UNIVERSITY OF NATIONAL AND WORLD ECONOMY

Case:
Competitiveness of Australia

Sofia, December 2014

Contents
1. Basic information about Australia ............................................................................................................ 3
2. General economic background ................................................................................................................. 4
2.1. Real GDP Growth % and GDP per capita............................................................................................ 5
2.2. Gross fixed capital formation ............................................................................................................. 6
2.3. Annual average inflation rate ............................................................................................................ 7
2.4. FDI ...................................................................................................................................................... 8
3. Foreign Trade Indicators ........................................................................................................................... 9
3.1Trade openness (Exports + Imports as a % of GDP) ............................................................................. 9
3.2 Export per capita ............................................................................................................................... 11
3.3Trade balance (% of GDP) and the export/import ratio .................................................................... 12
3.4. Annual growth rate of export of goods and services ....................................................................... 13
3.5.Structure of exports by 1-digit SITC categories (%) and share of the 3 largest export categories at
3-digit SITC level (%)................................................................................................................................ 13
3.6. High-tech exports (% of total exports) ............................................................................................. 17
3.7. Share of the 3 largest export markets (%) ....................................................................................... 17
4. Science, Social, environmental indicators .............................................................................................. 20
4.1. Level of Internet access ................................................................................................................... 20
4.2. Greenhouse gas emissions ............................................................................................................... 21
4.3. Gross domestic expenditure on R&D by source of funds ................................................................ 21
4.4. Energy intensity of the economy ..................................................................................................... 22
5. Conclusion and recommendations ......................................................................................................... 23

1. Basic information about Australia

Australia is a country comprising the mainland of the Australian continent, the island of
Tasmania, and numerous smaller islands. It is the world's sixth-largest country by total area.
Neighbor countries include Indonesia, East Timor and Papua New Guinea to the north, the
Solomon Islands and Vanuatu to the north-east, and New Zealand to the south-east.
For at least 40,000 year before the first British settlement in the late 18th century, Australia was
inhabited by indigenous Australians, who spoke languages grouped into roughly 250 language
groups. After the European discovery of the continent by Dutch explorers in 1606, Australia's
eastern half was claimed by Great Britain in 1770 and initially settled through penal
transportation to the colony of New South Wales from 26 January 1788. The population grew
steadily in subsequent decades, the continent was explored and an additional five self-governing
crown colonies were established. On 1 January 1901, the six colonies federated, forming the
Commonwealth of Australia. Since Federation, Australia has maintained a stable liberal
democratic political system that functions as a federal parliamentary democracy and
constitutional monarchy comprising six states and several territories. The population of 23.6
million is highly urbanized and heavily concentrated in the eastern states and on the coast.
Australia is a developed country and one of the wealthiest in the world, with the world's 12thlargest economy. In 2012 Australia had the world's fifth-highest per capita income. Australia's
military expenditure is the world's 13th-largest. With the second-highest human development
index globally, Australia ranks highly in many international comparisons of national
performance, such as quality of life, health, education, economic freedom, and the protection of
civil liberties and political rights. Australia is a member of the United Nations, G20,
Commonwealth of Nations, ANZUS, Organization for Economic Co-operation and Development
(OECD), World Trade Organization, Asia-Pacific Economic Cooperation, and the Pacific Islands
Forum.
Australia is a constitutional monarchy with a federal division of powers. It uses a parliamentary
system of government with Queen Elizabeth II at its apex as the Queen of Australia, a role that
is distinct from her position as monarch of the other Commonwealth realms. The Queen resides
in the United Kingdom, and she is represented by her viceroys in Australia (the GovernorGeneral at the federal level and by the Governors at the state level), who by convention act on
the advice of her ministers. Supreme executive authority is vested by the Constitution of
Australia in the sovereign, but the power to exercise it is conferred by the Constitution
specifically on the Governor-General. The most notable exercise to date of the GovernorGeneral's reserve powers outside the Prime Minister's request was the dismissal of the Whitlam
Government in the constitutional crisis of 1975.
The federal government is separated into three branches:

The legislature: the bicameral Parliament, defined in section 1 of the constitution as

comprising the Queen (represented by the Governor-General), the Senate, and the House
of Representatives;

The executive: the Federal Executive Council, in practice the Governor-General as

advised by the Prime Minister and Ministers of State;

The judiciary: the High Court of Australia and other federal courts, whose judges are
appointed by the Governor-General on advice of the Council.

