Report on International Trade: Australia's Trade Dynamics

This report provides a comprehensive analysis of international trade, with a specific focus on Australia's economic performance. It begins by defining international trade and exploring various theories, including classical and modern approaches, before delving into key economic indicators such as Gross Domestic Product (GDP). The report then examines Australia's trade patterns, detailing its exports (mineral fuels, meat, precious metals) and imports (capital goods, intermediate goods), and their impact on the country's GDP. It further analyzes the balance of trade, current account, and factors influencing Australia's trade, including both positive aspects like foreign investment and service sector growth, and negative factors such as slow capital flows and global protectionism. The report utilizes various sources, including OECD data and Australian government publications, to support its findings and forecasts, offering valuable insights into Australia's economic landscape and its role in the global market.

Modern methods
of international
trade analysis

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International Trade
Analysis
• International Trade is referred as the exchange of
goods and services between one and more countries
(Feenstra, 2015)
• Allows the trade to flow in and expand the market for
products and services
• Provides opportunities to consumers and countries
to avail the products and services not available in
their home country
• Export and import the two concepts of International
trade
• Improves the potential of a country to produce and
acquire goods

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Theories of
International Trade
There are many theories starting from the Classical theories to Modern
theories to explain about the International trade (Gilpin, 2016).
Traditional
Country-based
theories
• Comparative Advantage
• Mercantilism
• Heckscher-Ohlin
• Absolute Advantage
Modern Firm-based
theories
• Product Life Cycle
• Country Similarity
• Global strategic Rivalry
• Porter’s National
Competitive Advantage

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GDP- Gross
Domestic
Product
• Gross Domestic Product is the overall economic activity
of a country (Scholl & Schermuly, 2018)
• It derives the value of finished products and services in
terms of it monetary value produced by a country within
a specific time period
• GDP is calculated both quarterly and annually basis
(Coyle, 2015)
• Can be calculated in terms of expenditures, incomes
and production by a country
• Helps policy makers and businesses to make decisions
strategically
• Helps businesses to analyze the market changes

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GDP-
Calculations
• The value of finished produced products and services are calculated
by-
• GDP= Private Consumption + Gross Investment + Government
Investment + Government Spending + (exports – imports) (Lepenies,
2016).

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Forecast of trade
in goods and
services• The projected value of trade value of resources and services between two
countries
• The projections depend on the economic conditions of the countries along
with the world economy
• Net trade, exports and imports are the key indicators of market growth
Source: (OECD Data, 2019)

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Australia’s
Trade
• Australia is known for its free trade
and depends on the exports made
by the country
• The Free Trade Policy of Australia
supports its international trade
negotiations
• The Australian export highlights a
positive change in the recent
years
• Australia competes with Asian
countries in terms of its exports
and forecasts a potential growth
from the exporting into the PAN
Asian markets
• The expansion of Australian
market is dependent upon its free
trade.
Source: (Workman, 2019)

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Australia’s
Exports
• The total exports of Australia accounted to 21.5% including the
exported goods and services of the total GDP
• The total exports amounted to $253.8 billion in 2018 (Workman,
2019)
• Mineral fuels, Meat, gem, precious metals, machinery, inorganic
chemicals, cereals, aluminum, electrical equipment and medical
apparatus contributes to the top 10 exports of Australia which
accounts to 79.5% of the overall global shipments value of
Australia
• Inorganic chemicals account to the highest exported product
followed by Mineral fuels and aluminum (Pines, 2019)
• International deficits are cars and automobile accessories

Top export markets
of Australia
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Source: (Australian Government, 2019)

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Australia’
imports
• In the 2017-18, the imports of Australia rose 9% to $403.2 billion
• Australia’s imports comprise of Capital goods, Intermediate & other
goods, and consumption goods
• The import value of capital goods increased to 10.6%
• The import value of intermediate & other goods rose to 6.2%
• The import value of consumption goods increased to 5.6%
• The import prices also rose to 1.8% in 2017-18

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Australia’s
composition of
trade
• In 2017-18, Iron Ore, Natural gas, travel services involving
education and personal travel constituted to highest number of
exports
• The combined efforts of both exports and imports contributed
hugely to the GDP
• Australia has a highly competitive financial system making its
exports and import conduct smoothly

Balance of
Trade
• Balance of Trade refers to the monetary value of the imports and
exports of a country calculated within a specifies time period
(Dogru, Isik & Sirakaya-Turk, 2019).
• Balance of Trade helps in measuring a country’s economic
strength
• Balance of Trades can be calculated by deducting the total
exports of a country from the total imports
• Higher import and less export indicate a trade deficit
• Higher export and less import indicate a trade surplus
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