International Interactions of Australia

1.) International Trade 
a.) Exports: 

• Coal, iron ore, gold, meat wool, alumina, wheat, machinery and transport equipment
• $269.3 billion (2012)
• China 29.14%, Japan 19.4%, South Korea 8.3%, India 5%, and the U.S. 3.7% (2012)
• 
  

b.) Imports 

• Machinery and transport equipment, computers and office machines, telecommunication equipment and parts, crude oil, and petroleum products
• $239.7 billion (2012)
• China 18.1%, the U.S. 12.8%, Japan 8.5%, Singapore 6.2%, and Germany 4.7% (2012)

2.) Exchange rate

• Current value of the Australian dollars (AUD) is 0.97 per 1.00 U.S. dollars.
• Recent history of AUD / US dollar:
• 2012- 0.9630
• 2011- 0.9695
• 2010- 1.0902
• 2009- 1.2822
• 2008- 1.2059

3.) Immigration / emigration

• Immigration:
• New Zealand 20.2%, China 11.5%, United Kingdom 8.6%, and India 8.3%
• Currently about 1 in 4 Australians were born outside of Australia.
• From 2010-2011 127,460 settlers arrived in Australia from over 200 different countries.
• Only 39,000 permanently moved to Australia
• Emigration:
• Low of 18,100 leaving from 1985-86
• High of 41,100 leaving from 1999-2000
• Even though there is an increase of Australian-born people permanently leaving the country, there are still more overseas-born Australians that are more likely to leave the country. This is true for both females and males.

4.) Relations with other countries

• Active member of the United Nations and the Commonwealth of Nations.
• ANZAC- Australian and New Zealand Army Corps dates back to the early 1900s and have created long standing ties with New Zealand as their allies.
• Australia's foreign policy is based on multilateralism, regionalism, and bilateral relations with its allies.
• Mulitlateralism- multiple countries working together on a given issue (Wikipedia).
• Regionalism- expression of a common sense of identity and purpose combined with the creation and implementation of institutions that express a particular identity and shape collective action within a geographical region (Wikipedia).
• Bilateral relations- consists of the political, economic, or cultural relations between two sovereign states. Typically when states recognize one another as sovereign states and agree to develop diplomatic relations, they exchange diplomatic agents such as ambassadors to facilitate dialogues and cooperation in different fields (Wikipedia).

News Summary: Australian Dollar Remains High

Cries for help as high Aussie dollar set to stay

1.) Many experts are expressing anxiety and concerns as the price of the Australian dollar remains high, which places Australia at a great disadvantage in trading with other countries. What this means is that goods are being imported into the country at far lower prices than Australia could produce the goods locally. A member from the Federal Chamber of Automotive Industries, Tony Weber, stated, "If we cannot get market access to other countries because of the value of our dollar or we cannot compete in our domestic market because of the value of our dollar, we have grave concerns that there could be a hollowing out of the economy. And when the dollar depreciates, when the resources boom drops off in the future, we will not have the industry structure that we have today." The automotive industry has been affected especially hard by the high dollar value. European and Asian cars are still controlling the automotive market in Australian because of the low values of their currencies. If the auto industry continues to reduce its collapse appears certain. Jac Nasser, BHP Chairmain, said, "It would be a very sad day for Australia but unfortunately it looks like it could be inevitable." Weber warned that if the auto industry left Australia it would most likely never return.

2.) This article relates to the idea of the national income equation, GDP = Consumption + Investment + Government + Net Exports, that was discussed in class. Other factors set aside, if imports exceed exports then the net exports category would be negative and cause a decrease in GDP. Not to mention that the cost of living in Australia is already extremely expensive. Also, since the price of foreign cars is lower and more affordable than cars produced in Australia, the demand for these locally produced cars will decrease and the price and quantity will also decrease. Due to Australia's economic strength, somewhat high interest rates, lots of foreign investment due to the resources boom, and the "currency war" the value of the Australian dollar is being inflated. A currency war is when trading partners such as Japan, China, Europe, and the United States print large amounts of money in an attempt to stimulate their economies.