2. General economic background

Australia is a wealthy country; it generates its income from various sources including miningrelated exports, telecommunications, banking and manufacturing. It has market economy, a
relatively high GDP per capita, and a relatively low rate of poverty. In terms of average wealth,
Australia ranked second in the world after Switzerland in 2013, although the nation's poverty rate
increased from 10.2 per cent to 11.8 per cent, from 2000/01 to 2013. It was identified by the
Credit Suisse Research Institute as the nation with the highest median wealth in the world and
the second-highest average wealth per adult in 2013.
An emphasis on exporting commodities rather than manufactured goods has underpinned a
significant increase in Australia's terms of trade since the start of the 21st century, due to rising
commodity prices. Australia has a balance of payments that is more than 7% of GDP negative,
and has had persistently large current account deficits for more than 50 years. Australia has
grown at an average annual rate of 3.6% for over 15 years, in comparison to the OECD annual
average of 2.5%. Australia was the only advanced economy not to experience a recession due to
the global financial downturn in 20082009.
However, the economies of six of Australia's major trading partners have been in recession,
which in turn has affected Australia, significantly hampering its economic growth in recent
years. From 2012 to early 2013, Australia's national economy grew, but some non-mining states
and Australia's non-mining economy experienced a recession. Over the past decade, inflation
has typically been 23% and the base interest rate 56%. The service sector of the economy,
including tourism, education, and financial services, accounts for about 70% of GDP. Rich in
natural resources, Australia is a major exporter of agricultural products, particularly wheat and
wool, minerals such as iron-ore and gold, and energy in the forms of liquified natural gas and
coal. Although agriculture and natural resources account for only 3% and 5% of GDP
respectively, they contribute substantially to export performance. Australia's largest export
markets are Japan, China, the US, South Korea, and New Zealand. Australia is the world's

fourth largest exporter of wine, and the wine industry contributes $5.5 billion per year to the
nation's economy.

2.1. Real GDP Growth % and GDP per capita

Graph 1: Real GDP growth
Over the past decade, inflation has typically been 23% and the base interest rate 56%. The
service sector of the economy, including tourism, education, and financial services, accounts for
about 70% of GDP. Rich in natural resources, Australia is a major exporter of agricultural
products, particularly wheat and wool, minerals such as iron-ore and gold, and energy in the
forms of liquified natural gas and coal. Although agriculture and natural resources account for
only 3% and 5% of GDP respectively, they contribute substantially to export performance.
Australia's largest export markets are Japan, China, the US, South Korea, and New Zealand.
Australia is the world's
fourth largest exporter of wine, and the wine industry contributes $5.5 billion per year to the
nation's economy

Real GDP Growth %

4,5
4
3,5
3
2,5
Real GDP Growth %

2
1,5
1
0,5
0
2002

2004

2006

2008

2010

Source: World Bank

Graph 2: GDP per capita in USD

2012

2014

80 000
70 000
60 000
50 000
40 000
30 000

GDP per capita in

USD

20 000
10 000
0
2002 2004 2006 2008 2010 2012 2014

Source: World Bank

The Real GDP growth rate and the GDP per capita give the most precise information on the level
of growth and productivity of an economy. For Australia both of the indicators are rising through
the selected period, meaning that there is an increasement in the production of goods and
services. The GDP growth if varies from 1,7% (2009) to 4,2% (2004). The GDP per capita
endured a significant growth over the last decade, going from 30 464$ to 67 468$, growing more
than two times. Growth in GDP per capita is often used as the measure of economic progress of a
country, indicating the rate at which living standards are changing. Growth of GDP per capita
can be described as a combination of the growth of labor utilization and the growth of labor
productivity.

2.2. Gross fixed capital formation

Graph 3: Gross Fixed Capital Formation , percents of GDP

Gross Fixed Capital Formation % of

GDP
29,5
29
28,5
28

Gross Fixed Capital

Formation % of GDP

27,5
27
26,5
2002

2004

2006

2008

2010

2012

2014

Source: OECD
Gross fixed capital formation measures the value of acquisitions of new or existing fixed assets
by the business sector, governments and households less disposals of fixed assets. GFCF is a
component of the expenditure on gross domestic product (GDP), and thus shows something
about how much of the new value added in the economy is invested rather than consumed. Fixed
assets include land improvements (fences, ditches, drains, and so on), plant, machinery and
equipment purchases, and the construction of roads, railways, schools, offices, hospitals, private
residential dwellings and commercial and industrial buildings.

