Impact of Globalisation on Australia

Affect of globalisation on
Australia

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Economic objectives, Fiscal Policy.............................................................................................1
Microeconomic Reform...............................................................................................................2
Cost/Benefit Analysis..................................................................................................................2
Balance of payments, Current A/c, Financial & Capital A/c......................................................3
Exchange rate...............................................................................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Globalisation is a procedure in which individuals and organisations of a domestic country
interacts and integrates with individuals and organisations of foreign countries for the objective
of trade and investments (Baker, Merkert and Kamruzzaman, 2015). The economic issue which
is discussed in this report is the affect of globalisation on Australia. The concept of globalisation
has various benefits to an economy but it also has various drawbacks which have turned into an
issue for the economy of Australia. According to the data procured from Australian Institute of
International Affairs, globalisation acts as an issue to the Australian economy as it has resulted in
financial reforms (Australian Institute of International Affairs. 2020).
In this report, economic objectives along with fiscal policies of Australia is discussed along
with microeconomic reforms. Furthermore, a cost benefit analysis has been conducted with
evaluation of balance of payments and capital accounts. Lastly, this report will analyse exchange
rate and impact of globalisation on Australian dollar.
MAIN BODY
Economic objectives, Fiscal Policy
Economic objectives of a country are the targets that a nation wants to achieve with respect
to its economy (Daley and Wood, 2015). Reserve Bank of Australia has set the target of
achieving price stability in the country and controlling the inflation rate within an acceptable
range of 2%-3%. Inflation refers to an increase in prices. The government of Australia seeks to
achieve an objective of full employment to increase the rate of economic growth in the country.
Full employment doesn’t mean zero unemployment but unemployment somewhere between a
rate of 5%-6% or maybe even lower than that. The government has an aim of achieving
‘sustainable economic growth’ which is defined as the fastest growth rate of GDP that
compliments the other economic objectives of the country. Current objective is to have a growth
in GDP by almost 4% every year.
Every year, Australian economy exhibits transactions with people from all over the world
in huge amounts as an impact of globalisation. These transactions are either recorder on the
credit side (exports) of the Balance of Payments account or on the debit side (imports). A higher
current account deficit implies more imports over the exports which also plays an important role
in determining the currency exchange rates in the international market. Rise of the Australian
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