Globalization and Australia

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Globalization and Australia

• Alan Oxley
• Australian APEC Centre, Monash
• www.worldgrowth.org

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Three aspects

• The impact of globalization
• What is globalization
• Impact on Australia

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What is the impact of globalization?
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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

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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
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Quality of life improving
1970 1990s
People undernourished 920m 810m
Average life expectancy 58 66
Infant survival rates/1000 44 67
Global literacy 80 67bb
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Countries open to trade grow faster
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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.
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What is Globalization?

• Defining it
• The drivers
• The effects

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Defining globalization

• An open economic system
• Non-discrimination
• Global brands
• Global structures

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The Drivers

• Cheap travel
• Trade liberalization
• Information technology
• High technology

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Exports share of world production
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Annual Growth of trade and GDP1959 96
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US investment now more global

• Percentage of foreign stocks held by US investors

1975 1996
One percent Ten percent
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Effects of globalization

• On business
• On work

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Effects of globalization on business

• Cheap offshore production
• Reduced transport costs
• Virtual communication
• Standardization of logistics
• Global marketing

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Bigger and smaller

• Greater scale in manufacturing - commodities
  are globally priced
• Specialization in manufacturing
• Globalization of specialist manufacturing

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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

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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

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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

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A globalized world

• Greater freedom of movement of goods, services,
  capital, people
• Global citizens
• The Information Age has only just begun

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Australia and Globalization

• How is Australia positioned?
• Examples of globalized industries
• The Future

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Australia globalizations child

• Australia has grown on - trade - foreign
  investment
• - immigration - adaptation of
  technologyAustralia is the branch office model
  of development

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Australias position

• Openness
• IT/E readiness
• Culture

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Australias openness

• One of the most open economies in the world -
  average tariffs 5 percent - open financial
  and telecoms - open to foreign investment

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Australias 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
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Australias globalized economy

• Global industries - mining and agriculture
• Services distribution, logistics, transport,
  financial services
• Manufacturing a new contender

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Manufacturing exports
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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

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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

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Australia ready to thrive

• Globally oriented economy
• High adaptation of IT
• Workforce adjusting
• Open society

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