What are the competitive advantages of Australia as a nation and why
does it is considered as an advanced economy? Examine its similarity with advantages of state of California and discuss Answer: Australia as a nation has great competitive advantages because of the following reasons: It is rich in minerals ranging from Nickel, Zinc, magnesium, copper and black coal. Japans demand for Australias iron-ore and coking coal for its rapidly growing steel industry. Due to rapid industrialization of China, the demand Australias raw materials ranging from steel to oil to coal has increased. Australia is considered as an advanced economy because of the below factors: It has amongst the lowest of budget deficits and debt to GDP of any other major economies in the developed world. Out of the major economies of the world, Australia had the 13th lowest fiscal deficit in 2012. Despite private foreign debt of about 88% of GDP, Australia had financed its current account with remarkably little difficulty to date. In similarity with state of California where the U.S. lawmakers helped to kill a bid for Unocal Corp., a petroleum company based in California, by Chinese Oil Company National Off shoring Oil Corp., the Australian government would not allow the Chinese government to buy and control a key strategic asset in their country as the Chinese government doesnt allow any other country to buy a land in China. 2. With Asias appetite for iron ore ,coal ,natural gas and mutton growing, how do Australian companies expand and tap in to these markets? Answer: With Asias appetite for iron ore, coal, natural gas and mutton growing, the Australian companies have great opportunities to expand and tap into these markets. As an example, due to the rapidly growing steel industry in Japan, the demand for Australias iron ore and coking coal has increased. Also due to rapid industrialization of China, the demand Australias raw materials ranging from steel to oil to coal has increased. China being the top market for Australian mineral exports has helped Australia avoid recession. In fact in 2009, China surpassed Japan as Australias largest export market .The Australian government found out that the two countries trade relations would provide the basis for further economic and commercial development. 3. What are the support industries that need to be built to take Australia into a golden future? How does government intervene? Answer:
As mining industry of Australia experiences an annual growth of 12 % as compared
with 2 % growth in other industries, the mining industry is a support industry for Australia and these needs to be focused upon for the growth of the economy. The government can intervene by making mining an attractive industry for new start-ups by providing grants and subsidies, thus reducing the cost for these producers. 4. As Australia promotes new industries such as Airline, shipping and telecom with liberal De regulation, how does it impact competition globally? What are the challenges it might face? Answer: As the Australian government promotes and supports the new industries such as Airlines, shipping and telecom with liberal De regulation, by giving them excessive grants and subsidies, it ultimately makes them more competitive. These industries will then reduce their prices and in turn will be perceived as not being at par with the rest of the world. Also, it might face the challenge of deflation i.e. the reduced prices are putting Australia at such a risk, which will mean that companies will leave the market which is not what the government wants.