3.) The inflation of the Australian dollar is due to multiple different factors such as economic success, high interest rates, and large amounts of foreign investment in order to fund infrastructure for the resources boom. Australia is also involved in a "currency war" with Japan, China, Europe, and the United States. The inflation of the Australian dollar is causing the import of cheap goods to increase dramatically, and may cause the demise of the Australian auto industry. Some economic experts, such as Professor Ross Garnaut, are suggesting that the Reserve Bank cap the dollar. Garnaut said, "This would involve cutting interest rates and buying large quantities of foreign currency to deflate our own." Many others, however, disagree with this proposed solution. Economists who disagree believe that capping the dollar and cutting interest rates would only temporarily lower the value of the dollar and risk hurting the housing market. Others think that when the mining and investment boom falls in a few years, the inflation will also fall. For now, the solution to this problem remains in debate.

Response to "Information Wants to Be Free"

a.) One passage from McMillan's chapter four that I found interesting was the difficulty of finding high quality milk in some Indian cities. To increase profits, milk vendors would water down their milk. Buyer were able to judge whether or not the milk was fresh, but they had no way of measuring the quality of the milk (butterfat content). Due to this low quality of milk, the sales declined and per capita consumption fell 25 percent from the previous twenty years. Eventually, India did solve this low-quality milk issue. India's National Dairy Development Board in the 1970s provided inexpensive machines that would measure the butterfat content of milk at each stage of the distribution chain, from farmer to wholesaler to vendor (52). Brand names were also created to give consumers more trust in their sellers. As a result of these changes, consumption rose and the quality of milk improved. This was interesting for me because this was another example of a subtle transaction cost that there is difficulty in observing quality. This point was a little difficult for me to visualize, I think because the quality of goods in the United States is generally relatively high. So, this example of the milk market in India helped me understand this transaction cost more effectively.

b.) By transaction costs, the author means that certain things create market frictions or don't allow the market to function as well as it is able to. There are two types of market frictions that come from the uneven distribution of information in a market: there are search costs and evaluation costs. "There are search costs: the time, effort, and money spent learning what is available where for how much. And there are evaluation costs, arising from the difficulties buyers have in assessing quality. A successful market has mechanisms that hold down the costs of transacting that come from the dispersion of information" (44).

c.) The effects that arise from imperfect information are evident in the bazaar's that are characterized by high prices solely due to the buyers lack of information about the normal price levels and the ability to judge the quality of the good being sold. Another example of the effects of imperfect information is the 25 percent per capita consumption decrease of milk sales in Indian cities. Sellers were diluting their milk products, but buyers had no way of judging the quality of the milk and would continue to buy the low quality products. The inability to judge the quality of the product directly cause the decline in milk quality and sales. Dishonest sellers gain when information is unevenly distributed, and honest sellers go out of business. Consumers also lose because they have no way of knowing whether or not they are buying a quality good, or they have no way of knowing if they are buying their good at a reasonable price.

Response to A Fez of the Heart by Jeremy Seal

a.) The passage from the reading that I found most interesting is when the author first describes the very beginning of tourism in Pomegranate and then the immense change to the city that was a direct result of tourism. Pomegranate citizens start of allowing a few foreigners to stay with them in their homes and even stone visitors that wore bikinis on their beaches. I think around twenty years later, the author visits the city and it's quite obvious how tourism has taken over the people and the culture of this once small farming town. Shops were selling hats and postcards with essentially naked women, breasts exposed and wearing G-strings, with the slogan "No problem in Turkey". He beings the search for a fez, a part of old Turkish culture. However, these fez hats were now illegal to wear on an every day basis, but it was okay for someone to wear a fez to attract tourists. Halil a hotel owner says, "'Life used to be fun,' Halil told me. 'Now it's just business'" (7).

b.) There were multiple passages from this reading that demonstrated the interaction between economics and culture. At the start of the story, Halil's father was a simple orphan turned farmer as was most of the town. When foreigners came to visit, the people of Pomegranate realized that these visitors were willing to pay money to see their beaches and old ruins. So, by the end of the story, Halil is now a hotel owner unlike his farmer father, and the town has lost most of it's cultural heritage. It now aimed more at pleasing the tourists than sticking with actual Turkish culture. Shops were selling friend fish, french fries, and would advertise their town with pictures of naked women, all in the hopes of making more money off of tourists. It was the same story with the fez hat. The fez was illegal for a Turk to wear on just an every day basis, but a restaurant owner had his employees wearing these hats to attract tourists and potentially make more money. 

c.) The big cities such as Melbourne and Sydney have museums, shopping, restaurants, and national parks relatively close. Sydney has the famous Opera House and Darling Harbour. Australia is home to the Twelve Apostles and The Great Barrier Reef. What draws people to these national park locations is their magnificent beauty, some of which are like nothing else in the world. The big cities have a wide range of activities for during the day coupled with a notable nightlife.

