Effects of Globalization of Economic Growth and Development in Australia and China

Effects of Globalization of Economic Growth and Development in Australia and China

Introduction

Globalization can be described as the free movement of goods, services and people around the world. The globalization process is by interaction and integration of among people, companies and governments of different nations. the interaction and integration are fueled by economic needs where countries depend on each other for maximum economic growth. Currently, globalization is aided by information technology whereby people all over the world can transact business easily without having to meet physically. This essay is going to look at different areas that globalization has impacted on in relation to Australia and China.

Economic Growth-Sustainability

Before globalization, Australian economy was stunted. Australia has abundant resources that cannot be fully utilized by Australian people. Before globalization in Australia, these resources were of little importance because they did not generate any income. This lack of extra income in Australia resulted in stagnated economic growth. The case of China was different form Australia in that China had limited resources and an abundance of citizens. However, this still led to economic growth stagnation because majority of Chinese citizens did not have income generating activities and the levels of poverty were very high.

Economic growth in the two countries has been affected positively by globalization. Australia exports the surplus resources to the countries who need them and their economy grows as a result. in China, Chinese citizens migrate to other countries in need of labor to look for employment or investment opportunities. This has greatly reduced the levels of poverty and it has translated to the economic growth of the country.

Economic Development- Income and Quality of Life

Before globalization, the quality of life in China and Australia was relatively low. In Australia, because of the abundant resources that were not generating any income, the cost of living was quite high leading to poor quality life. In a similar manner, a majority of Chinese residents were leading poor quality life. Lack of employment opportunities for many people contributed to the high levels of poverty.

However, globalization has affected the quality of life positively by increasing income. In China, companies and industries are getting stronger and this has created numerous employment opportunities for Chinese residents. Chinese exports products are cheap because of the availability of cheap labor and therefore many countries prefer Chinese products to other products from around the world. The Human Developmental Index (HDI) in China is very high and it is the only country to merge from a low development level to a highly developed level. According to China Daily (2016), China is currently ranked 90th of 188 countries on the HDI. China’s notable achievements include per capita GDP of $7575 in 2014; life expectancy of 74.8, universal nine-year compulsory education and the elimination of illiteracy among young and middle-aged citizens. This goes to prove that huge market for Chinese products has led to economic growth which has translated to high quality life for Chinese residents.

In a similar manner, globalization has had a huge impact on the economy and quality of life for Australia. Natural resources exports of Australia sell to a market of over 6.5 billion people (Swkirk.com, 2018). Primary resources, such as coal, uranium, iron, beef, wool and rice, make up 50% of exports and this translates to economic development. This has opened up job opportunities for many people. The quality of life has also gone up because the cost of living has gone down. In terms of HDI, Australia has been ranked as the second-best country in the world for its quality of life by a UN report that assessed economic, education and life-expectancy data. The nation’s “Human Development Index” (HDI) was measured at 0.935 out of a maximum score of one, coming second to Norway and beating Switzerland, which has held on to third place in 2015’s annual report (Sidney Morning Herald, 2015). This can be attributed to the high and vigorous transactions between Australia and other countries.

Trade in Goods and Services

Globalization has led to the growth of goods and services for both Australia and china. In Australia, the readily available global market for natural resources has ensured a vigorous import/export trading system. Australia primary exports products include minerals such as coal, uranium and iron ore. The exports also include agricultural products such as wheat, rice, beef and other animal products such as wool. In terms of services, Australia is a world tourist destination and the growing tourism sector contributes to the economy. The main products that Australia imports are crude petroleum, computers and cars. Although globalization has led to the growth of the Australian trade system, some local industries have been affected negatively. The cost of labor in Australia is high compared to countries such as China which makes their locally produced high compared to imported ones.

In China, trade in goods and services has developed at a very high rate. Cost of production in China is cheap because of cheap and available labor; this makes their products very cheap. As such, Chinese products have a readily available market. In terms of services, many investors seek to invest in China because of the cheap labor and this has made Chinese services very popular around the globe.

Both Australia and China have immensely benefited from trade liberalization because of the free movement of goods and services across borders. Although some local industries in Australia have suffered, majority of other business institutions have grown at a high rate. Furthermore, the entry of China into the global market place has impacted on the trading system of Australia. China has a huge population and therefore a huge market and this has made China Australia’s biggest customer. The trading bloc has affected both countries positively.

Investment and Transnational Corporations

Globalization has impacted on capital and labor flow. Capital flow in Australia is balanced in both inflow and outflow. Australia exports more than she imports and that has maintained the economic growth. In terms of labor, Australia imports labor because the natural resources are more than the people and therefore the labor is not enough. in terms of transnational corporations, Australia has the largest mining company in the world which is a merger of an Australian and British company. The company runs operations in over 25 countries and it has led to exchange of technology, business ideas and maximum profits for both countries.

China has a constant capital and labor flow. China has the highest population in the world and this makes labor cheap and available. China products also have ready and available markets for their products which makes capital flow in China high. Furthermore, China has the second highest number of transnational companies in the world. these corporations control the movement of wealth and resources in many countries around the globe. Therefore, investments and transnational corporations have made China a global economic giant.

Environmental Sustainability

Globalization has increased the consumption of products. There is faster access to information and technology. For both Australia and China, the increase in the consumption of products, has impacted the ecological cycle. Increased consumption has led to an increase in the production of goods, which in turn has put stress on the environment. The local industries in Australia have suffered because of the influx of cheap imported good from China. On the other hand, China has enjoyed all benefits of globalization because of cheap labor that has made their products cheap as well as attracted global investors.

Strategies Adopted to Promote Economic Growth and Development

Since globalization has played a major role in contributing to economic growth, both China and Australia have implemented strategies to promote it. Both counties have done so by providing platforms for global investors as well as invested in transnational companies in order to maintain globalization. The only problem Australia has suffered from globalization is the downfall of some local industries. China on the other hand has gained major benefits from globalization because it opened up the doors of China to investors who lifted the economy.

Conclusion

Globalization has impacted positively on the economic growth and development in Australia and China. Free integration between entrepreneurs and people of different countries has led to economic growth as people seek opportunities in other countries.

References

Australia ranks second-best in the world for quality of life, UN study says. Retrieved from https://www.smh.com.au/business/the-economy/australia-ranks-secondbest-in-the-world-for-quality-of-life-un-study-says-20151218-glqi0l.html

China’s Human Development Index gains highlight great strides. Retrieved from http://www.chinadaily.com.cn/china/2016-08/22/content_26561442.htm