Ease of Doing Business in Australia

The report examines the DB ranks of Australia in 10 topics related to ease of doing business, and highlights the country's strengths and weaknesses. It also references relevant articles and sources for further information.

Running head: INTERNATIONAL BUSINESS
International Business
Name of the Student:
Name of the University:
Author note:

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Topic 3: Political Economy of International Trade
Australia is one of the most developed countries of the world. The country has never
experienced economic recession within the past 26 years, which is a record. Australia ranks 11th
in the list of highest GDP per capita and it is the 13th biggest economy in the world. In 2016, the
international trade has contributed 40% of the total GDP (). The country has extremely liberal
trade policies that support the prosperity of the citizens through a strong economy, boost the
economic growth, and encourage domestic and foreign investment and businesses (dfat.gov.au,
2018).
Australia has been a part of many free and preferential trade agreements with various nations that
promote the growth of international trade. However, there are few areas, where the Australian
government has already imposed trade barriers, such as, in the agricultural products and
processed foods, manufactured goods like steel and automotive good (hktdc.com., 2017). There
can be many economic and political reasons for employing trade barriers by the Australian
government.
The economic reasons are as follows:
Protecting the domestic producers and industries is the major economic objective of trade
barriers. When the domestic manufactures are unable to compete with the international products,
the government should impose trade barriers on imports. Reduction in imports leads to rise in
domestic production with improved quality and increase in employment and in GDP of the
country (intelligenteconomist.com, 2017). Once the domestic manufacturers improve their
product quality, they can compete in the international market. However, this should be a short
term strategy as in the long term, the domestic industry might lose interest of improving.

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Secondly, trade barriers provide revenue to the government. Tariffs can bring a
substantial amount of the foreign currency to the tariff imposing country. If Australia imposes
import tariffs, it can earn a good amount of different foreign currencies from the countries
exporting goods to Australia (Almahmoud, 2012).
Thirdly, trade barriers also offer protection from dumping. In the international trade, an
importer can sell its low quality products to a country at a price below its average cost of
production if there is no trade barrier in the importing country. This affects the local industries.
Anti-dumping duties and laws help in protecting the domestic manufactures from the dumped
products (nordeatrade.com., 2018).
The political reasons for imposing trade barriers are:
According to some policy makers, maintaining the level of imports at a minimum level
guarantees political independence. When a country becomes heavily dependent on the imported
products, it loses its economic and political independence and its growth faces hard challenges
due to poor domestic production, lower GDP and unemployment. This can lead to economic
embargo, as experienced by Iraq, Iran and Syria (Treisman & Di Lieto, 2017). Trade barriers
push a country to improve its manufacturing sectors and have economic growth. A strong self
dependent economy reduces the political vulnerability of the nation. Secondly, trade barriers help
a country to protect domestic jobs from the cheap foreign labor, which helps in generating
employment in the country and ensuring political stability (intelligenteconomist.com., 2017).

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Topic 4: The Foreign Exchange, the IMF & the International Economic Environment
The assignment 2 focuses on the macroeconomic analysis of a country, where the chosen
organization would like to do business. For an organization, which wants to do business in a
foreign country, the macro environmental analysis is very important. This analysis presents the
growth opportunities and risk factors that can affect the business positively and negatively. The
macro environmental analysis are performed on the factors that can affect the business
externally, hence, economic, political, cultural, legal and ethical environmental analysis are
performed to evaluate the business opportunities in that chosen country (Barkauskas,
Barkauskienė & Jasinskas, 2015).
International Monetary Fund (IMF) is an international economic and financial
organization. It was established in 1945 with the objective of ensuring global financial
cooperation and security across 189 countries, facilitating international trade, promoting higher
employment rate and sustainable growth and reducing poverty across the world (img.org, 2018).
Thus, the IMF website is expected to contain economic and financial information regarding
every country that would help in performing the economic analysis of the chosen country.
Economical factor analysis consists of the analysis of the economic factors, which have
significant impact on the business scenario of a nation. GDP, inflation are two major economic
factors, along with financial position, FDI position, SDR capacity, debt relation, balance of
payments, trade agreements, interest rate, exchange rates are some other important economic
factors that influence the economic condition and business opportunity in a country (Dunning,
2014). In the website of IMF, there is summarized information about the chosen country’s
financial and population status, along with projected real GDP, projected consumer prices, date

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of membership, SDR, quota and number of arrangements since membership in IMF. It has
country specific separate factsheets and documents on finance and development, and fiscal
monitor, which would be beneficial for doing the economic analysis. All the latest financial
reports and documents on financial meetings and discussions of the country can be found on the
website that could be helpful in the economic analysis. In a nutshell, it can be said that, all types
of country specific financial data, proceedings, position status in the fund and detailed
information on the agreements with other countries are available in the website of www.imf.org.
While doing a macro environmental analysis on the economic factors of a country, the website of
IMF will provide all the financial information about the country in a consolidated manner.

