1 Globalization and Australia Alan Oxley Australian APEC Centre, Monash

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

3 What is the impact of globalization?

4 The wealth gap is narrowing Gap between richest 20 percent and poorest 20 percent falls - from 15 to 1 in to 13 to 1 in i.e. by 10 percent

5 Incidence of poverty is falling East Asia26.6%15.3% (- China)23.9%11.3% Europe/Central Asia 0.2%5.1% Sub-Saharan Africa 46.6%46.3% WORLD28.3%24%

6 Quality of life improving ’s People undernourished920m810m Average life expectancy5866 Infant survival rates/ Global literacy80%67%bb

7 Countries open to trade grow faster

8 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.

9 What is Globalization? Defining it The drivers The effects

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

11 The Drivers Cheap travel Trade liberalization Information technology High technology

12 Exports % share of world production

13 Annual % Growth of trade and GDP 1959 – 96

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

15 Effects of globalization On business On work

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

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

18 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

19 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

20 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

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

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

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

24 Australia’s position Openness IT/E readiness Culture

25 Australia’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/Ereadiness RankingScore (of 10) US18.73 Australia28.29 UK38.10 Canada48.09 Norway58.07 Sweden67.89 Singapore77.87 Source: Economist Intelligence Uni t

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

28 Manufacturing exports

29 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

30 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

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

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