Australia as an Example of Successful Integration in International Economy

356
DOI: 10.20542/0131-2227-2018-62-10-71-79

Z. Mamedyarov (mamedyarov@imemo.ru), 
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya St., Moscow, 117997, Russian Federation;
A. Polivach (apolivach@imemo.ru),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya St., Moscow, 117997, Russian Federation 



Abstract

Australia looks similar to Russia given its large territory, huge natural resources and deep involvement in the international trade of commodities. Despite its substantial dependence on commodity prices, Australia demonstrated uninterrupted economic growth during the last 26 years. This article analyses main causes of such a success. The free floating exchange rate regime, which was introduced 35 years ago, is usually mentioned by Australian sources first of all. They suggest that the ability of AUD to appreciate in time of commodities boom and to depreciate when it is bust provided an offsetting effect was vital for the Australian steady economic growth. However, the same sources often point out that the actual exchange rates of the AUD were rarely strictly consistent with the terms of trade. Given that, the authors argue that the floating exchange rate regime was not the sole factor with an automatic counter-cyclical effect for Australian economy. Significant and far-reaching changes in the monetary and fiscal policies were made in this country to ensure the desired results of the floating exchange rate regime. These changes (free capital movements, inflation targeting, committed reduction of budget deficits, prudent banking supervision etc.) have built confidence among non-resident investors in Australian economy. As a result, in times of falling commodity prices the Government of Australia had much less problems with finding extra resources to counter the GDP contraction. Another outcome was that non-residents became less inclined for quick flee from Australian assets. Finally, the local banks became more sustainable to conduct monetary and fiscal stimulus to the economy in times of crisis. The authors stress the significance of the innovation policy in securing steady development of Australia’s economy. Growing numbers of innovation-related policy measures and initiatives in Australia reflect its government commitment to diversify factors of economic growth. Country’s innovation policy anticipated role is to become a vital new counter-cyclical factor and its major objective is to build a flexible and creative economy of Australia, which is ready for new challenges in the period after the boom in commodity prices. Based on their findings the authors suggest what Australian experience to offset volatility of commodity prices can be of particular use in Russia. These are floating exchange rate regime, free cross-border capital movements, welcome to internationalisation of the local currency, expanding borrowing in the local currency in the off-shore markets, effective banking supervision, consistent and consecutive innovation and R&D policy. 


Keywords

Australia, economic development, exchange rate policy, commodities exports, dependence on international markets, innovation policy, research and development (R&D) 


REFERENCES

1. Australia Is a Top 20 Country. Available at: http://dfat.gov.au/trade/resources/publications/Pages/australia-is-a-top-20-country.aspx (accessed 27.01.2018).

2. 5206.0 – Australian National Accounts: National Income, Expenditure and Product. Table 1. Available at: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5206.0Dec%202017?OpenDocument (accessed 04.03.2018).

3. World Economic Outlook (October 2017) Database. Available at: http://www.imf.org/external/datamapper/datasets/WEO (accessed 02.03.2018).

4. 3101.0 – Australian Demographic Statistics. Tables 1, 2. Available at: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/3101.0Jun%202017?OpenDocument (accessed 04.03.2018).

5. Battellino R. Twenty Years of Economic Growth. BIS Review, 2010, no. 108, pp. 13-24.

6. Stevens G. The Australian Dollar – Thirty Years of Floating. BIS Central Bankers’ Speeches, 2013, 21 November, pp. 1-10.

7. Edison H., Cashin P. Foreign Exchange Intervention and the Australian Dollar: Has It Mattered? IMF Working Paper, 2003, no. 99, pp. 1-29.

8. Daily Foreign Exchange Market Intervention Transactions 1989-2017. Available at: http://www.rba.gov.au/statistics/tables/xls/a05hist.xls?v=2018-03-02-14-54-38 (accessed 14.02.2018).

9. International Market Operations. Available at: http://www.rba.gov.au/mkt-operations/intl-mkt-oper.html (ac­cessed 14.02.2018).

10. Domestic Market Operations. Available at: http://www.rba.gov.au/mkt-operations/dom-mkt-oper.html (accessed 19.02.2018).

11. Lowe P. Internal Balance, Structural Change and Monetary Policy. BIS Central Bankers’ Speeches, March 19, 2013, pp. 1-7.

12. Lowe P. Low Inflation in a World of Monetary Stimulus. BIS Central Bankers’ Speeches, March 5, 2015, pp. 1-12.

13. Beaumont C. Conquering Fear of Floating. Australia’s Successful Adaptation to a Flexible Exchange Rate. IMF Policy Discussion Paper, 2007, no. 2, pp. 1-24.

14. Stevens G. The Lucky Country. BIS Central Bankers’ Speeches, July 26, 2012, pp. 1-12.

15. Debelle G. The Australian Bond Market. BIS Central Bankers’ Speeches, April 16, 2014, pp. 1-12.

16. Triennial Central Bank Survey. Foreign Exchange Turnover in April 2016. Available at: https://www.bis.org/publ/ rpfx16fx.pdf (accessed 12.02.2018).

17. Australia’s Direction of Goods & Services Trade – Calendar Year (from 1987 to present). Available at: http://dfat.gov.au/trade/resources/trade-statistics/Documents/australias-direction-of-goods-services-trade-calendar-years.xlsx (accessed 12.03.2018).

