Australia's Enduring Influence: A Middle Power in the Asia-Pacific

This essay explores whether Australia can maintain its status as a middle power in the Asia-Pacific/Indo-Pacific region given the rise of India and Indonesia. It discusses Australia's historical dominance due to its economic and military strength, as well as its role as a manufacturing hub and commodity exporter. However, the essay argues that the emergence of India and Indonesia, with their large populations, growing economies, and lower operational costs, is challenging Australia's position. The essay also considers factors such as technological advancements, foreign direct investment, political stability, and military strength in assessing the shifting power dynamics in the region. It concludes that while Australia has strong relationships with key global players, the increasing economic and political influence of India and Indonesia poses a significant challenge to Australia's regional dominance.

International Relations

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With the emergence of new players such as India and Indonesia in the region, do you
still expect Australia to remain a middle power in the Asia-Pacific/ Indo-Pacific region?
Asia pacific region has been the area of economic capital from centuries. Australia has
remained the centre of power in the Asia pacific or indo pacific region for over decades. They
have been enjoying the power with its financial and military strengths. They are a developed
nation among the various developing nations in this region. Australia had great economic ties
with all the countries in the region. They had a strong bond with all their allies in this region.
With minimum of conflict with any other country they have been the leader in the region.
Apart from this Australia has been the manufacturing hub of many companies at international
level and hence acts as a source from where most of the suppliers were gaining raw
commodities. Australia has been the major raw commodity exporter over the years. Almost
all the big companies had their manufacturing centres in Australia and the hence the demand
of the Asia pacific region has been fulfilled from this country while they were dependent on
the ASEAN countries for availing workers at lower cost. Many students from this region
preferred Australia for studying. This is the region why companies were also finding young
new talents in this nation (Connors, Davison and Dosch, 2017). Australia was a
manufacturing hub for this region and acted as a source for employment.
In the present global world, the country which is having more control on the resources and
economy is understood to be as a power in that region. Higher power to affect the balance of
global trade is one of metrics on which dominance of any country depends. Australia has
been the economic powers over the years but in the last two decades some other power
centres have emerged in this region. The first basic reason for the shift of power centres in the
region has been the fact that Australia is a developed nation with limited opportunities to
grow (Beeson and Higgott, 2014). On the other hand countries like India and Indonesia is a
developing nation with huge future growth potential. The socio-economic change in the
environment of both the nations has instigated the companies to look for a better option
among these countries. Since market drives the dominance of any country over the others
hence the rate with which any country is developing showcases its dominance in any region.
Things started to change after the introduction of IT in the business processes. This has
empowered new nations to build their strength. After 1990’s, the world started getting
connected in a networks and hence it was possible for the companies to expand into the new
regions. Nations like India and Indonesia came up in the region with new opportunities for

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the companies. It was possible because of the fact that they had a bigger market with both the
countries having large population (Brook and McGREW, 2013). Technology became cheaper
hence it was easier for companies to work in any part of the world with the same capabilities
as they could have worked in Australia. This has opened the gates for the firms to look into
the lesser developed nations.
The biggest reason for emergence of new countries as a centre of power is that they had large
population which attracted investments. Countries like India and Indonesia opened their gates
for Foreign Direct Investment which was one of the major boosts for their development. In a
very short period of time large numbers of players in different industries started to sell their
commodities in these nations (Roca, 2018). Many companies have adopted the process of
internationalisation and in this process they have expanded their reach to many new nations
in this region also. Due to highly dense population, this region attracted new companies and
hence countries like India and Indonesia became their first priority. Along with this, these
countries were having lower operational cost. With the cheap availability of skilled labourers,
it became further easier for the companies to establish their manufacturing units in this
region. The governmental policies and support from the low cost suppliers in the region
would have helped the firms to establish their units in these nations (Medcalf, 2014).
India has now become the IT capital and is supporting the business of many global firms.
Digitalisation of the work process has helped the firms to manage their operations sitting in
any part of the world and they do not have to be present in these nations. Along with this,
India and Indonesia have become the leaders in the service industry as large numbers of
young and talented employees are present in these countries (Varma and Budhwar, 2013).
They acted as a low cost labourer for the Multi-National firms. At the same time, when new
opportunities were emerging in these new nations, the cost of operations became very high
for the companies that are operational in Australia. Employees of Australia demand for
higher income which increases the operational cost of the firm. When the companies started
to make job cuts the employees were frequently conducting strikeouts and lockouts. In order
to make cost cuts and achieve higher profits, many companies came out of Australia and
established their units in these countries. Technology brought transparency in the work
process which was necessary for new investments. Previously many big companies were not
reluctant to come in these countries as they had higher corruption and there was lack of
proper system to establish the business units within the country. It was also seen that
companies had to spend a lot of money on the bureaucracy which was an additional cost to

