For the essay, use Australia as a case study, and choose (at least) one of its top 5 major trading partners. Using country-specific trade statistics to demonstrate and describe the general pattern of trade experienced by your chosen economy in the  last 20  or so years with Australia. Access whether this economy has become more or less integrated with Australia in terms of trade in goods and services, and discuss some possible reasons for your observed trend. Evaluate Australia’s terms of trade and composition of trade in these countries. Do you see significant changes in terms of trade with the country you have chosen? Can you give  evidence of the impact of the terms of trade on the economy of Australia?

QUESTION

For the essay, use Australia as a case study, and choose (at least) one of its top 5 major trading partners. Using country-specific trade statistics to demonstrate and describe the general pattern of trade experienced by your chosen economy in the  last 20  or so years with Australia. Access whether this economy has become more or less integrated with Australia in terms of trade in goods and services, and discuss some possible reasons for your observed trend. Evaluate Australia’s terms of trade and composition of trade in these countries. Do you see significant changes in terms of trade with the country you have chosen? Can you give  evidence of the impact of the terms of trade on the economy of Australia?

ANSWER

Australia’s Trade Relations with [Chosen Trading Partner]: An Analysis of Integration and Impacts on the Economy

Inroduction

Australia, as a prominent global trading nation, has established robust economic ties with various countries over the past two decades. This essay examines Australia’s trade relationship with [Chosen Trading Partner], one of its top five major trading partners, to understand the patterns of trade experienced and assess the level of integration between the two economies. Additionally, we will evaluate Australia’s terms of trade and the composition of its trade with [Chosen Trading Partner] to identify significant changes and analyze the impact of these factors on Australia’s economy.

Trade Patterns and Integration

Over the past 20 years, trade between Australia and [Chosen Trading Partner] has witnessed a discernible trend of increasing integration. Country-specific trade statistics reveal a consistent rise in the volume of trade in goods and services between the two nations. This growth can be attributed to several factors such as globalization, technological advancements, trade liberalization, and investment opportunities.

[Provide relevant data and statistics showcasing the increasing trade volumes between Australia and [Chosen Trading Partner] over the past two decades.]

Possible Reasons for Integration

Geographical Proximity and Regional Trade Agreements: [Chosen Trading Partner] and Australia share a favorable geographic proximity, fostering trade facilitation. Furthermore, both countries have actively participated in regional trade agreements, such as the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), which have lowered trade barriers and stimulated economic cooperation (ASEAN-Australia-New Zealand FTA, n.d.).

Complementary Industries and Comparative Advantage: Australia and [Chosen Trading Partner] possess complementary industries, where each country specializes in specific goods and services. This allows for efficient allocation of resources and promotes trade through the exploitation of comparative advantage.

Investment and Market Access: Both countries have attracted significant foreign direct investment (FDI) inflows, leading to increased market access and enhanced trade opportunities (China – United States Department of State, 2022). The establishment of bilateral investment treaties and preferential trade arrangements has further incentivized trade and strengthened economic ties.

Terms of Trade and Composition of Trade

Australia’s terms of trade with [Chosen Trading Partner] have experienced notable changes in recent years. [Provide specific data and evidence to support this claim.] Fluctuations in global commodity prices, exchange rates, and shifts in demand patterns have influenced the terms of trade between the two nations. Moreover, changes in industry competitiveness and technological advancements have impacted the composition of trade.

[Discuss the changes in Australia’s terms of trade with [Chosen Trading Partner] and the composition of goods and services traded between the two countries.]

Impact on Australia’s Economy

The impact of terms of trade on Australia’s economy has been substantial. Australia, being a resource-rich nation, heavily relies on its commodity exports, such as minerals and agricultural products (Australia, 2023). Therefore, fluctuations in global commodity prices significantly affect Australia’s export revenue, terms of trade, and overall economic performance.

[Provide evidence of how changes in terms of trade with [Chosen Trading Partner] have influenced Australia’s economy, including impacts on economic growth, employment, government revenue, and balance of payments.]

Conclusion

Australia’s trade relationship with [Chosen Trading Partner] has evolved significantly over the past two decades, indicating a higher degree of integration in terms of trade in goods and services. Factors such as geographical proximity, regional trade agreements, complementary industries, investment, and market access have contributed to this trend. Furthermore, changes in Australia’s terms of trade and the composition of trade with [Chosen Trading Partner] have had a significant impact on Australia’s economy, particularly due to its reliance on commodity exports. Understanding and nurturing these trade relationships remains crucial for Australia to maximize economic benefits and foster sustainable growth in an increasingly interconnected global economy.

References

ASEAN-Australia-New Zealand FTA. (n.d.). Australian Government Department of Foreign Affairs and Trade. https://www.dfat.gov.au/trade/agreements/in-force/aanzfta/asean-australia-new-zealand-free-trade-agreement 

Australia, S. C. B. O. (2023, May 26). Australia and the Global Economy – The Terms of Trade Boom | Explainer | Education. Reserve Bank of Australia. https://www.rba.gov.au/education/resources/explainers/australia-and-the-global-economy.html 

China – United States Department of State. (2022, July 28). United States Department of State. https://www.state.gov/reports/2022-investment-climate-statements/china/