Globalization and Australia Alan Oxley Australian APEC Centre

Globalization and Australia Alan Oxley Australian APEC Centre, Monash www. worldgrowth. org 1

Three aspects The impact of globalization What is globalization Impact on Australia 2

What is the impact of globalization? 3

The wealth gap is narrowing Gap between richest 20 percent and poorest 20 percent falls - from 15 to 1 in 1970 - to 13 to 1 in 1997 - i. e. by 10 percent 4

Incidence of poverty is falling 1987 1998 26. 6% 15. 3% 23. 9% 11. 3% Europe/Central Asia 0. 2% 5. 1% Sub-Saharan Africa 46. 6% 46. 3% WORLD 28. 3% 24% East Asia (- China) 5

Quality of life improving 1970 1990’s People undernourished 920 m 810 m Average life expectancy 58 66 Infant survival rates/1000 44 67 Global literacy 80% 67%bb 6

Countries open to trade grow faster 7

The evidence shows that the poorest people within countries share in the gains from national income growth. Generally, as a country ’s average income rises, the poorest share proportionately in those gains. More specifically, the poorest 20 per cent in an economy gain by the same percentage as the country does. And as a country ’s average income person rises, the proportion of its population living in extreme poverty falls. 8

What is Globalization? Defining it The drivers The effects 9

Defining globalization An open economic system Non-discrimination Global brands Global structures 10

The Drivers Cheap travel Trade liberalization Information technology High technology 11

Exports % share of world production 12

Annual % Growth of trade and GDP 1959 – 96 13

US investment now more global Percentage of foreign stocks held by US investors 1975 1996 One percent Ten percent 14

Effects of globalization On business On work 15

Effects of globalization on business Cheap offshore production Reduced transport costs Virtual communication Standardization of logistics Global marketing 16

Bigger and smaller Greater scale in manufacturing - commodities are globally priced Specialization in manufacturing Globalization of specialist manufacturing 17

New importance of Brands Selling Fords like Coca Cola? - Ford sold its components business for $1. 5 billion - That business, Visteon, supplied 22% of a new Ford vehicle - Ford spent $9 billion buying brands: Jaguar and Volvo 18

Globalized business Greater specialization of production - Hewlett Packard More outsourcing – Soap and medicines Greater increase in brand values - LG New technology niches – steel mini mills 19

Effects of globalization on work Jobs in services rather than manufacturing Workers provide services rather than “do a job” End of “lifetime” employment Individuals manage more of their own affairs 20

A globalized world Greater freedom of movement of goods, services, capital, people Global citizens The Information Age – has only just begun 21

Australia and Globalization How is Australia positioned? Examples of globalized industries The Future 22

Australia: globalization’s child Australia has grown on - trade - foreign investment - immigration - adaptation of technology Australia is the branch office model of development 23

Australia’s position Openness IT/E readiness Culture 24

Australia’s openness One of the most open economies in the world - average tariffs – 5 percent - open financial and telecoms - open to foreign investment 25

Australia’s IT/Ereadiness Ranking Score (of 10) US 1 8. 73 Australia 2 8. 29 UK 3 8. 10 Canada 4 8. 09 Norway 5 8. 07 Sweden 6 7. 89 Singapore 7 7. 87 Source: Economist Intelligence Unit 26

Australia’s globalized economy Global industries - mining and agriculture Services – distribution, logistics, transport, financial services Manufacturing – a new contender 27

Manufacturing exports 28

Globalized industries Toyota - manufactures and exports a global car Howe Leather – a tier one supplier to Ford Rosemount/Southcorp – exporter & offshore producer Westfield – real estate management 29

The future The information Age - computing power continues to expand exponentially - More global distribution of activity - Greater interconnectivity - Bigger organizations - Greater fragmentation - Greater personal freedom 30

Australia ready to thrive Globally oriented economy High adaptation of IT Workforce adjusting Open society 31

www. globalizationguide. org 32