International Trade: -------------------- Reasons for trade - Limited domestic market - Gain resources, Gain goods - International specialisation - Absolute advantage - Comparative advantage Composition - Export: - Rural, resources - Manafacturers - Services - Import: - Machinery - Transport equipment - Chemicals Largest - Export: - Japan - N. Asia - S.E. Asia - Import: - USA - Japan - EEC Trends - Export: - Increased services -> Tourism -> Education - Increased E.T.M. - Import: - Increased machinery (computers & hardware) - Transport equipment Increased importance of International Business: ----------------------------------------------- - From mid 1980's increase in exports and imports, therefore a decrease in tariffs', deregulation, microeconomy reforms - Encouraged by governments, therefore a reduction in unemployment, but an increase in St. of h. Balance of payments: -------------------- Balance of current account: --------------------------- Goods & { (A) Balance of goods services = Exports - Imports Services { (B) Factor income = Export$ services - Import$ services { (C) Net unrequired transfers + Balance on capital account money ---------- $0.00- Normally Australia has a _defecit_ on it's Current Account (IE. CAD), caused by: - (i) decreased terms of trade therefore decreased P of rural therefore increased price of imports as decreased price of Exports (ii) decreased international competitiveness therefore increased cash, low productivity, decreased australian dollar (iii) Increased imports therefore fast growth policy (iv) Increased capital inflow / foreign investment ------------------------------------------------------------------ Current Account: ---------------- Balance on merchandise trade + Net Service --------------------------------- = Balance on goods and services + Net transfers --------------------------------- = Balance on current account Capital Account: ---------------- Offical capital transactions + Non-offical capital transactions --------------------------------- = Balance on capital account ------------------------------------------------------------------
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