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the company’s expansion policy. Poor support from the authorities made the process to
become lengthy hence wasted huge amount of time of the firms.
India and Indonesia had expanded their trade relations with various countries in the world. It
has become easier for the firms to open their manufacturing units in these countries and sell
their products in other parts of the world. The lowering down of the import and export taxes
in this region has shifted the focus of the companies towards these countries. India was more
preferable than Indonesia for the companies as the population in the Indian Sub-Continent
was very high. By expanding in India companies could easily extend their reach to these
other countries of Indian Sub-continent. This can be easily done with the help of their
distributors.
It is also to be noted that Australia is having an ageing society while India is the youngest
country in terms of Demographic age. Large numbers of youngsters present in these countries
hence companies find a huge target market for them (Pan, 2014). Internal market condition is
one of the major reasons citing which any company makes any kind of investment. Support
from the local players helped MNCs to expand in these countries as local companies having a
better market understanding. Indonesia and India also supported public private partnership in
the business which further supported the companies.
Right now, India had become the 6th largest economy in the world which provides a support
to the companies operational in this country (The Indian Express, 2018). On the other hand
Indonesia is largest economy in the South East Asia. They have also become the military
power in the Asian region which further promised stable environment for business (Morley,
2015). Indian military strength is superior to Australia which again does not support
Australia’s dominance in the Asia pacific region. With India and Indonesia becoming a
bigger global political power, there was a shift in the centre of power like Australia. This
made the image of the country better and hence attracted new investors.
The rate of inflation in Australia is also higher as compared to other countries in this region
hence there would be less numbers of firms coming to Australia as compared to other
countries in the region. It is difficult for the companies that are operational in Australia to
reduce their cost of operations in the environment of increasing inflation (Brook and
McGREW, 2013). On the other hand the inflation in the developing nations in the ASEAN
region is still under control hence helping the firms to do operations at lower cost.

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Apart from this, countries like India and Indonesia also started to become educational hub
where many new universities and colleges are coming up. With the huge amount of talent
pool coming up in these developing nations, companies can easily manage their operations.
Apart from this India, Indonesia and many other countries are also acting as a centre for the
multinational companies where they outsource their other support or additional activities
(Stuart and Tow, 2013). This is possible because of low labour cost and higher skills of the
employees.
Since India and Indonesia is a developing nation hence companies finds it a better place
where they could actually invest and grow. In the time to come these countries are going to
become further big powers which would shift the control from the hand of Australia to these
countries (Ping, 2017). These countries have become quick in responding to changing global
business environment and hence they are making policies at a very fast speed. This further
strengthens their position as an economic power. For example the implementation of GST in
India and Indonesia has further strengthened country’s position in terms of becoming
economic power. It is same strategy using which once Australia has gained their power in the
region. Now other countries are also doing the same.
India and Indonesia have made many military ties with powerful nations and hence they have
strengthened their trade routes with these countries. They have become a global super power
in the region as many countries are now dependent on these nations for their growth (Fletcher
and Crawford, 2013). Australia on the other hand is facing a great political instability from
the last five years. It can be checked from the fact that many governments have changed in
between these five years. With the change of prime ministers, there is change in the policies
made by the government. This has disturbed the political environment within the nation and
hence has affected the growth of the companies in the region. On the other hand countries
like India and Indonesia which is one of the biggest democratic nations in the world and has
been able to provide a healthy political environment.
Australia has a healthy relationship with China, Japan as well as America. Till now, this has
provided support to the country to remain in the centre of power. But now there is an increase
in the intensity of rivalry among the China and America. In such an environment, it has
become difficult for the players such as Australia to stand on anyone side as standing on any
one side could be a loss to Australia. But the case is different with India and Indonesia as
they are not actually on any one side. This puts them into inert atmosphere where they could