2.3. Annual average inflation rate

Graph4: Percentage of inflation rate

Inflation Rate %
5
4,5
4
3,5
3
2,5
2
1,5
1
0,5
0
2002

Inflation Rate %

2004

2006

2008

2010

2012

2014

Source: IndexMundi

The inflation rate is calculated using the price increase of a defined product basket. This product
basket contains products and services, on which the average consumer spends money throughout
the year. They include expenses for groceries, clothes, rent, power, telecommunications,
recreational activities and raw materials (e.g. gas, oil), as well as federal fees and taxes.
One of the Australian governments key economic aims is to achieve the goal of low inflation
(also called stability of the currency). This is defined by the Reserve Bank of Australia (RBA) as
a desirable situation where inflation is slow and general prices are rising by an average of around
23 per cent a year over the duration of the business cycle.
Rates in excess of this government target would undermine various aspects of the economys
performance (e.g. it could weaken equity in the distribution of income, undermine the
international competitiveness in trade), while even lower inflation than this 23 per cent per year
target could mean that the rate of economic growth is too slow, resources are lying idle and part
of Australia's productive capacity is being wasted.

2.4. FDI

Table 1: FDI in USD at current prices and current exchange rates in millions
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

41 944,48

-24 859,7

30 352,34

44 661,82

47 162,34

27 191,76

35 799,33

65 209,3

55 517,65

49 826,23

Source: UNCTAD

Australia continues to be a top global destination for both inward and outward foreign direct
investment (FDI), due to the countrys robust economy, strategic location, strong global trade
and investment ties and proven track record of innovation, which continues to position it as an
ideal investment destination. For instance, inflows as well as outflows in Australia turned
sharply negative in 2005 because of corporate restructuring that triggered disinvestment in both
directions.

3. Foreign Trade Indicators

3.1Trade openness (Exports + Imports as a % of GDP)
Table 2: Import as % of GDP
2004
20

2005
21

2006
21

2007
21

2008
22

2009
22

2010
20

2011
20

2012
21

2013
21

2008
20

2009
23

2010
19

2011
21

2012
21

2013
20

2009
45

2010
39

2011
41

2012
42

2013
41

Source: World Bank

Table 3:Export as % of GDP
2004
17

2005
18

2006
20

2007
20

Source: World Bank

Table 4: Trade Openness as % of GDP

2004
37

2005
39

2006
41

2007
41

2008
42

Source: World Bank

The trade-to-GDP ratio is frequently used to measure the importance of international
transactions relative to domestic transactions. This indicator is calculated for each country as the
sum of exports and imports of goods and services relative to GDP. Low ratio does not
necessarily imply high (tariff or non-tariff) barriers to foreign trade, but may be due to factors
such as size of the economy and geographic remoteness from potential trading partners. The
aggregate value of international trade in goods and services reflects countries' integration into the
world economy. Small countries are generally more integrated: their exports tend to be in a
limited number of sectors and they need to import more goods and services than larger countries
in order to satisfy domestic demand. Also other factors help to explain differences across
countries: geography, history, culture, trade policy, structure of the economy and integration in
global production chains, where measured trade may include a significant proportion of reexports and intra-firm trade linked to the presence of multinational firms.
International trade has historically played a very significant role in the development of the
Australia economy. Despite Australia's geographic isolation from the rest of the world, trade has
always represented a high proportion of Australias economic activity. In part this is because
there have always been overseas markets for Australias primary commodities, such as minerals
and agricultural products. It is also partly because Australia has needed to trade in order to obtain
new technology and items that are not produced in Australia because of its relatively small
population size. In the context of the global economy, Australia is sometimes referred to as a
small, open economy. It is small by global standards, producing around 2 per cent of gross world
product. But while the Australian economy makes up only a small proportion of the global
economy, trade is central to the Australian economy. The country export around one fifth of its
production, and import the equivalent of around one fifth of gross domestic product. As a result,
although the Australian economy does not have much influence on developments in the global
economy, world economic developments can have a very significant impact on Australia.
Empirical estimation suggests that a countrys population is the most significant determinant of
openness, with a negative correlation between the two variables. In other words, countries with
smaller populations have higher levels of external trade and vice versa. Countries with smaller
populations have fewer opportunities for trade within their own borders and are therefore likely
to trade more externally, for example like Luxemburg, Ireland and Belgium.
Despite having a substantially lower openness ratio than the OECD average (51%) , Australias
openness ratio has been about the level one would expect for a country with its characteristics.
The factors that best explain Australias relatively low openness are its remoteness from large
economies and its large land mass. The first of these can be viewed as a natural disadvantage,
while the second can be viewed as an advantage because of the natural diversity of the large
land mass, Australia is able to produce many goods internally and does not need to trade for
them externally. The trade openness of the country is constantly growing, which a trend is started