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Topic 5: International Political and Legal Environment
Australia is chosen from the website “Ease of Doing Business” by World Bank for
reviewing the reports. In this website, country specific reports on the ease of doing business are
available. In the reports, the economies are ranked on 10 different factors that are important for
doing a business in the country. Those factors are, namely, Starting a Business, Dealing with
Construction Permits, Getting Electricity, Registering Property, Getting Credit, Protecting
minority Investors, Paying Taxes, Trading across Borders, Enforcing Contracts and Resolving
Insolvency.
The ranking of the economies are provided on the basis of the easy regulations for
conducting business in the economy. There are total 190 countries considered by the World Bank
for this analysis. A higher rank in the ‘Ease of Doing Business’ list indicates that the regulatory
environment is more favorable for starting and operating a business. These rankings are
determined by sorting the score on the parameter ‘Distance to Frontier’. The ranks are given
from 1 to 190. The absolute level of the regulatory performances over time is assessed by this
parameter. The frontier represents the best performance by an economy and the gap between the
actual performance and the frontier is called the distance score (DTF). The range of the score is 0
to 100, 0 indicating the lowest performance, and 100 indicating the frontier, that is, perfect ease
for business in that topic. The score for each of the 10 factors are consolidated to get the final
DTF score and that yields the ranking (World Bank Group, 2018).
From the reports, it is seen that Australia holds the 14th position in the scale of ‘Ease of
Doing Business’.

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Figure 1: DB 2018 Rank and DTF 2018 score for Australia
(Source: World Bank Group, 2018)
The rankings of Australia for the 10 factors are as follows.
Figure 2: DB 2018 Ranks of Australia
(Source: World Bank Group, 2018)

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From the table above, it can be found that, Australia has moderately good scores and
ranks among the 190 countries. Being a developed and economically liberal country, Australia
has enforced an easy environment for doing business. It has very good rankings in ‘Dealing with
Construction Permits’, ‘Getting Credit’, ‘Starting a Business’, ‘Enforcing Contracts’ and
‘Resolving Insolvency’. In these topics, Australia has fared well among the 190 countries and in
these factors; the business owners find ease of doing business. It ranks 26 in ‘Paying Taxes’,
which can be considered as a good ranking among the 190 countries (World Bank Group, 2018).
Hence, it can be said that, the regulatory environment of Australia provides good support in
starting a business, getting constriction permits and necessary credit, enforcement of contracts
and resolving insolvency.
On the hand, Australia has very poor ranks in ‘Trading across Borders’, ‘Protecting
Minority Investors’, ‘Registering Property’, and ‘Getting Electricity’. Thus, it can be derived
that, the business owners face quite high difficulty in international trading and moderate
difficulty in protection of minority investors, property registration, and in getting adequate
electricity connection (World Bank Group, 2018). All these are quite important factors for
setting up a business and running that smoothly and the above mentioned topics are the
concerned areas for getting the perfect ease of doing business in Australia.
Therefore, from the review of the reports and the DB ranks, it can be said that, Australia
has a good score in overall ease of doing business. The economic policies of the country provide
adequate support to the business industry to operate with ease. However, among the 10 topics,
identified as parameters of ease of doing business, Australia has fared very well in some factors,
while it fared moderately in others, the combined effect of which has positioned the country at
the rank of 14 among the 190 countries.

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References
Almahmoud, M. (2012). Reasons For Using Trade Barriers. Wordpress.com. Retrieved 16
March 2018, from https://almahmoudm.wordpress.com/2012/07/15/reasons-for-using-
trade-barriers/
Barkauskas, V., Barkauskienė, K., & Jasinskas, E. (2015). Analysis of macro environmental
factors influencing the development of rural tourism: Lithuanian case. Procedia-Social
and Behavioral Sciences, 213, 167-172.
dfat.gov.au. (2018). Barriers to Australian Trade and Investment in Regional Comprehensive
Economic Partnership (RCEP) Participating Countries. Department of Foreign Affairs
and Trade. Retrieved 16 March 2018, from
http://dfat.gov.au/trade/agreements/rcep/Pages/barriers-to-australian-trade-and-
investment-in-regional-comprehensive-economic-partnership-rcep-participating-
countries.aspx
dfat.gov.au. (2018). Economic diplomacy. Department of Foreign Affairs and Trade. Retrieved
16 March 2018, from http://dfat.gov.au/trade/economic-diplomacy/Pages/economic-
diplomacy.aspx
Dunning, J. H. (2014). Economic Analysis and multinational enterprise. Routledge.
hktdc.com. (2017). Trade Regulations of Australia. Hong-kong-economy-research.hktdc.com.
Retrieved 16 March 2018, from http://hong-kong-economy-research.hktdc.com/business-
news/article/Small-Business-Resources/Trade-Regulations-of-Australia/sbr/en/
1/1X000000/1X006MWA.htm

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imf.org. (2018). Financial Position in the Fund for Australia as of February 28, 2018. Imf.org.
Retrieved 16 March 2018, from http://www.imf.org/external/np/fin/tad/exfin2.aspx?
memberKey1=40&date1key=2099-12-31
intelligenteconomist.com. (2017). Why Governments Are For Trade Barriers. Intelligent
Economist. Retrieved 16 March 2018, from https://www.intelligenteconomist.com/5-
reasons-governments-are-for-trade-barriers/
nordeatrade.com. (2018). The economic context of Australia - Economic and Political
Overview. Nordeatrade.com. Retrieved 16 March 2018, from
https://www.nordeatrade.com/en/explore-new-market/australia/economical-context
Treisman, D., & Di Lieto, G. (2017). Why Australia shouldn't fear a wave of trade
protectionism. The Conversation. Retrieved 16 March 2018, from
https://theconversation.com/why-australia-shouldnt-fear-a-wave-of-trade-protectionism-
86931
World Bank Group. (2018). Doing Business - Measuring Business Regulations - World Bank
Group. Doingbusiness.org. Retrieved 16 March 2018, from
http://www.doingbusiness.org/

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Appendix
Figure 3: DB Ranks of Australia in the 10 topics
(Source: World Bank Group, 2018)