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focus on other things (Borthwick, 2018). With the increasing tension in the global political
environment, it has become essential for the countries to ensure their dominance in this
region. India is a nuclear power which is not the case with Australia hence their dominance is
going to be on the higher side in the coming years. With India and Indonesia becoming the
fastest developing nations of the world, it is going to challenge the dominance of not only
Australia but is also going to influence the other power houses in the world. On the hand
Japan is losing their grounds in terms of their economic strength and hence it is a loss to
Australia also.
Australia needs to focus on the relationship building with other countries so that could act as
a greater trade partner in the coming years. The isolation of Australia from other countries
has reduced the chances of Australia making inland bonds with other partners in this region
(Storey, 2013). The chance that there would be larger players developing in various parts of
the world will be higher in the coming years. This is because the military tussle might
increase in the future hence gaining control over this region could be a challenge for
Australia. The decision like Brexit in other part of the world is also going to affect more to
the countries like Australia as they are bigger trade partners with the European nations as
compared to other countries. This is going to affect the bilateral trade among these nations
and hence the position of Australia is going to further degrade (Ratner, 2013).
Another perspective about it is that there are some external powers that also want to increase
their influence in this region. This is disturbing the geo-political situation of the region.
Countries like America and China is increasing their dominance in this region. This is due to
the huge availability of resources in the region. Australia does not have huge population that
could support optimum utilisation of resources while Indonesia and other countries in the
south pacific region have huge opportunities for other companies to invest. Social
development programs run by the government increases the chances of India and Indonesia
becoming a much larger powers in the Asia pacific region (Tseng, Tan and Siriban-
Manalang, 2013). Both these countries have targeted to become the suppliers for the
workforce in all around the world. International relations of the countries is also going to get
affected by the emergence of new powers hence effective policies are need to be made by the
governments of various countries (Patience, 2014).
The effect of the tussle in the South China Sea is also going to get reflected in the South Asia
Pacific region. With the support of other super powers in the region, there might be the

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chance that some other small centres of powers may develop. Australia needs to concentrate
on the bilateral ties with other countries so that they do not loose grounds in the region (Chen
and Yang, 2013). First thing that Australia need to concentrate upon so as to regain the
market share is to remove the trade barriers with their partner countries. This will ensure that
more opportunities will be coming to the Australia.
Apart from this it is also crucial that Australia become independent in terms of resources they
have and the way in which they utilise each of these. This is extremely necessary in the case
of human resource management and human resource development (Graham, 2013). They will
also have to invest a huge amount of money on the innovation practices as well as research
and development projects (Amran, Periasamy and Zulkafli, 2014). This must be done for the
long term utilisation of resources.
With increasing stretch of Globalisation and improvement in economy of many countries, it
is obvious that more such countries are going to originate in this region. In the increasing
tension among different countries in the same region might affect the development of small
regional powers. Development of countries such as Malaysia is a matter of concern for the
already established nations such as Australia. The dominance of the country can also be
understood in terms of the present state of country to influence the policies of others.
Changes must be done in the welfare program run by the government of Australia so as to
improve the internal environment of the country. This will enable the government to think
about external parameters using which a company can increase their dominance in the region.
Some crucial trade and military negotiations with big super powers in the region can increase
their dominance again (Weatherbee, 2014). Apart from this it is also essential that Australia
manages its international relations with other countries in the world so that they may not lose
their smaller partners.
No country in any region of the world will enjoy the supreme power in the coming years.
With strong nations pressurising small nations, it is essential that all the countries make their
own plans for development which includes holistic development and countries are also doing
the same (Hill, 2017). This increase the chance of more power centres to emerge in this
region which will further increase the conflicts in order to have control over the region. The
country which will have more support of their trade partners will easily be able to grab the
market. In this regards the role of the smaller countries become more essential. Australia
needs to work on the social development initiatives so as to enhance the chances of more

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people becoming the target market of the company. Australia could utilise its high per capita
income as strength to attract new firms that plans for high capital growth. At the same time
they will also have to think about reducing the operational cost within their country by
working with intermediaries.

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