Discuss about the International Trade Empirical Evidence.
The present assignment covers a discussion and explanation on the globalization with respect to Australia’s international business. The assignment aims to present the concept of globalization, considering the analysis on Australia’s trading areas as well as trading parties across the border. The study further incorporates discussion on the relative issues of international business and globalization that results in collapse of several business deals and projects. In order to present the concept on globalization, foreign investment policy of Australia has been analyzed which explains Australia’s contribution for international business.
Globalization refers to the process through which business organizations share ideas, products, services, technologies and other business aspects. It is a procedure, which involves international trading and international investment with the assistance of informational technology. As the process of globalization affects the environmental factors, cultural system, political system and development of economy, it is essential for the organizations to evaluate all the factors while entering into international business (Pieterse, 2015).
With the rapid increase in globalization, international business has become significant in the recent years that involve undertaking of business activities across the internal borders. Globalization and international business impacts the economy and transforms different countries as well as industries in several ways to create high rate of gross domestic product (GDP). At the same time, globalization creates several opportunities to for the countries as well as for the organizations together with certain challenges and issues that need to be monitored by different industries (Mitchener & Yan, 2014). Considering the recent trends of globalization, Australian has significant contribution in the foreign investment and international trade that resulted in the enhancement of quality of life. It has been observed that due to free trade policy across the international borders, Australia has become one of the largest international traders resulting in increase of competitiveness, improvement in standards of living as well as innovations in business activities (Jorgenson & Rice, 2015).
As per the current data, it has been noted that Australia business organizations involve significantly in global investment valued around $2.1 trillion during the year 2015. United States as well as United Kingdom regions are the largest investment destinations as the amount of outward investment is $594 billion as well as $353 billion respectively (Austrade.gov.au, 2017). Australia has also been investing large amount of economy in the Asian countries amount of which increased to $346 billion in the year 2015 from the amount of $70 billion in the year 2005 (Dfat.gov.au, 2017). Australia’s international trade not only involves trade in commodities and miners but also in the services of banking and telecommunications. During the year 2013, value of export in Australia valued around $251.7 billion (Austrade.gov.au, 2017). Considering the international trade for commodities and minerals, Australia exports iron ore, coal, wheat, gold products, aluminum products, wool, natural gas products, mining and transportation equipment. It has been noted that Australian trade in the product of mined coal involves 54% whereas the commodity trade involves 85% and 60% for the agricultural goods (Austrade.gov.au, 2017).
Considering the present economy trends, Australia has been largest exporter of the product iron- ore while Britain region and United States region has been major trading partners. However, Australia is focusing in trading with Asian countries that is China, Republic of Korea and Japan becoming largest partners in trading (Simas et al., 2014). As the international trading policy of Australia incorporates limited restrictions to encourage free trading across the borders in terms of import of goods and services, productivity has been increased together with the growth in economy. International trade in Australia associates with unilateral, bilateral and multilateral trade practices that assist in strengthening of economic collaborations at international level (Rogers, Lee & Yan, 2015).
In the present international trade practices, Australia currently involves in ten free trade agreements (FTAs) amounting to approximately 67% of the total trade. Such trading parties are New Zealand, Singapore, Thailand, United States, Malaysia, Korea, South East Asian Nations, Japan as well as China (Austrade.gov.au, 2017). Considering the trade for the products related mining and resources, Australia has been largest producer of iron ore, bauxite, zinc ore natural gas, uranium as well as coal mining. It has been noted that the production and trading in the mining sector Australian economy constitutes around 9% whereas the export value from the minerals and fuel products incorporates 42% (Austrade.gov.au, 2017).
Analysis on the current market scenario of Australia, total value of export amounted to A$ 316.6 billion which incorporates the export of iron ores amounted to $49,060 million and export of coal minerals amounted to A$37,031 (Austrade.gov.au, 2017). As Australia is considered as largest trader in iron ore products, maximum amount of export is derived from the products of Iron ore as well as coal minerals, which is exported mainly in top exporting countries China, United States and Japan. Consequently, Australia is considered as developed country in terms of manufacturing equipments for mining, manufacturing technologies and services. Apart from that, business organizations in Australia have become competitive in accordance to the supply chain, engineering processes, training as well as the process of research and development (Bowman, Gilligan & O’Brien, 2014).
In view of the globalization process, there are several challenges involve that affects the growth and sustainability of the business organizations. The primary issues included in the process of globalization are considered in terms of governments, society as well as political factors. It is essential to ensure that the potential advantage of globalization extends to all the nations and regions (Kalfadellis, 2015). Several organizations involve in international trade as a part of globalization, which influences instability in the business activities and affects the strategies in developing countries. Another primary challenge of globalization associates with the wage structure, labor rights practices in employment and environmental factors that results in collapse of certain organizations. Due to difference in wage payment structure or labor policies in different countries, companies on other countries find it difficult to appoint competent or experienced workers (Clougherty & Grajek, 2014).