Tourism in Australia

1.) Importance of tourism to Australia (numbers, origin of tourists)

• During 2012, there were 6.1 million short term international visitors to Australia, which was an increase 4.6% from 2011 (Australia Bureau of Statistics).
• China is Australia's largest tourism export market with $3.8 billion annual expenditure.
• More than 583,000 Chinese visitor arrivals in 2011-12, which was a 17% increase from the previous year.

2.) Major tourist attractions

• Sydney- Opera House, Darling Harbour, shopping malls, museums, etc. 
  
• Carins- Great Barrier Reef, Daintree National Park.
  
• Gold Coast- large city with a lively nightlife, surrounded by mountains and national parks with lots of wildlife and waterfalls
• Ayers Rock- close to the city of Alice Springs, it's the biggest rock monolith in the world and a sacred place to the Aborigines.
  
• Tasmania- island to the south of Australia, with 18 national parks and lots of surfing beaches.
• Melbourne- larger in area than Sydney, most culturally diverse city in Australia, Port Phillip Bay has water temperatures that are suitable for penguins, the red Tram is available to take a tour around the city for free, lots of shopping and restaurants. Home of the Australian Open tennis grand slam event.
  

3.) National parks, wildlife, or nature preserves

• Australia has over 500 national parks.
• Uluru-Kata Tjuta National Park- lots of cultural and spiritual significance for the Anangu people who were the original owners of the land.
• Great Sandy National Park- this park is basically Fraser Island, and is a World Heritage site. It has sub-tropical rainforests that grow extraordinarily well in infertile sand.
• Kakadu National Park- filled with many wetlands, waterfalls, and saltwater crocodiles.
• Port Campbell National Park- known as "Shipwreck Coast" and includes the Twelve Apostles.
  

• Cradle Mountain-Lake St Clair National Park- home of Cradle Mountain and Australia's deepest lake, Lake St. Clair. Possible to see platypus, Tasmanian devil, wombats, and wallabies.
• Nambung National Park (and the Pinnacles)- north of Perth and filled with unusual limestone pillars.
  
• Purnululu National Park (and the Bungle Bungles)- home of the domed Bungle Bungles.
  
• Daintree National Park (and Cape Tribulation)- one of the world's most diverse ecosystems, filled with lush rainforests that connect to white sand beaches.
  
• Freycinet National Park- A Tasmanian park home to the Wineglass Bay.
• Kosciuszko National Park- where Australia's highest peak is located. Large, snowy mountains that are popular skiing attractions.

4.) Important museums

• National Gallery of Victoria- located in Melbourne and founded in 1861. It is the oldest public art museum in Australia.
• National Museum of Australia- located in the national capital of Canberra, and explores the history of Australia including social issues, indigenous heritage, and events that shaped the country.
  
• Art Gallery of New South Wales- located in Sydney. It's the most important public gallery in Sydney and the fourth largest in Australia.

Economics of Australia

Economic stats:

1. GDP- $960.7 billion
2. GDP per capita- $42,400
3. Life expectancy- 81.9 years: 79.48 years for males and 84.45 years for females
4. Poverty rate- 12.8% in 2010 (ABC News)
5. Literacy rate- 99% of the population 15 years and older
6. Unemployment rate- 5.2%
7. Inflation- 2.1%

Resources:
Natural resources: Australia has a tropical climate to the north with a rainy season from about November through April, and a temperate climate in the south with a more even annual distribution of rainfall (The Australian Bureau of Statistics). The middle of the continent is generally air to semiarid. They are also the world's largest net exporter of  coal at 29% of global coal exports. Winter crops are cereals, grains, legumes, and canola are harvested between September and January. Summer crops are sorghum, sunflowers, and soybeans and are harvested between February to May. Cotton harvesting occurs from March until late May. (AG Workforce). In high rainfall areas, fruit and vegetable growing and dairying are very important in the south, while sugar cane growing and tropical fruits and vegetables are prevalent in the north. The "wheat belt" is located between the moist coasts and arid interior (Australian Government).

The Murray and the Darling rivers make up the Murray-Darling river basin that measures over 2,500 kilometers long. Some other famous rivers are the Snowy river and the Murrumbidgee.

