Comparing Australia to the World

Associate Professor Geoff Dow of the University of Queensland spoke today about some of the variables that can be used to compare Australia’s economy to the rest of the world.  One of the comparisons he made was based on the Human Development Index (HDI).  The HDI measures how rich a country is by taking into consideration factors affecting quality of life such as education, life expectancy, and health conditions.  Using the HDI, Australia ranks number two in the top fifteen richest countries.  This measurement is important because a rich country according to GDP may not also have the best quality of life.  A country that provides the best conditions for a quality life is overall the richest. 

Another comparison Professor Dow made was based on unemployment.  Over the past 70 years, unemployment in Australia has fluctuated following similar trends to the rest of the world.  Between 1974 and 2004 Australia’s unemployment rate has averaged about 6.6% as compared to the US which is about 6.2%.  The unemployment rate has been as low as 2% in Australia and many economists, such as Professor Dow, would like to see it that low or even lower once again.  The unemployment of Australia currently is around 5% while the US unemployment rate has risen to 9.2% after the recession.  The unemployment rate shows the stability of an economy and the availability of jobs. 

A third comparison Professor Dow made was about the sense of egalitarianism a country possesses.  Australia, for instance, believes they are egalitarian because the difference in incomes between rich and poor has been mediocre.  They have never had an extremely small gap between the rich and the poor, such as the Scandinavian countries, but their inequality has never been as great as the USA.  It is somewhat of a social attitude that has Australians convinced that they are egalitarian, even though they are in the top 8 countries with the largest income gap from 1965 to 2010.  Egalitarianism is a sense of equality and particularly with incomes, it is important for a country to minimize the gap between the rich and the poor to maximize their economy.     

(All statistics and information above from Geoff Dow’s packet)   

Since WWII, Australia, much like America, also experienced times of recession and times of success.  Industries such as auto development and agriculture expanded greatly to prove Australia’s role in the global economy.  Today, however, such industries have been diminishing  private companies become less and less popular and large companies begin to rule.  Professor Jones mentioned that inflation has risen by about 20% in the last year.  GDP has increased with only minor fluctuations over the past five years and is predicted to continue increasing in 2011.   The external balance of Australia has fluctuated with increases and decreases from year to year, but is most commonly seen at around $54-59 billion.  The five main trade and finance partners that interact with Australia are China, Japan, Republic of Korea, India, and the USA (Jones packet).

I Love College.

Today we heard from Sean Lennon of Study Australia.  He and his business partner built from the ground up an international study abroad program.  Their goal is to engage students in studying abroad foreign countries such as Australia, New Zealand, Thailand, and other parts of Southeast Asia.  University education can be considered an export because it is a service provided by a country.  The country that provides the service makes money from it.  Australia’s higher education sector is the third largest export in the nation only behind mining and tourism.  Foreign student tuition makes up about 25% of the education system’s budget (Chronicle).  Though Australia makes most of its money exporting education to students who choose to study abroad for a full semester, a year, or maybe even a couple, by taking this class I am contributing to Australia’s economy and increasing their education exports.     

Recently, the education sector has been challenged by the increasing strength of the Australian dollar.  This makes studying abroad in Australia less appealing to American and some European students.  Affordability is a main concern when students consider studying abroad.  Higher education costs in America are rising Another major concern students have is safety.  In recent news, two Indian boys were attacked.  This has caused major concern to India, but also to countries that have students wanting to study abroad. 

 Out of Australia’s 39 Universities, there are only two private universities that exist in Australia—Notre Dame and Bond University.  In the United States private institutions, such as Augustana, are not funded by the government.  They are usually small, have good academic reputations, and affiliated with a church.  In Australia, where religion is a less predominant institution, there are only two universities affiliated with churches.  The government still funds these universities, because they would not survive without the help.  Like other universities in Australia, Notre Dame and Bond University receive money, land, and research grants from the government.       

Sydney Opera House

“I believe that the choice of Jørn Utzon is important because [he] made a building well ahead of its time, far ahead of available technology, and he persevered through extraordinary, malicious publicity and negative criticism to build a building that changed the image of an entire country."

- Frank Gehry, Architect and Pritzker juror

(Architecture Week)

The Architect: Jørn Utzon

The Danish architect that entered the international competition for designing Sydney’s Opera House, Jørn Utzon , was an unlikely choice for the winner.  The input of one juror convinced the others to choose his design, though it required advanced computer technology that was expensive and not easily accessible at the time.  Utzon’s creativity and ability to create such designs was inherited from his father, a naval architect, and was passed on to his son and his two grandchildren who each became architects also.  In 1966, Utzon became frustrated with the politics and criticism he was receiving from the public and withdrew from the creation of his opera house.  His contribution to Sydney lives on, however, in the iconic structure of the Opera House. 