10

since the late 80 due to the lowering of barriers to the import of goods and services and capital
flows. The peak of 45% in 2009 is by a slump to 39% in 2010, which is a reflection of the Global
economic crisis.

3.1 Share in world exports (%)

Table 5: Share of Australia in world exports in %
2004
2005 2006
1.010 1.018
0.939
Source: UNCTAD

2007
1.008

2009
1.160

2009
1.229

2010
1.390

2011
1.475

2012
1.393

2013
1.343

With its relatively low share in the world export of around 1% for the last decade, Australia is
situated in the top 30 countries by export. With an increase of 0.4%, the country moved from 27th place in 2004 to 21-st place in 2013. Despite a noticeable reorientation of Australias exports
toward the rapidly expanding economies of developing Asia, export volumes have grown only
modestly this decade, in comparison with the country's largest economic partner- China, which
now is the top exporting country in world with share of almost 12%. The slow increase of the
export share over recent years can be explained by the rise in global resource commodity prices,
which contributed to appreciation of the Australian dollar.

3.2 Export per capita

Table 6 :Export per capita in USD:
2004

2005

2006

2007

2008

6,038 $ 6,764 $ 7,633 $ 8,782 $ 11,026 $

2009
8,992 $

2010

2011

2012

2013

11,810 $

14,473 $

13,686 $ 13,302 $

Source: UNCTAD and World Bank

The export per capita is the amount of US dollars per habitant of the country for one year period.
For the last couple years Australia is positioned at 24 place in the list of "List of countries by
exports per capita". Overall through the decade Australia has endured substantial growth of this
indicator with more than two times. Apparently this is caused by the growth of export over the
years, but it should be taken into consideration the fast growth of the population from 20 million
in 2004 to 23,5 millions at the end of the period.

11

3.3Trade balance (% of GDP) and the export/import ratio

Table 7: trade balance as % of GDP
2004
2005
-2,7 % -2,71%
Source:Unctad

2006
-1,8 %

2007
-1,6%

2008
-2,59%

2009
-0,97%

2010
0,10%

2011
0,99%

2012
-0,20%

2013
-1,31%

The trade balance is the difference between a country's imports and its exports. Balance of trade
is the largest component of a country's balance of payments. Debit items include imports, foreign
aid, domestic spending abroad and domestic investments abroad. Credit items include exports,
foreign spending in the domestic economy and foreign investments in the domestic economy.
The negative trade balance is referred also as a trade deficit in which there is increased
dependence of the country's economy. The government have to finance it usually by FDI's or by
selling assets, or directly by loans to cover it. The trade deficit also means that foreign nations
hold amounts of the country's national currency, which can be sold at any time and drive the
value of the currency down, making it more costly to purchase imports.
All of these statements can apply to Australia's current debt situation. Australia has been in
deficit for more than thirty years, starting from the early 80's. For the last decade, the balance
was negative, except the surpluses in 2010 and 2011 due to the high prices of commodities.
However in 2012, the trade balance is back in deficit due to sharp increase in value of exports
and rising capital imports. Metals, coal and oil and natural gas account for 54 percent of total
exports, but the country is a major importer of machinery and transport equipment, computers
and office machines and telecommunication lasers.
On one hand trade deficit is not necessarily a bad thing. It raises the standard of living of a
country's residents, since they now have access to a wider variety of goods and services for a
more competitive price. It can reduce the threat of inflation, since the products are priced lower.
A trade deficit can also indicate that the country's residents are feeling confident, and wealthy,
enough to buy more than the country produces. But on the other hand, over time a trade deficit
can cause outsourcing of jobs. That's because, as a country imports certain goods rather than
buying domestically, the local companies start to go out of business. The domestic business itself
will lose the skills needed to produce that good competitively. As a result, fewer jobs in that
industry are created in the home country. Instead, the foreign companies hire new workers to
keep up with the demand for their exports.

