Structural Change and Australian Economy
Structural change is the change in the pattern of production in an
economy as certain products, processes of production and industries
disappear and are replaced by others. The past century has seen the
relative decline of agricultural and manufacturing industries, and the
rise of services and new technology sectors. Structural change can be
caused by a wide range of economic influences including changes in the
pattern of consumer demand and technological change. The speed of
structural change depends on the ability of an economy or industry to
adjust quickly. People's natural resistance to change and government
regulation often impedes the process of structural adjustment.
Past Macroeconomic policies have been largely ineffective in bringing
about structural change. For example Australia's past trade deficits
can be blamed on structural problems that failed to react to
government macroeconomic policies. To solve economic problems such as
high inflation and high unemployment governments are shifting away
from macroeconomic policies to microeconomic policies.
Microeconomic policy or Microeconomic reform is action taken by the
government to improve resource allocation between industries in order
to maximise output and promote structural change. It is considered
that microeconomic reform will be effective in dealing with long term
problems such as international competitiveness, high foreign debt and
high structural unemployment. The shift towards microeconomic reform
includes a change of focus from influencing demand towards influencing
supply. This is called supply side economics which has ...
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...ale sales tax and the introduction of a broad
based goods and services tax created a fairer taxation system which
does not rely on taxing particular products. Australia has been a
strong advocate for free trade with other countries. This will allow
Australia access to new international markets on fair terms at a time
where microeconomic reforms in the agricultural sector were resulting
in greater competitiveness for Australian products.
Through the use of microeconomic policy, promoting structural change,
the Australian government has been able to rid the economy of
technical inefficiencies which inhibit economic growth and prosperity
and which aren't in the public's interest. Through precise
microeconomic policy the government has been able to target specific
areas and improve efficiency in the larger scale as well.
Since the 1960s, there has been a large shift from the other two industry sectors to the Tertiary Sector in the UK. The other two industry sectors Primary and secondary sectors have either moved abroad where it is cheaper for goods to be manufactured or completely shut down because of consumer trends.
Neoliberalism is an economic approach that promotes a laissez-faire model of trade (Edmonds-Poli & Shirk, 253). This economic model, widely supported by many Western economists, is based on three main principles: stabilization, structural adjustment, and trade liberalization. (Edmonds-Poli & Shirk, 254) Neoliberalism is a method to restructure the economy and the first step is to stabilize the fiscal supply. This happens through decreased government spending, leading to an overall decrease in employment, public services, and access to credit, while simultaneously increasing interest rates and the cost of imports (Edmonds-Poli & Shirk, 254). The next element of neoliberalism is structural adjustment which focuses on the shift from the public to the private sector. This shift is meant to minimize government involvement, which in turn stimulates competition in an open market economy to create a more efficient private sector (Edmonds-Poli & Shirk, 254). Finally, trade liberalization works to increase foreign investment and exports by lowering trade restrictions, such as tarif...
The labour party is the federal party which was run by Paul Keating at the time. The first Labour government originated in the 1890’s, they are currently the biggest party in Australia.
...rall due to the level of consensus there is relatively little difference between the way the economy has panned out between the conservatives period in charge end the dominance that the Labour party currently are enjoying. On the whole the economy has become relatively depoliticised since the Thatcher years as politicians have less control over this increasingly globalised and privatised aspect of the agenda. Now with Brown’s decision to give the Bank of England the power to set the level of interest rates the economy has become less prone to state intervention then ever especially with a clear end to the grip that Trade Unions once had over the Labour party. Overall state intervention over this period has decreased and barring a crisis it is likely that this will remain the case unless the Liberal Democrats manage to gain power, even through a coalition government.
In the middle of the nineteenth century, an economic transformation occurred in the United States. Historians refer to this event as the market revolution. Americans integrated technologies of the Industrial Revolution into a new profitable market economy. Steam power moved steamboats and railroads, fueled the rise of American industry by powering mills and sparking new national transportation networks. Alexis de Tocqueville said on his first visit to America: ”No sooner do you set foot on American soil and you will see how everything is on the move around you.” This is considered a bold term that conjures up images of radical transformation within the American economy. However, not everybody enthusiastically participated in the new market
This economic growth continued to increase through ‘98 and ‘99, partly being attributed to the weakening Australian dollar that allowed for the opening up and increasing market shares held by Australian exports on world markets. This was the case, as the reduction in the Australian dollar’s value, triggered decreases in the prices of our exports for foreign buyers, thereby increasing demand for our products and increasing the amount of money and investments coming into Australia. This therefore resulting in the aforementioned increases economic growth when combined with the high levels of employment and consumer confidence.
