measures and economy’s integration with the world economy.
A higher trade intensity means an economy is more susceptible to external shocks in the world economy
Trade intensity is the sum of exports and imports over GDP
- Sum of exports and imports (of both goods and services) as a percentage of GDP

$T r a d e I n t e n s t i y = \frac{X + M}{G D P} \times 100%$

Factors that determine a country’s trade intensity
- Relative size of the economy
- Location relative to foreign markets (proximity)
- Extent of barriers to trade (natural and artificial)

Australia’s largest imports are personal travel (tourism) expenditure, refined petroleum, passenger motor vehicles and telecommunications equipment
These 4 account for nearly 1 quarter of all imported goods and services
Primary industries ddominate Australian exports
- Use commodities and agriculture products instead of primary industries for extended response
Manufactured goods have been Australia’s most important import category
Changes (to composition) have been associated with rapid increase in mineral andd energy exports and the decline in rural exports
Moreover the focus of Australia’s trade has shifted away from Europe to the Western Pacific and East Asian regions

Trade (exports and imports) is of extreme importance to the Australian economy
As a proportion of growth: Trade represents 46% of GDP for Australia
Driver of growth - over the last 30 years Australia’s economy has doubled, with exports accounting for over a quarter of this growth
Liberalisation (trade) - over the past 30 years, it contributed to higher real GDP (income)
Employment - 1 in 5 Australians are employed in a trade related activity
- In export related industries (e.g. agriculture, minerals and energy) and also sectors related to the import of goods and services
Consumer welfare - Access to wider variety of goods and services a more competitive prices
- Improves Standard of Living (SOL) due to affordability
- Prices of Aud. Vis. and computing equipment fallen over 50% in the last.5 years
- Imports: reduces cost of production due to lower or removal of tariffs. Increases employment. Over half of imports are essential inputs to produce goods locally
Competition - Competition from oversea markets compels Australian firms to innovate and adopt more efficient methods. Increased efficiency boosts economic growth