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Globalization
and
Australia
Alan Oxley
Australian APEC Centre, Monash
www.worldgrowth.org
1
Three aspects
The impact of globalization
What is globalization
Impact on Australia
2
What is
the impact
of
globalization?
3
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
4
Incidence of poverty is falling
East Asia
(- China)
Europe/Central
Asia
Sub-Saharan
Africa
WORLD
1987
1998
26.6%
15.3%
23.9%
11.3%
0.2%
5.1%
46.6%
46.3%
28.3%
24%
5
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
6
Countries open to trade grow faster
7
6
5
4
3
2
1
0
-1
63-73
Open
Mod Open
86-92
Mod Closed
Closed
7
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.
8
What is Globalization?
Defining it
The drivers
The effects
9
Defining globalization
An open economic system
Non-discrimination
Global brands
Global structures
10
The Drivers
Cheap travel
Trade liberalization
Information technology
High technology
11
Exports % share of world
production
25
20
15
10
5
0
1913
1950
2000
12
12
Annual % Growth of trade and GDP
1959 – 96
Trade
10
8
6
4
Trade
GDP
GDP
2
0
World
USA
13
US investment now more global
Percentage of foreign
stocks held by US
investors
1975
One
percent
1996
Ten
percent
Cumulative US direct
foreign investment
% of GDP
20
15
10
5
0
1980
1995
14
Effects of globalization
On business
On work
15
Effects of globalization on business
Cheap offshore production
Reduced transport costs
Virtual communication
Standardization of logistics
Global marketing
16
Bigger and smaller
Greater scale in manufacturing
- commodities are globally priced
Specialization in manufacturing
Globalization of specialist manufacturing
17
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
18
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
19
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
20
A globalized world
Greater freedom of movement of goods,
services, capital, people
Global citizens
The Information Age – has only just
begun
21
Australia and Globalization
How is Australia positioned?
Examples of globalized industries
The Future
22
Australia: globalization’s child
Australia has grown on
- trade
- foreign investment
- immigration
- adaptation of technology
Australia is the branch office model
of development
23
Australia’s position
Openness
IT/E readiness
Culture
24
Australia’s openness
One of the most open economies in the world
- average tariffs – 5 percent
- open financial and telecoms
- open to foreign investment
25
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
26
Australia’s globalized economy
Global industries - mining and
agriculture
Services – distribution, logistics,
transport, financial services
Manufacturing – a new contender
27
Manufacturing exports
Growth in manufactured exports vs
all exports 1980 - 2000
Manufactures
Exports
0
5
10
15
28
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
29
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
30
Australia ready to thrive
Globally oriented economy
High adaptation of IT
Workforce adjusting
Open society
31
www.globalizationguide.org
32