What does economic competitiveness refer to and how does it impact Australia’s trade and investments?
Put simply, the phrase “international competitiveness” refers to Australia’s ability to sell its goods internationally. The more competitive Australia becomes, the more easily it can sell its goods, services, or investment opportunities and vice versa. Australia’s competitiveness directly links towhat it trades, how much it trades and with who it trades. Like any person, Australia has particular things it is better at than others. Iron ore extraction for example is an area where Australia is more competitive than others and can more easily trade. Investments in and out of Australia are also connected to trade competitiveness. A more competitive Australia encourages more numerous or higher value investments into the country as new ore, existing Australian markets or trade products become more or less promising.
Impact on everyday Australians
Australia’s international competitiveness significantly impacts everyday Australians in a number of important and surprising ways. Most notably a more competitive Australia can lead to lower costs for Australians. Australia is constantly competing against other countries. Whether it be Iron, Mandarins orWheat, Australia needs to make its products stand out in some way to ‘win over’ existing and new customers. Through this competition the products Australia sells, and buys improve. Whether through lower prices, higher quality or new features, more competition gives everyday Australians more choice, higher quality and/or lower prices.
The advantages and disadvantages of increased competitiveness
Improved competitiveness does however, come with some drawbacks. The largest of these is that Australia’s international competitiveness is strongly connected to the value of the Australian Dollar(AUD). A weak AUD is generally good forAustralia’s competitiveness as our products become cheaper to our trade partners. However, a weak AUD also means our trade partners products become more expensive to us. Apples from the United States, rice cookers from Japan or tea from the United Kingdom all become relatively more expensive with a weakerAUD. However, as will be highlighted later on, there are opportunities for Australia to enhance its competitiveness without devaluing the AUD and increasing costs for everyday Australians.
Competitiveness strengths and weaknesses
Like any country or person, Australia has areas it excels in and areas it is weaker in, with international competitiveness being no exception. Some of the areasAustralia is particularly competitive in include mining (and resource extraction), healthcare and even casinos. Areas such as manufacturing are however, significantly smaller, weaker, and less competitive.
Opportunities for competitiveness
Despite some of the aforementioned drawbacks, Australia has many opportunities to improve its international competitiveness without weakening the AUD. Energy, and green energy in particular are key fields where significant opportunities lie.
Unlike other countries such as those in Southeast Asia or Africa where labour is comparatively cheap and safety standards comparatively low, Australia paysits workers well and ensures they have safe work environments. Consequently, this also makes Australia expensive and limits the tools available forAustralia to become more competitive as Australians certainly would be unhappy at pay cuts. Developing Australia’s green energy capacity can help reduce the costs of Australia’s products by, in essence, making the energy free. It would also provideAustralia with a competitive edge in that all its products could be considered“green”, an increasingly important consideration for consumers globally.Improving competitiveness via this method would also lessen the drawbacks of a weaker AUD and still provide the cost savings as mentioned prior. Through investment into these technologies and reducing Australia’s energy costs areas currently considered not competitive, like manufacturing would become much more feasible in Australia. As added benefit improving competitiveness through energy cost reductions would bring with it thousands of new jobs and make Australia amore competitive investment destination with a greener, more competitive economy.
Where to find further information
Having access to information about Australia’s international competitiveness is crucial in understanding its impacts and contributions to the Australian way of life. Accurate information and data can be found through government sites, particularly the Austrade and Department of Foreign Affairs and Trade websites. Additionally, the ACITI site and the services provided by ACITI can help provide further information and establish connections between you and the relevant information hubs.