Even though international trade in Australia reflects increasing trend for different products with different countries, there are certain challenges and issues involved that affects the economy and globalization outcomes. Major issue includes in international trade is structure of the company with respect to the production techniques, working coordination, appointment of experts and competent officials to understands the target market and business strategies. Another issue that affects international trading is foreign laws and principles that regulate the organizations in the international countries related to the laws of trading, tax implications, potential tariffs as well as legal costs (Kriesi, 2013). Several organizations experience challenges with respect to the international accounting as different countries have different accounting standards to determine and report financial values that affects the tax implications and financial risks. Good business involves appropriate business strategy and proper accounting records to ensure the true business performance, appropriate profitability and appropriate tax liability. International trade is affected due to account international process as the comparative analysis becomes different due to difference in accounting methods, currency values and tax rates. Strategies in cost calculation as well as global pricing are another primary challenge the affects the international trade business. Favorable international trade depends on the cost of production, cost of shipping, cost of marketing as well as distribution together with the profit margin hence it is essential for the organizations to control the business costs (Korkmaz & Union, 2013). Organizations are required to construct appropriate strategy in terms of global pricing so that the accurate profit margin can be estimated to make the international trade viable. Currency rates and foreign exchange fluctuations majorly affects the international trade hence, the organizational management is required to incorporate the provisions for higher currency rates by incorporating the rate of foreign exchange fluctuations while setting the price of products. International trade largely depends on the currency fluctuations for instance; trading in a currency US dollars would involve higher cost of export whereas trading in weaker currency might depreciate the currency and lower the total cost (Kalfadellis, 2015).
Conclusion
In view of the above discussions, it can be said that the globalization is affecting the economy of the country due to exchange of products, technologies, ideas, cultural values and services. Globalization not only involves international trade but also involves foreign investment and exchange of technologies that affects the cultural, political and environmental factors. It has been noted that Australia has been largest country for international trade as well as foreign investment that improved standard of living, financial economy and productivity. In addition, globalization and international trade in Australia enhanced the market competitiveness and innovations in the activities of business. As per recent data, it has been noted that major trading products in Australia are minerals and resources, agricultural products, gold, wheat and natural gas products. In the current year, Australian economy reflected largest trade in the product of iron- ore while the value of foreign investment reflected around $2.1 trillion in 2015. Besides, globalization involves certain challenges with respect to governmental, social and political factors. Accordingly, organizations are required to consider these factors ensuring the benefits of globalization and international trading is received by all the countries.
Reference List
Austrade.gov.au. (2017). Austrade, Australian Government – Austrade. Retrieved 17 March 2017, from https://www.austrade.gov.au/
Bowman, M., Gilligan, G., & O’Brien, J. (2014). Foreign investment law and policy in Australia: a critical analysis. Law and Financial Markets Review, 8(1), 65-77.
Clougherty, J. A., & Grajek, M. (2014). International standards and international trade: Empirical evidence from ISO 9000 diffusion. International Journal of Industrial Organization, 36, 70-82.
Dfat.gov.au. (2017). Department of Foreign Affairs and Trade. Retrieved 17 March 2017, from https://dfat.gov.au
Jorgenson, A. A., & Rice, J. (2015). Structural dynamics of international trade and material consumption: A cross-national study of the ecological footprints of less-developed countries. Journal of World-Systems Research, 11(1), 57-77.
Kalfadellis, P. (2015). Location Advantages and Repeat Investment in Australia: A Two-State Comparison. Regional Studies, 49(7), 1140-1159.
Korkmaz, E. E., & Union, T. W. (2013). Global labor movement’s response to the challenges of globalization: transnational solidarity campaigns. Analysis of three cases from turkey.
Kriesi, H. (2013). Conclusion: An assessment of the state of democracy given the challenges of globalization and mediatization. In Democracy in the Age of Globalization and Mediatization (pp. 202-215). Palgrave Macmillan UK.
Mitchener, K. J., & Yan, S. (2014). Globalization, trade, and wages: What does history tell us about China?. International Economic Review, 55(1), 131-168.
Pieterse, J. N. (2015). Globalization and culture: Global mélange. Rowman & Littlefield.
Rogers, D., Lee, C. L., & Yan, D. (2015). The politics of foreign investment in Australian housing: Chinese investors, translocal sales agents and local resistance. Housing Studies, 30(5), 730-748.
Simas, M. S., Golsteijn, L., Huijbregts, M. A., Wood, R., & Hertwich, E. G. (2014). The “Bad Labor” footprint: quantifying the social impacts of globalization. Sustainability, 6(11), 7514-7540.
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