Australia has had one of the most outstanding economies of the world in recent years - competitive, open and vibrant. The nation’s high economic performance stems from effective economic management and ongoing structural reform. Australia has a competitive and dynamic private sector and a skilled, flexible workforce. It also has a comprehensive economic policy framework in place. The economy is globally competitive and remains an attractive destination for investment. Australia has a sound, stable and modern institutional structure that provides certainty to businesses. For long time, Australia is a stable democratic country with strong growth, low inflation and low interest rate.(Ning)
The disparities between the two views of the economy lead to very different policies that have produced contradictory results. The Keynesian theory presents the rational of structuralism as the basis of economic decisions and provides support for government involvement to maintain high levels of employment. The argument runs that people make decisions based on their environments and when investment falls due to structural change, the economy suffers from a recession. The government must act against this movement and increase the level of employment by fiscal injections and training of the labour force. In fact, the government should itself increase hiring in crown corporations. In contrast the Neoliberal theory attributes the self-interest of individuals as the determinant of the level of employment.
The Founding Fathers supported limited government intervention and economic self-regulation for America. They believed that the job of the government was to protect and uphold the rights of the people to participate in a free market economy. These rights include property rights and free markets, “property rights: the legal right to own and use property in land and other goods; the right to sell or give property to others on terms of one’s own choosing (market freedom); and government support of sound money” (West, 2010). The United States government has accumulated a massive amount of public debt, which is a danger to the preservation of liberty. Since the Federal Reserve’s creation on December 23rd 1913 it has been increasing our money supply
The United States and New Zealand established close ties in 1942, when the U.S. provided security for New Zealand during World War II, and have remained close ever since. However, in 1984, the Labour party came into power in New Zealand, with intentions to bar nuclear-armed and nuclear-powered warships from New Zealand ports. Implementation of this anti-nuclear policy was incompatible with U.S. policy and disrupted the alliance under the Australian, New Zealand, and United States (ANZUS) security treaty of 1951. After unsuccessful attempts to remedy the issue, the United States suspended its ANZUS security obligation to New Zealand in 1986.
The two economic theories that will mainly be looked at and examined are the “Classical Keynesian Theory” and the Import Substitution Industrialization Theory”. It will argue that these theories do not work well independently of one another. For instance, Malaysia (a country that has its own unique way of using import tariffs to help their economy grow) will serve as a case study to help discuss how import tariffs can help the welfare of a county.
The appropriate role of government in the economy consists of six major functions of interventions in the markets economy. Governments provide the legal and social framework, maintain competition, provide public goods and services, national defense, income and social welfare, correct for externalities, and stabilize the economy. The government also provides polices that help support the functioning of markets and policies to correct situations when the market fails. As well as, guiding the overall pace of economic activity, attempting to maintain steady growth, high levels of employment, and price stability. By applying the fiscal policy which adjusts spending and tax rates or monetary policy which manage the money supply and control the use of credit, it can slow down or speed up the economy's rate of growth in the process, affecting the level of prices and employment to increase or decrease.
It is difficult for government to achieve all the macroeconomics objectives at the same time. Conflicts between macroeconomics objectives means a policy irritating aggregate demand may reduce unemployment in the short term but launch a period of higher inflation and exacerbate the current account of the balance of payments which can also dividend into main objectives and additional objectives (N. T. Macdonald,
Difficulties in Formulating Macroeconomic Policy Policy makers try to influence the behaviour of broad economic aggregates in order to improve the performance of the economy. The main macroeconomic objectives of policy are: a high and relatively stable level of employment; a stable general price level; a growing level of real income (economic growth); balance of payments equilibrium, and certain distributional aims. This essay will go through what these difficulties are and examine how these difficulties affect the policy maker when they attempt to formulate macroeconomic policy. It is difficult to provide a single decisive factor for policy evaluation as a change in political and/or economic circumstances may result in declared objectives being changed or reversed. Economists can give advice on the feasibility and desirability of policies designed to attain the ultimate targets, however, the ultimate responsibility lies with the policy maker.
Firstly, what should be noted here is that international trade has been providing different benefits for firms as they may expand in different new markets and raise productivity by adopting different approaches. Given that nowadays marketplace is more dynamic and characterized by an interdependent economy, the volume of international trade has grown substantially in recent years, reducing the barriers to international trade. However, after experiencing the economic crisis that took its toll in 2008 many countries adopted a different approach in terms of trade barriers by introducing higher tariffs in order to protect domestic firms from foreign competition (Hill). Secondly, in order to better understand the implications of the political arguments for trade it is essential to highlight the main instruments of trade policy (See appendix 1).