12

Table 8: Import/Export Ratio

2004
2005
0,84
0,79
Source Unctad

2006
0,88

2007
0,85

2008
0,93

2009
0,93

2010
1,05

2011
1,10

2012
0,98

2013
0,99

The export/import ratio shows if a country's imports are fully paid by exports in a given year. If
the value is 1 or above it, then the import is fully paid by the export and also there is positive
trade balance, which for the past decade occurs in 2010 and 2011.
The current account deficit could further deteriorate if exports keep surpassing imports , although
a widening trade deficit would eventually result in currency depreciation, which would help
improve the trade balance over time. The current account could also deteriorate if international
interest rates rose. Through the use of hedging instruments, Australia effectively pays domestic
interest rates on most of the external debt.

3.4. Annual growth rate of export of goods and services

Table 9: Annual growth rate of exports
2004
8.22%

2005
2006
2007
2008
2009
23.00% 22.56% 16.34% 32.47% -17.58%

2010
37.78%

2011
27.16%

2012
-5.16%

2013
-1.47%

Source: Unctad

The average growth rate of export of goods and services for the period 2004-2013 is 17%. The
growth is positive except in 2009 which is a result of the global crysis and in the last two years,
because of the rised prices of commodities.

3.5.Structure of exports by 1-digit SITC categories (%) and share of the 3 largest export
categories at 3-digit SITC level (%)

13

Table 10: Product groups, exports in thousands of dollars

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

17 151 986

16 523 867

17 409 726

17 146 341

20 702 007

18 997 250

20 879 920

27 268 945

28 273 838

28 195 855

33 972 375

49 429 932

58 703 918

65 901 703

106 750 266

85 090 010

126 653 576

172 871 456

160 241 147

162 319 481

32 072 860

36 408 615

43 602 437

51 889 231

54 890 358

45 705 635

54 797 817

63 931 941

62 628 482

56 768 809

83 197 221

85 838 547

119 716 081

134 937 275

182 342 631

149 792 895

202 331 313

264 072 342

251 143 467

247 284 145

SITC
( 0 + 1)

SITC
(2 + 3 +
4)
SITC (5
+6+7+
8)
Total:

Source: UNCTAD

Table 11: Share of product groups, exports in share of total exports

2004
2005
SITC
( 0 +
1)
21%
16%
SITC
(2 + 3
+ 4)
41%
48%
SITC
(5 + 6
+ 7 +
8)
38%
36%
Total: 100% 100%
Source: UNCTAD

2006

2007

2008

2009

2010

2011

2012

2013

15%

13%

11%

13%

10%

10%

11%

11%

49%

49%

59%

57%

63%

65%

64%

66%

36%
100%

38%
100%

30%
100%

30%
100%

27%
100%

25%
100%

25%
100%

23%
100%

The raw materials have the largest share in the period 2004-2013, with an increase of 62% . The
food and beverages in the beginning of the period are 21% and they have decreased almost in
double in the end of the period. There is also a decrease in the share of the manufactured goods
from 38% to 23%. The decrease in manufactured goods and food and beverages are in favour of
the raw materials. Raw materials are the product group with the least added value; therefore for
a country's economy is better that this group is wit the lowest share. In 2013 the Australian share
of this group is 2/3 of the total export, which means that it is not much diversified and it's
dependent of other economies.
Table 12: Three largest exports in thousands of dollars from 2004 to 2009

14

[321]
Coal,
whether or not
pulverized, not
agglomerated
[281] Iron ore
and
concentrates
[971]
Gold,
non-monetary
(excluding gold
ores
and
concentrates)
Total of all
categories:

2004

2005

2006

2007

2008

2009

9 827 070

16 643 649

17 557 394

17 208 980

39 252 661

30 939 787

4 471 105

8 386 722

10 895 385

13 280 638

25 379 001

23 573 322

4 146 036

4 441 813

6 902 488

9 401 890

12 040 145

11 807 017

83 197 221

102 365 933

119 716 081

134 937 275

182 342 631

149 792 895

Source: UNCTAD

Table 13: Share of the three largest export categories from 2004 to 2009

[321]
Coal,
whether or not
pulverized,
not
agglomerated
[281] Iron ore and
concentrates
[971] Gold, nonmonetary
(excluding gold
ores
and
concentrates)