History and Culture

·         Australia held a competition in 1957 for the opera house design after WWII

·         The country wanted an iconic structure to represent the city of Sydney and the entire country of Australia –much like Eiffel Tower is to Paris, and  the pyramids to Egypt

·         Opened by Queen Elizabeth II on October 20, 1973

·         The design of the opera house was inspired by Yucatan culture of the Mayans

Construction

·         Initially construction costs were estimated at $7 million and a timeline of about 5 years beginning in 1959

·         Utzon’s design required technology ahead of its time and over 10,000 construction workers in 14 years

·         The entire project was $102 billion after completion and mainly funded by lottery

·         Roof sections weigh up to 15 tons

·         Over 1 million tiles on the roof

·         Roof sections are held together by 350 km of tensioned steel cable

Events

·         Hosts 3,000 events each year

·         Over 200,000 people take guided tours every year

·         2 million people attend performances

Location

·         Bennelong Point, Sydney Harbour

·         Surrounded by water on three sides, including Farm Cove and Sydney Cove

·         Located near Sydney’s Royal Botanical Gardents and the Government House

Elizabeth Anderson

For Professors Nesiba and Gardner

December 28, 2010

In partial fulfillment of

requirements for

ECON 297/BSAD 420

Australia in the Global Economy

Works Cited

Jørn Utzon Pritzker Prize. ArchitectureWeek. Artifice, Inc., 16 Apr 1993. Web. 21 Dec 2010.

Opera House, Sydney. A View On Cities. N.p., 2010. Web. 23 Dec 2010.

Sydney Opera House. Culture.gov.au. Commonwealth of Australia, 2010. Web. 23 Dec 2010.

Potts, Joanna. Australia. Long Island City, NY: Langenscheidt Publishers, Inc., 2009. Print.



We Could Pretend That It's The Weekend...We Could Pretend It All The Time.

Over the weekend we had two free days to decide on our own what we wanted to do or see in Sydney.  We kicked it off with a barbecue with the whole group on Friday night.  They guys have become experts with the grill!  After that we went out to explore the nightlife in Sydney and ended up dancing the night away. 

We slept in just a little on Saturday morning so we didn’t waste the whole day.  While the rest of the girls decided to go shopping I headed to the beach with a few of the guys.  The weather was absolutely beautiful, and I somehow even managed to avoid any painful sunburn.  Originally I had decided to join them because I didn’t want to spend the day shopping like the last two days, but after just a couple hours on the beach they were ready to scope out some of the surf shops.  It was quite the shopping adventure with the guys.  I felt like the situation should have been the opposite, because I was the one holding their bags and telling them if the color was right for them or if it fit right.  What an experience!  Saturday night was the kick off for Sydney’s Festival First Night, a celebration of the arts.  There was a lot going on including live bands at Martin Place.  The whole group of us went down there together, with thousands of others to check it out.

The best part of the weekend was Sunday.  In the afternoon a few of us went down to Patty’s Market to look for some souvenirs for my family.  The market was almost overwhelming.  There were so many booths with so much packed into each one and there were people everywhere.  We weren’t there very long because we had to come back to get ready to go to the Sydney Opera House.  The show was amazing!   It was called Le Grand Cirque “Adrenaline” and was basically composed of acrobats doing gymnastic tricks.  They were so flexible and some of their tricks made me nervous.  The whole experience was awesome!   

Monetary Policy

Monetary policy is conducted by the Federal Reserve Bank.  It sets interest rates with the aim of affecting economic growth, employment, and inflation and can either be expansionary and contractionary.  The interest rates in the US are lower than interest rates in Australia because of Australia’s exports from industries such as wine, tourism, education, and mining.

Every bank was hit by the global financial crisis, but some suffered more than others.  Australia, having a smaller economy compared to the US, did not suffer as greatly.  According to the 2010 Policy Brief article, Australia’s businesses and citizens were spared some of the effects of the financial crisis because of the monetary and fiscal policies Australia previously had in place.  The Australian Competition Law gave competitive markets the strength they needed in order to avoid some of the effects of the crisis (Policy Brief).   

Due to the impact the financial crisis did leave on Australia, inflation costs rose.  Richard Finlay, an economist at the Federal Reserve Bank of Australia, explained that as consumption and private investment decrease, inflation costs rise in order for businesses to benefit.  Australia’s goal for inflation is between 2-3%. 