Labor: The amount of Australian's employed increased to 11,599,900 in March (Australian Bureau of Statistics). Percentage of labor force by occupation includes agriculture at 3.6%, industry at 21.1%, and services at 75%. Australian's attend primary school until about age 6 or 7 and then secondary school until about age 17. After secondary school students can attend a Vocational Education and Training (VET) sector or attend University as an undergraduate for three years, unlike the four year program of the United States.

Capital: Some primary industries in Australia and agriculture, fisheries, forestry, mining, chemicals, and industrial and transportation equipment. The industrial production growth rate is -0.1% as of 2011 (CIA World Factbook). In 2009, 15.8 million Australian were internet users. The Australian Infrastructure Statistics Yearbook 2012 is presented online by the Australian government and gives statistics on transportation, energy, communications, and water infrastructure and the use of this infrastructure in Australia.

News Summary: Australian's Cost of Living Rising

 1.) The main issue covered in these three articles was that the cost of living in Australia is higher now than it has ever been and it's the main cause of anxiety in all of the Australian states, especially in Queensland. In the first article, The National Australia Bank quarterly Consumer Anxiety Index reported that more than 40% of the 1000 Australian's surveyed rated their concern for the cost of living at 9 or more out of 10, with 10 being extremely concerned. The second article summarizes that some costs of living have decreased during the month of March such as fruits, vegetables, household appliances, and audio, visual, and computing equipment. However, these certain price decreases have been somewhat counteracted by the increase in prices of alcohol, clothing, tobacco, and footwear. The last article explains that demand for the once popular meat pie from the corner store has fallen and consumers are more inclined to purchase chocolates and lollies instead. This may seem silly, but it emphasizes that the cost of living and food has increased significantly since 2005 and Australian's are more determined to increase their savings by cutting back on spending. Thus, the downfall of the common corner stores.

2.) The economic concepts we've covered in class, so far, have really only been the effects of supply and demand on markets. These articles directly related to the concepts of supply and demand because Australian's cost of living is high which makes consumers want to cut back on spending and save more. A market's success is dependent on a consumer's willingness to buy and the producers willingness to sell. So, if consumers are less willing to buy goods, then producers are not able to sell as much and lose money and the market overall suffers.

3.) This situation seems to be very similar to many economies around the world directly cause by the worldwide economic recession. What we've read so far in McMillan's Reinventing the Bazaar, explains the complexity of markets and that in order to succeed markets need information to flow smoothly, the protection of property rights, people that can be trusted to live up to their promises,  side effects on third parties decreased, and the support of competition. I'm certainly no economic expert, but maybe some sort of government policy or intervention would help improve the economic situation. I honestly feel like if there was a policy or policies that would help solve the economic issues faced Australia and by many countries someone would have tried to enforce these policies already. I think the difficulty behind these economic issues is that there isn't a simple answer, there isn't just one answer to the problem, and because markets are so intricate one policy might help in some areas of issue, but would do nothing to help another area of economic struggle. I am extremely interested to learn about other people's opinions on this question in regards to Australia and other economies around the world because it is certainly an area of difficulty for me, as a Biology major, and I struggled with how to answer this question.








http://www.news.com.au/money/cost-of-living
http://www.news.com.au/money/cost-of-living/food-prices-fall-alcohol-and-fuel-rise/story-fnagkbpv-1226608313539
http://www.news.com.au/money/cost-of-living/aussies-giving-up-meat-pies-sausage-rolls-but-cant-resist-the-chocolate/story-fnagkbpv-1226611157704