Total :

2004

2005

2006

2007

2008

2009

12%

16%

15%

13%

21%

21%

5%

8%

9%

10%

14%

16%

5%

4%

5%

7%

7%

8%

22%

28%

29%

30%

42%

45%

Source: UNCTAD

Table 14: Three largest exports in thousands of dollars from 20010 to 2013

15

[281] Iron ore

and
concentrates
[321]
Coal,
whether or not
pulverized, not
agglomerated
[971]
Gold,
non-monetary
(excluding
gold ores and
concentrates)
Total of all
categories:

2010

2011

2012

2013

44 290 173

66 216 909

56 726 866

67 208 986

38 571 820

48 234 952

42 698 410

38 422 821

12 970 833

15 575 506

16 076 778

13 404 799

202 331 313

264 072 342

251 143 467

247 284 145

Source: UNCTAD

Table 15: Share of the three largest export categories from 2004 to 2009
2010

2011

2012

2013

22%

25%

23%

27%

19%

18%

17%

16%

6%

6%

6%

5%

47%

49%

46%

48%

[281] Iron ore

and concentrates
[321]
Coal,
whether or not
pulverized, not
agglomerated
[971] Gold, nonmonetary
(excluding gold
ores
and
concentrates)
Total :

Source: UNCTAD
In terms of largest export categories in Australia are distinguished two periods. The first is
between 2004-2009 when in the first place is the Coal [281], in second is Iron ore [321] and in
third is the Gold [971] . The second period is between 2010 and 2013, where Coal and Iron ore
are shifting places in the share of the largest categories. The share of these categories in the total
export share of the country have doubled through the period, from 22% to 48% . The shares of
the Gold remained the same, but of the two other groups have risen significantly. This share of
48% of those three commodities is bad for the country, because it's export is not diversified, and
if some global problems occur with these commodities, Australia could take severe losses.

16

3.6. High-tech exports (% of total exports)

Table 16:Percentage of high-tech exports from total exports
2004
3%

2005
2%

2006
2,3%

2007
1,7%

2008
1,6%

2009
1,6%

2010
1,4%

2011
1,4%

2012
1,6%

2013
2%

Source: UNCTAD and IndexMundi

High-technology exports are products with high R&D intensity, such as in aerospace, computers,
pharmaceuticals, scientific instruments, and electrical machinery. These commodities are high
value added, so they are considered as an important factor for sustainable economic growth for a
country. One of the most important factors for high tech manufacturing and export is technology
ownership. Technology ownership can be gained through technology transfer by the way of
inward foreign direct investments (FDI). Although many scholars emphasize foreign direct
investments as a cheap and easy way of technology transfer, the role of human capital of the host
country is considered as an important factor in this process. Another important aspect is
economic freedom level (EFL) of the host country which is associated with FDI attraction of the
host country. High technology competency is seen as one of the principle driving forces of
economic development, especially, in countries practicing export-led growth strategies.
Capability to manufacture and export high technology products in todays competitive global
markets basically is an indication of innovation power of a country. There is also a positive
correlation between high-tech exports and GDP growth.
The high-tech export of Australia for the last decade fluctuates between 3% in 2004 and 2% in
2013, where the most sensitive decrease was after the post global crysis years - 1,4%. Now the
trend is positive and the outlook for the forthcoming years is to surpass the levels of 2004.
Increasing the share of high technology products is one of Australia's main objectives of in order
to compete in new and high technology segments of industries of todays fast growing
environment.

3.7. Share of the 3 largest export markets (%)

17

Graph 5: Share of the 3 largest export markets

7
6
5
4
Series1

3
2
1
0
2002

2004

2006

2008

2010

2012

2014

Source: OECD
The share of the export of the three largest export markets through the period 2004-2014
has significantly fallen from 5,4% to 2,2%. The outlook is that this share remains the same
around 2-3 %.The three top export markets are: China, Japan and Republic of Korea.
3.8. Revealed comparative advantage index by SITC categories
Table 16: RCA for 2004
2004
[286] Ores and concentrates of uranium or
thorium
[268] Wool and other animal hair (incl. wool
tops)
[285] Aluminium ores and concentrates
(incl. alumina)
[321] Coal, whether or not pulverized, not
agglomerated
Source Unctad

Table 17: RCA for 2007

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RCA
69,41894197
39,75272784
37,67394565
32,41200148

