Globalization and Australia www.apec.org.au Globalization and Australia Alan Oxley Australian APEC Centre, Monash www.worldgrowth.org www.globalizationguide.org

Three aspects The impact of globalization What is globalization Impact on Australia

What is the impact of globalization?

The wealth gap is narrowing 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

Incidence of poverty is falling 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%

Quality of life improving 1970 1990’s People undernourished 920m 810m Average life expectancy 58 66 Infant survival rates/1000 44 67 Global literacy 80% 67%bb

Countries open to trade grow faster

The evidence shows that the poorest people within countries share in the gains from national income growth. Generally, as a country ’s average income rises,the poorest share proportionately in those gains. More specifically,the poorest 20 per cent in an economy gain by the same percentage as the country does. And as a country ’s average income per person rises,the proportion of its population living in extreme poverty falls.

What is Globalization? Defining it The drivers The effects

Defining globalization An open economic system Non-discrimination Global brands Global structures

The Drivers Cheap travel Trade liberalization Information technology High technology

Exports % share of world production

Annual % Growth of trade and GDP 1959 – 96

US investment now more global Percentage of foreign stocks held by US investors 1975 1996 One percent Ten percent

Effects of globalization On business On work

Effects of globalization on business Cheap offshore production Reduced transport costs Virtual communication Standardization of logistics Global marketing

Bigger and smaller Greater scale in manufacturing - commodities are globally priced Specialization in manufacturing Globalization of specialist manufacturing

New importance of Brands 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

Globalized business Greater specialization of production - Hewlett Packard More outsourcing – Soap and medicines Greater increase in brand values - LG New technology niches – steel mini mills

Effects of globalization on work 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

A globalized world Greater freedom of movement of goods, services, capital, people Global citizens The Information Age – has only just begun

Australia and Globalization How is Australia positioned? Examples of globalized industries The Future

Australia: globalization’s child Australia has grown on - trade - foreign investment - immigration - adaptation of technology Australia is the branch office model of development

Australia’s position Openness IT/E readiness Culture

Australia’s openness One of the most open economies in the world - average tariffs – 5 percent - open financial and telecoms - open to foreign investment

Australia’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

Australia’s globalized economy Global industries - mining and agriculture Services – distribution, logistics, transport, financial services Manufacturing – a new contender

Manufacturing exports

Globalized industries Toyota - manufactures and exports a global car Howe Leather – a tier one supplier to Ford Rosemount/Southcorp – exporter & offshore producer Westfield – real estate management

The future The information Age - computing power continues to expand exponentially - More global distribution of activity - Greater interconnectivity - Bigger organizations - Greater fragmentation - Greater personal freedom

Australia ready to thrive Globally oriented economy High adaptation of IT Workforce adjusting Open society

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