Blog #11: Australia in the World Economy, University of Sydney

Today, we took the train to the other side of the University of Sydney and walked into campus on that side. We met Professor Geoff Dow who talked to us about the limits and the possibilities of politics in the contemporary world. He showed us many different graphs of variables that compare Australia to the world. One of the graphs that I thought was extremely interesting was The Wealth of Nations. Wealth is something that is accumulated over time, not income which is wages, rent, and interest.  The top three countries are Norway, Luxembourg, and the USA. Australia ranks 7^th on the list. This is interesting because Professor Dow then goes on to compare that to GDP per capita in 2010 and the Human development index 2010 ( a United Nations program that includes longevity, infant mortality, education and GDP per capita). GDP per capita shows Norway, Singapore, USA, Netherlands, Canada and Australia as the top 6 countries. But when compared to the HDI Norway, Australia, New Zealand, USA, Netherlands, and Canada are the top 7. This shows that even though a country, like Singapore for example, has high GDP it is lacking in other areas like education, longevity, etc. as shown in the HDI where it ranks last. It is important to look at these graphs to see all of the different areas a country can be ranked and what is included in each.

Professor Dow also talked a lot about unemployment as a major variable to compare Australia to the world. He shows multiple graphs that show its unemployment against the rest of the world before the financial crisis and during. One of his graphs show unemployment from 1974 to 2004 and has Australia at 6.6% the OECD at 6.4 (which is Organization for Economic Cooperation and Development which is somewhat of an average) and the United States at 6.2%. Then another graph shows unemployment in 2009. The USA is at 9.3% the OECD is 8.3%, and Australia is at 5.6%. Dow presents this information and says that the reason for this is because of the mining boom hitting Australia when it did. Unemployment is interesting to look at because recent events in the Global Financial Crisis have impacted so many countries and these numbers show how Australia has been hit less than others. Unemployment is important to look at because it shows people without jobs that have been looking for a considerable amount of time which is a sign of economic stability.

 

Another variable that Dow talked about that I thought was interesting was the average annual hours worked per person in 2009. Korea was at the top of the list with 2256, Greece is second with 2119 and then USA is 8^th with 1802 hours. Australia is 1690 which is about 100 less hours than the United States. This is interesting because Norway, which was at the top of the Human Development Index talked about earlier, is near the bottom of the list with 1407 average hours worked per person. This is important to look at especially when comparing it to the GDP graphs mentioned above. Norway shows us how even though they don’t work as much as some other countries they still have high HDI and GDP.

We also heard the enthusiastic Frank Stilwell speak about Australia as the "Lucky Country". He talked about why Australia has been lucky in economic times including the Australia is close to Asia which is experiencing major growth especially in China who is buying Australia's natural resources, efficient government policies to get consumer spending up, and continuing population growth. He talked about some problems with this like the imbalance of economic, social, and ecological sectors. 

Something that was talked about earlier in the course when Jones spoke (Blog #6) was performance of Australia since WWII.   Jones also did a great job providing an overview of Australia’s macroeconomic performance since WWII. In the 1950’s Australia boomed with agriculture expansion and manufacturing development such as autos and petrochemicals. The 1960’s began a massive resource boom exported to mostly Japan. This boom was followed by a general economic crisis in the mid 1970’s.  In the 1990’s there is another resource boom mostly to China.  These events changed Australia’s GDP, unemployment, inflation and external balance greatly. Currently, Australia’s GDP and inflation has rose 3% in the past year. The external balance on current accounts in Australia has been negative which means that the imports have been greater than the exports. Today Australia’s primary trade and finance partners include China, Japan, Korea, India, and the United States.