Economics Essay Notes

Submitted By lachlanterbutt
Words: 6401
Pages: 26


1. Globalisation
2. Trade Agreements
3. Free trade/protection
4. Balance of Payments
5. Exchange Rate
6. China
7. Growth
8. Unemployment
9. Inflation
10. Inequality
11. External stability
12. Environment
13. Fiscal Policy
14. Monetary Policy
15. Microeconomic Policy
16. Labour Market

1. Globalisation
Analyse the impact of changes in the global economy (globalization) on Australia’s economic performance
• Intro o Context – 30 years, increase in integration of economies, increases in trade, financial flows, rise of TNCs o Definitions
• Features of globalization o Trade Flows o Financial Flows o Trans National Corporations o International Business Cycle
• Effect on Australia o Internal Stability
• Free Trade impacts
• Higher living standards, more consumption with lower prices → growth, less imported inflation
• Increase competitiveness/reallocation → less inflation, long term growth, short term unemployment
• International business cycle
• GFC wouldn’t have happened without globalization, couldn’t have had growth without it either
• Higher growth with more investment (access to foreign funds)
• Higher growth overall → lower unemployment, there has been lowered inflation o External stability
• Higher borrowing – SI Gap
• More imports
• Higher exchange rate
• Is it a bad thing? o Inequality
• Growth not distributed evenly
• FDI concentrated toward already successful industries
• Consumer goods come from overseas → unskilled out of work
• Growth dividend allows for more transfer payments o Environment
• In other countries TNCs have negative impact
• Increased consumption of natural resources
• International cooperation on environmental issues, international research
• Without global shift toward combating climate change wouldn’t have taxed carbon, done Kyoto, subsidised ethanol.

2. Trade Agreements
Analyse the impact of trading blocs and international organisations on the contrasting levels of development in the global economy.

Definition of trading blocs
Existence of international organisations
Difference between economic growth and development
Development Gap

European Union
• Tariff wall – Common External Tariff
• Subsidies – Common Agricultural Policy
• Depression of world commodity prices
• Stronger growth and higher development throughout Europe
• Loss of market access – Philippines, Australia
• Growth is retarded
• Decreased ability to achieve higher standards of living/income >> low economic development

North American Free Trade Agreement
• Retaliation to EU
• Elimination of trade and investment barriers between members
• US shift production south, lower costs, access to large US market
• Trade diversion
• Strong growth and development in Mexico etc
• Lower export earnings >> restricted development for non members through worse CAD etc

Association of South East Asian Nations
• Aims to promote growth and development, social progress and cultural development in its member countries
• AFTA – regional resources used more efficiently, productivity, higher growth, development
• Higher protection against non-members > lose export earnings, lower growth and development
• Significant to Aust as we export most resources, manufactures, and services to member nations and import much petroleum, timber and light manufactures

Asia Pacific Economic Cooperation
• Trading forum
• Aim to create closer trade and investment links within the region and achieve free trade with the abolishment of protection by 2010 for developed economies and 2020 for developing economies
• Non-discriminatory - positive impact on both member and non member countries
• Improvements in world resource allocation >>greater efficiency and higher productivity
• Increases in world trade > increase in world GDP and domestic growth
• High growth > high development > high living standards
• ¾ Aust merchandise trade X

World Trade Organisation