2007
[286] Ores and concentrates of uranium or
thorium
[268] Wool and other animal hair (incl. wool
tops)
[285] Aluminium ores and concentrates
(incl. alumina)
[321] Coal, whether or not pulverized, not
agglomerated
Source: Unctad

RCA
62,92178679
38,19369704
35,66212738
32,88145728

Table 18: RCA 2010

20010
RCA
[286] Ores and concentrates of uranium or
thorium
[351] Electric current
30,65664023
[281] Iron ore and concentrates
[321] Coal, whether or not pulverized, not 27,67538675
agglomerated
Source: Unctad

63,7643865
39,7643567

Table 19: RCA 2013

2013
[351] Electric current
[281] Iron ore and concentrates
[268] Wool and other animal hair (incl. wool
tops)
[285] Aluminium ores and concentrates
(incl. alumina)
Source: Unctad

RCA
67,2567654
35,81018654
27,74401396
26,44881711

Table 20: RTB for the period 2004-2013

Year
2004

Product group
[351] Electric current

2007

[351] Electric current

[286] Ores and concentrates of uranium or
thorium

2010

[351] Electric current

[286] Ores and concentrates of uranium or

2013

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thorium
[351] Electric current

Source: Unctad

The revealed comparative advantage RCA is an index used in international economics for
calculating the relative advantage or disadvantage of a certain country in a certain class of goods
or services as evidenced by trade flows. The relative trade balance RTB is an index showing if
national production is considered to be competitive in both foreign and domestic markets. Both
indexes must be above 1.
The RCA for Australia shows that the country have comparative advantage in Ore, Woll,
Aluminium and Coal for 2004 and 2007, in Electric current, Wool, Aluminium, Iron and Coal in
2010 and 2013.
In terms of relative trade balance, Australia have comparative advantage in both foreign and
domestic markets for Electric current in 2004 and 2007, and for Ores and Electric current in
2010 and 2013.

4. Science, Social, environmental indicators

4.1. Level of Internet access
Graph 6: Level of households to internet access and broadband access

Source: Australian Bureau of Statistics

The number of households with access to the internet at home continues to increase, reaching 7.3
million households in 201213 and representing 83% of all households (up from 79% in 2010

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11). More than three quarters (77%) of all households had access to the internet via a broadband
connection. Almost every household with children under 15 years of age had access to the
internet at home (96%), as compared to 78% of households without children under 15 years of
age in 201213.

4.2. Greenhouse gas emissions

Australia generates about 1.5% of global greenhouse gas emissions. However, on a per capita
basis, Australia is one of the world's largest polluters. For the year to June 2012, our national
inventory emissions per capita were about 24.4 tones carbon dioxide equivalent (CO2e) per
person. Only a few countries in the world rank higher Bahrain, Bolivia, Brunei, Kuwait and
Qatar. Australia's per capita CO2 emissions are nearly twice the OECD average and more than
four times the world average.

Chart 1: Sources of pollution:

Source: Australian government

4.3. Gross domestic expenditure on R&D by source of funds

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Table 21: Gross domestic expenditure on R&D by source of funds

Source: Australian Bureau of Statistics

Gross expenditure on R&D (GERD) represents the total expenditure devoted to R&D by the
Business, Government, Higher Education and Private Non-Profit sectors. A method of estimating
or modeling the 'missing' Government and Private Non-Profit sectors has been developed that
provides the best estimate of the 2010-11 Government and Private Non-Profit expenditure on
R&D. This approach utilizes a combination of directly collected information, budget papers and
annual reports. The methodology centers on the major contributing organizations from each
sector which demonstrate a consistent share of total R&D expenditure over time. Their
expenditure for 2010-11 is then extrapolated to represent an estimate for the whole sector. The
modeled estimate calculated for the R&D expenditure of the Government and Private Non-Profit
sectors was $4,747 million for 2010-11. Combining the modeled estimate for Government and
Private Non-Profit with the Business and Higher Education sectors has produced a 2010-11
estimate of GERD for Australia of $30.8 billion, an increase of $2.5 billion (or 9%) over 200809.

