ARTICLE
International Trade, Investment, and Australia
by Prudence Gordon and Ashleigh O’Toole
International trade and investment contribute to the Australian way of life in multiple ways. They:
· Provide access to goods and services Australia can’t or doesn’t produce domestically
· Provide access to larger pools of funds that support projects and business expansion
· Enable Australians to access new ideas and ways of doing things
· Encourage Australian innovation and productivity
· Generate income and promote economic growth and
· Support Australia’s economic resilience.
Access to goods and services
The vast and growing body of human knowledge has driven technological innovation and created products and services that would have been unimaginable 100 years ago. Wi-Fi, solar panels, organ transplant procedures, and satellites are now a part of everyday life for most Australians. However, the expertise, specialisation, and investment required to produce many common goods, means Australia often cannot produce these goods independently or efficiently.
Even for goods that we do have the expertise to produce, it can nevertheless be cheaper to produce them in countries with larger, more technically experienced workforces. Or we might import goods that have different qualities to those we make in Australia.
Many countries rely on Australia for mineral and energy products, food and agricultural goods, education and professional services. Similarly, Australia relies on importing categories of goods including cars, pharmaceuticals, aeroplanes, coffee machines, tractors and clothing.
International trade enables Australians to access goods and services that can’t be produced in Australia, are too expensive to produce domestically, that were first developed overseas, or that Australians don’t want to produce. The Australian way of life would look very different if we were closed to international trade and investment.
Access to larger pools of capital
International investment provides the capital needed to fund new or growing businesses in Australia. It means that Australians wanting to launch projects or expand their business have a bigger pool of funds, with a broader range of investors and financing options to choose from, enabling them to select the source of finance best suited to their project or business. International investment can help Australians access new technology, new markets, and new staff with specialist expertise. International investment also provides Australians with a vast array of global investment options for increasing their income. It provides an avenue for Australians to share their expertise, their ideas and their resources for the benefit of both Australia and the countries in which we invest. Like trade, however, international investment must be conducted within enforceable rules that protect the public good. There are too many examples in recent history of countries and companies exploiting vulnerable people for financial gain.
New ideas
International trade and investment do more than facilitate the exchange of goods, services and capital. It also gives us access to new ideas, new technology, new art forms, and ways of addressing shared challenges. Australians are part of an increasingly interconnected world in which people and institutions across countries often confront similar economic, social and environmental challenges. Trade and investment create channels through which ideas and innovations developed overseas can reach Australia and be adapted to local circumstances. These ideas may originate with individuals and businesses, or with university research teams whose work is commercialised and brought to market. The result is a broader pool of knowledge and innovation that can strengthen Australia’s productivity, creativity and capacity to respond to challenges.
Innovation and productivity
Australia’s openness to international trade and investment gives Australians access to new goods, services, ideas and capital, supporting innovation and productivity across our community. Australians use new products in their homes and workplaces to perform tasks more easily, improve health and wellbeing, or reduce environmental impacts. We also adopt, adapt, and build on the new products, services and ideas we import. This drives innovation in Australia, helping businesses and households find new and more effective ways to work.
This exchange works both ways. The world has adopted inventions such as Wi-Fi, the electric drill, and plastic bank notes, all of which were first developed in Australia.
Income and economic growth
Some identify the principal benefit of trade and investment as generating income for Australia. They highlight the importance of a trade surplus (when we sell more to overseas customers than we buy) to bolstering Australia’s wealth. International trade and investment do generate income for Australian businesses, workers and investors, and contribute to economic growth.
Australia can record substantial trade surpluses in some periods and trade deficits in others. For example, the latest monthly data show a seasonally adjusted goods trade surplus of $495 million in August 2026, while the balance of goods and services was in deficit by $5.1 billion in the June quarter. These fluctuations demonstrate why the presence of a trade surplus or deficit in any particular month or quarter is not, by itself, a useful measure of whether trade is benefiting Australia.
A trade deficit simply mean that, over a particular period, Australia bought more goods and services from overseas than it sold. It’s not helpful to think of trade surpluses and deficits as ‘good’ or ‘bad’. Imports can make a positive contribution to the Australian economy by helping businesses grow, increase productivity, employ more people, or provide new goods and services that improve living standards for all Australians.
Likewise, a trade surplus is not an end in itself. What matters is what trade and investment enable Australians to do. The benefits include access to goods, services, ideas and capital that may not otherwise be available in Australia; greater competition and exposure to international markets that can drive innovation and productivity; and the income generated by more productive businesses and successful exports. Together, these effects make international trade and investment an important contributor to Australia’s long-term economic resilience and way of life.
Australia’s economic resilience
Australia’s openness to international trade and investment strengthens our economic resilience – our ability to respond to and bounce back from shocks. Exposure to international markets means Australian businesses and the broader economy are constantly adapting to changes in technology, consumer preferences, supply chains, regulations and global economic conditions. This experience helps build the capacity to respond when unexpected shocks occur.
One way to think about this is being ‘work fit’. A busy workplace requires people to manage competing demands, respond to unexpected requests and adapt to changing circumstances. A quieter workplace may allow people to plan most tasks in advance. When something unexpected happens, those accustomed to dealing with change and uncertainty may be better prepared to respond—not because they are inherently better at it, but because they have more experience doing it.
Australian businesses that trade and invest internationally regularly must manage different time zones, currencies, legal systems, cultures, and regulatory environments. They also need to respond to shifts in consumer demand, technology and global supply chains. This gives them experience managing complexity and adapting to changing conditions.
At the national level, international trade and investment connect Australia to global markets, where economic conditions, technologies and industry trends are constantly evolving. These connections can help Australian businesses identify new opportunities, diversify markets and sources of supply, and adjust when markets or supply chains are disrupted. International engagement can therefore strengthen Australia’s capacity to absorb shocks, adapt to change and recover from disruption.
Openness does not eliminate economic risks, and reliance on particular overseas markets or suppliers can create vulnerabilities. The resilience benefits of trade and investment depend in part on how effectively Australia manages these risks and diversifies its economic relationships. The objective is not to avoid exposure to global markets, but to build the capacity to manage that exposure while capturing the opportunities presented by Australia’s engagement with the world.