Elements of Local Australian Culture

1. Popular sports: Australian rules football, rugby, cricket, golf, soccer, rowing, cycling, netball, surfing, tennis, and many others.
2. Music: Modern music tends to follow trends of the U.S. and the U.K. Indigenous music is best characterized by the didgeridoo, a wind instrument like a natural wooden trumpet. Some well known performers are ACDC, Keith Urban, Kylie Minogue, etc.
3. Food: Some iconic Australian foods include vegemite (yeast based sandwich spread), macadamia nuts, jaffas (chocolates with an orange flavored shell), etc. Kangaroo meat is readily available in Australia, but is not the most commonly eaten meat. Indigenous Australians have a hunter-gatherer diet which includes kangaroo and emu meat and bush berries and fruit.
4. Major religious beliefs and/or spiritual: The major religion in Australia is Christianity, but is also diversified with Islamic, Buddhist, and Jewish beliefs. There's an increasing percentage of Australians who have no religious beliefs and Indigenous Australians follow the animist spirituality of the Dreaming.
5. National holidays and traditional customs: Some national holidays include New Year's Day, Australia Day (January 26 and celebrates the establishment of the first English colony), Labor Day, Easter, Anzac Day (25th April and similar to veteran's day in the U.S.), Queen's Birthday, Christmas, and Boxing Day (post-Christmas sales and a significant sporting event day).
6. Popular TV shows, movies, and stars: Some popular TV series are The Neighbours, Home and Away, Australia's Next Top Model, and many other reality TV series. Notable Australian movies entail Moulin Rouge, Crocodile Dundee, Happy Feet, Red Dog, etc. Australian movie stars include Heath Ledger, Nicole Kidman, Geoffrey Rush,  Cate Blanchett, Eric Bana, Hugh Jackman, Naomi Watts, Chris Hemsworth, Mel Gibson, and many, many more.
7. Online news sources: The Australian http://www.theaustralian.com.au/, http://www.news.com.au/, Herald Sun http://www.heraldsun.com.au/, Sydney Morning Herald http://www.smh.com.au/, Australian Broadcasting Corporation http://www.abc.net.au/
8. Online forums for expatriates
9. Type of Government and leaders: There are three branches to the Australian Government which include the legislature (or parliament), the executive, and the judiciary. The six Australian states also have the power to make their own laws. Local governments  have a legislature and an executive branch, but no judiciary branch. The Australian Prime Minister is Julia Gillard. There is one federal parliament lead by the Prime Minister, six state parliaments lead by Premiers, and two territory parliaments lead by Chief Ministers. There is an Opposition Leader in each Parliament.

Response to "The Only Natural Economy"

1.) According to McMillan, the defining characteristics of a market are that information flows smoothly, property rights are protected, people can be trusted to live up to their promises,  side effects on third parties are curtailed, and competition is fostered. Markets are essentially controlled by everyone but they cannot work without structure. "Market design consists of the mechanisms that organize buying and selling; channels for the flow of information; state-set laws and regulations that define property rights and sustain contracting; and the market's culture, its self-regulating norms, codes, and conventions governing behavior" (9).

2.) There are many negative opinions in regard to the market system and I've encountered most of these through the news, television, or talk shows. What might cause some people to distrust markets is that there is a general mystery surrounding how markets work. People assume that the market economy is supposed to just run by itself and be successful. When free markets in certain countries or places fail, they probably have a difficult time believing in the market system. "Left to themselves, markets can fail. To deliver their full benefits, they need support from a set of rules, customs, and institutions" (14). Due to the mysterious nature of markets, or the lack of knowledge people have about how a market works and how it is successful, leads to this distrust.

3.) In my opinion, the market rules that are important for modern markets are lowering transaction costs (by entrepreneurs and governments) and a top-down market design in which the government provides a stable environment for the market to flourish with supporting institutions, property rights, laws, and regulatory overview. "While markets can do a lot, they do no work automatically. Unaided, the market will not take care of things" (14).

*Response questions to John McMillan's Reinventing the Bazaar, a natural history of markets.

" Why Did Human History Unfold Differently On Different Continents For The Last 13,000 Years?"

a.) Diamond's major themes and key points revolve around his theory that the differences between human societies on different continents seems to be caused by the differences in the environments of the continents and not due to the biological differences between the people.

b.) He identifies that the most important factors which determine a society's success are the availability of plant and animal species that are able to be domesticated. These species need to be able to easily spread without being affected by climate. Domesticated crops and animals can lead to higher amounts of agriculture and herding, which would increase the population of the society and the amount of food resources. This rise in population would increase the development of disease, writing, technology, and political organizations. He uses Tasmania and Australia as a warning of the effects of isolation. These isolated societies had lower rates of technological development and little to no domesticated plants and animals and therefore were much more underdeveloped than other societies around the same time.

c.) These ideas can be applied to today's global economy by recognizing that interacting with other societies increases the development and advancement of technology. They emphasize the importance of agriculture and livestock to a society's growth and success. If the global economy wants to continue to improve and grow the interactions between societies in order to advance technology.

http://www.edge.org/3rd_culture/diamond/diamond_p2.html