4.4. Energy intensity of the economy

Australia has abundant, high quality and diverse energy resources, which include both renewable
and non-renewable resources. Australia is the worlds ninth largest energy producer, accounting
for around 2.5% of world energy production and 5% of world energy export. The energy
industry is a significant contributor to the Australian economy, accounting for around 5% of total
GVA in 2009-10 .Demand for energy products has risen in recent years, driven by growing
exports and domestic use, which can in turn affect the price and security of supply.
Understanding developments and trends in the energy sector, therefore, helps policy makers to
make better decisions about how the nation should invest for future energy demands.

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Black coal remains the largest product contributor , accounting for almost half (49%) of
Australias net energy supply at the end of the period, even after a fall in production due to the
Queensland floods between 2009-10 and 2010-11. A strong support for black coal production
has been from strong overseas demand, particularly from China. Production of uranium, the
second largest component of the net domestic energy supply, has fallen sharply from 25% in
2009-10 to 18% in 2010-11. In contrast, both natural gas and crude oil increased their share, to
13% from 10%, and to 12% from 10% respectively.

5. Conclusion and recommendations

Today Australia is one of the fastest growing advanced economies in the world, economic
resilience and potential provide a safe, low-risk environment in which to do business. The
Australian economy has enjoyed a period of 23 years of uninterrupted economic growth an
average of 3.3 percent in real GDP growth annually, boosted by the strength of its services and
resources industries.
One of the key assets that Australia poses is the geographical location, close to the fastest
developing economy in the world- China, and the increasing connections with other fastgrowing economies in Asia. In 2009, China became Australia's largest export market,
surpassing Japan. Resources continue to underpin Australias exports to China. Australia
exported 266.2 million tons of iron ore to China in 2009, an increase of 45.2 per cent over the
same period. The vast scale of trade with China has seen massive investments by Chinese
companies in Australia. From 2007 to 2010, Chinese investment in Australia amounted to
nearly US$60 billion. Australias mineral exports also grew by 55 percent to US$139 billion in
2010 and are projected to reach US$180 billion in 2011, thanks to Chinas strong economic
performance. Chinese companies have also started to lease land from the Australian government
to mine resources on their own. Along with the relationship with China, Australia holds multiple
free trade agreements with numerous other countries such as the US, Singapore, Chile and
Thailand. Australia is also a member of numerous organizations such as APEC, the G20, WTO
and OECD.
Australias mining industry has been the catalyst for economic growth in the past decade.
Large quantities of minerals and resources can be found in Australia. Australia has the worlds
largest resources of recoverable brown coal, lead, rutile , zircon, nickel, tantalum, uranium and
zinc, and ranks second in the world for bauxite, copper, gold, limonite and silver. Iron ore is
another extremely valuable asset, with high demand from China.
The Australian labour force is one of the most educated, multicultural and multilingual in the
world. The country has the worlds highest secondary education enrolment rate, also almost 40

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% of the workforce holding a tertiary qualification or advanced diploma. It is expected that

Australia will outperform many other developed countries for labour productivity growth in
terms of GDP per person employed.
Australia is a world-class innovation destination, with solid foundations of modern ICT
infrastructure, high levels of investment, generous R&D tax incentives for businesses and strong
intellectual property protection. Australia is a leader in the development of new technologies like
the bionic eye. Billions of people around the world rely on Australian discoveries, such as
Google Maps, high-speed WiFi, spray-on skin for burns victims, cervical cancer vaccine,
ultrasound, cochlear implants and civilian use of penicillin.
Australia has strong mining sector, which contribute to the increase in export and the
share of 66% of the raw materials from the total export. Also a leverage is the undisputable
comparative advantage in Ores and Electrical current on both foreign and domestic markets. But
unfortunately commodity prices, particularly those important to Australia such as iron ore and
coal, have fallen over the past two years with shifts in both supply and demand. This has resulted
in weaker terms of trade, reducing Australian incomes and weighing on household and business
spending. However, the significant fall in oil prices, which are now at their lowest level in about
four years, will assist businesses by lower costs of production and improve real household
incomes. That's why Australia should have more diversity in its exports, in order to be more
independent from macro environmental factors, which will hinder its economic growth.

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Sources:

http://www.rba.gov.au
http://www.carbonneutral.com.au
http://www.oecd-ilibrary.org/sites
http://stats.oecd.org/
http://www.abs.gov.au/
http://www.worldbank.org/
http://www.imf.org
http://www.australia.gov.au/topics/economy-money-and-tax/statistics
http://www.nationmaster.com/country-info/profiles/Australia
http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx?sCS_referer=&sCS_ChosenL
ang=en

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