Exports for mining coal, metal ores, and other minerals has increased by 10.5% from 2000 t0 2007.  Education has increased by 3% and tourism decreased by 1.8% (Reserve Bank Bulletin).  The decrease in tourism relates to inflation.  As inflation occurs, prices rise and less people travel.  The other two industries have increased their export values, in opposition to the trend, because they attract Asian importers.   Service exports, especially education, are demanded by Asia from the effect of appreciation.

The Australian Central Bank and the US Federal Reserve System perform separate jobs.  The Federal Reserve System exists to provide emergency services to US citizens abroad.  For example, they can help with passport replacement, wiring money, and in some cases provide lawyers or bail for jail.  The Central Bank is the center of the banking industry in Australia.  They set interest rates and control inflation as well as manage the side effects of each of those. 

The US consulate provides emergency services to foreign countries.  The speaker from the Consulate talked about the United State’s relationship with Australia and described it as the best of any other country.  For quite a long time Australia has been supportive of the US and its plans.  The free trade agreement allows free trade to occur between the United States and Australia.  Exports become easier, and Australia’s wine industry benefits from its place in the FSO competitive wine market.

Tourism Australia

Today we heard from Rachel Crowley from Tourism Australia.  I found what she spoke about to be especially interesting.  She focuses of researching things like how many people visit Australia, where they come from, how they get there, and what they are interested in doing and seeing while in Australia.  Tourism is Australia’s largest industry.  It produces $92 billion in spending and $33 billion in GDP.  As a large industry, tourism also provides half a million jobs (Tourism Industry Potential). 

Trying to make Australia and its attractions known to the world is one of Rachel’s main goals.  Foreign tourists often don’t realize all that Australia has to offer, but their place in the industry is huge.  Because the dollar is strong, there are great opportunities for interstate Australians to travel the country without overpaying.  Also, Australian residents have been interested in travelling to other countries because it is now cheaper for them.  International tourists are becoming a more predominant factor for the tourism industry.  International tourism expenditures is estimated to increase from 38% in 2009 to 45% in 2010, which means the domestic and international tourists are becoming close to equal (Tourism Industry Potential).  In the past ten years tourism has steadily increased as far as overnight tourism expenditure goes.  The trend is for it to keep increasing steadily, but it had the potential to increase even more rapidly.  Australia attracts most of its tourists from Europe and Asia, with the exception of the United States.  China, the UK, and the USA make up the three largest importers of tourism.   

Recently the strength of the Australian dollar has increased.  Price levels stay constant, but the demand for the export of tourism increases as the demand curve shifts to the right.  Quantity demanded is also increased as the equilibrium is shifted to the right.  The strength of the dollar determines the affordability of tourism.  A strong Australian dollar increases domestic tourism, but decreases international tourism. 

Australia's Economic History

Today we heard from Evan Jones, a professor at the University of Sydney, about Australia’s economic history.  Since 1788 when the country of Australia was founded, the majority of settlers were white, but has since changed greatly to include a variety of heritages including European, Asian, and African.  As Australia has grown closer ties with China and Japan exports to these countries have increased dramatically.  Production and exports seem to be related as they seem to have an impact on one another.  Australia’s role in the global economy has brought it closer to new trading opportunities with different countries.   

Imperialism is the conquest of territory that is already occupied by a group of people, and instilling upon them new institutions and authority.  The British demonstrate this idea of imperialism in Australia as, “…the imperial state first had to establish the appropriate social relations amongst indigenous peoples, convicts, slaves, immigrants, and native-born.  This direct assertion of power was exercised over ‘subject’ populations in order to shape an expanding white settler community” (Wells).  Australia was subject to the authority of Britain for some amount of time, but eventually they somewhat formed independent institutions, industries, and authority. 

Since WWII, Australia, much like America, also experienced times of recession and times of success.  Industries such as auto development and agriculture expanded greatly to prove Australia’s role in the global economy.  Today, however, such industries have been diminishing a private companies become less and less popular and large companies begin to rule.  Professor Jones mentioned that inflation has risen by about 20% in the last year.  GDP has increased with only minor fluctuations over the past five years and is predicted to continue increasing in 2011.   The external balance of Australia has fluctuated with increases and decreases from year to year, but is most commonly seen at around $54-59 billion.  The five main trade and finance partners that interact with Australia are China, Japan, Republic of Korea, India, and the USA (Jones packet).