18. Debelle G. Capital Flows and the Australian Dollar. BIS Central Bankers’ Speeches, May 20, 2014, pp. 1-9.

19. OECD Economic Surveys: Australia 2017. Paris, OECD, 2017. 136 p.

20. OECD Science, Technology and Industry Scoreboard 2017 – The Digital Transformation: Australia. Paris, OECD, 2017. Available at: https://www.oecd.org/australia/sti-scoreboard-2017-australia.pdf (accessed 12.03.2018).

21. Asia Shows Strong R&D Growth. 2017 Global R&D Funding Forecast. Available at: http://digital.rdmag.com/researchanddevelopment/2017_global_r_d_funding_forecast?pg=24#pg24 (accessed 20.02.2018).

22. Digital Australia: Seizing Opportunities from the Fourth Industrial Revolution. McKinsey, May 2017. Available at: https://www.mckinsey.com/global-themes/asia-pacific/digital-australia-seizing-opportunity-from-the-fourth-industrial-revolution (accessed 12.03.2018).

23. Indicator Ranking & Analysis. Global Innovation Index. 2017 Report. Available at: https://www.globalinnovation-index.org/analysis-indicator (accessed 12.3.2018).

24. Majeed O. High Growth Firms in the Australian Economy. Available at: https://industry.gov.au/Office-of-the-Chief-Economist/Events/Documents/High-growth-firms-in-the-Australian-economy.pdf (accessed 27.02.2018).

25. Australian Innovation System Report 2017. Available at: https://industry.gov.au/Office-of-the-Chief-Economist/Publications/AustralianInnovationSystemReport2017/documents/australian-innovation-system-report-2017.pdf (accessed 12.03.2018).

26. OECD R&D Tax Incentives: Australia 2017. Available at: http://www.oecd.org/sti/rd-tax-stats-australia.pdf (accessed 10.03.2018).

27. National Innovation and Science Agenda. Available at: https://www.innovation.gov.au/page/agenda (accessed 12.03.2018).

28. Turnbull Government Cabinet Committee Considers New Innovation Policy. Australian Financial Review, March 2, 2018. Available at: http://www.afr.com/news/turnbull-government-cabinet-committee-considers-new-innovation-policy-20180302-h0wxjg (accessed 12.03.2018).

29. Australia 2030: Prosperity through Innovation. January 2018. 125 p. Available at: https://industry.gov.au/Innovation-and-Science-Australia/Documents/Australia-2030-Prosperity-through-Innovation-Full-Report.pdf (accessed 12.03.2018).

30. OECD Report Shows Australia Needs Innovation Re-think. Australian Financial Review. March 6, 2017. Available at: http://www.afr.com/technology/oecd-report-shows-australia-needs-innovation-rethink-20170305-gurd39 (accessed 12.03.2018)

31. 5368.0 – International Trade in Goods and Services, Australia, Jan 2018 Table 14a, 14b. Available at: http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5368.0Jan%202018?OpenDocument (accessed 12.03.2018). 


Text 

Registered in system SCIENCE INDEX

For citation:
Mamedyarov Z., Polivach A. Australia as an Example of Successful Integration in International Economy. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2018, vol. 62, No 10, pp. 71-79. https://doi.org/10.20542/0131-2227-2018-62-10-71-79



Comments (0)

No comments

Add comment







Indexed
 
Current Issue
Submit an Article
Announcement

Dear readers!
Please note that free access to full-text issues of the Journal is being opened at our WEB-site after 6 months of the date of publications.The work on deepening the open archive of full-text issues will be continued.


Dear colleagues, authors and readers!
We kindly request you to turn to editor-in-chief and executive secretary directly concerning reviewing scientific publications in our journal. Only editor-in-chief takes decision on order and publication the reviews!

Dear readers!
This is to inform the researchers of the Institute of World Economy and International Relations that electronic versions of the I, II, III issues of 2020 of French magazine Politique étrangère are now available. Those who are interested, please personally address to the editorial staff of MEMO Journal (room 18-17) with an electronic media.
NEW SECTION

In response to the challenges of our time the Editorial board continues to open new thematic rubrics:

“World Energy Sector after Pandemic”. We plan to publish articles presenting in-depth analysis of influence of Pandemic on the global energy sector and forecasts of further developments in its various branches.

“Civilization processes of modern development” is a new rubric opened by MEMO Journal in 2020. It will be devoted to the analysis of the influence of civilizational factors and inter-civilizational interactions on the political and socio-economic development of the world at whole, regions and countries.

“Africa today and tomorrow”The rubric devoted to contemporary issues of Africa which is attracting growing interest of the world's leading actors. We plan to publish the articles analyzing the status of statehood, socio-economic and political development of the countries of Black continent, as well as the integration processes between them.

CONTEST!

"World Eсonomy and International Relations" announces a contest for the best joint academic publications of domestic and foreign researchers and experts in topical issues of the world economy and international relations. The winners will be selected according to the results of peer reviewing and discussion at the Editorial Board. The articles will be published in priority order.

SUBSCRIBE TO THE JOURNAL

The print version of “World Economy and International Relations” journal is distributed by advance subscription only, and is not offered for retail sale. To subscribe please address to any post office in Russia by referring to the Federal Postal Service Union Catalogue, section “ARSMI”, the journal index is 70542. The subscription may be made for the whole subscription period or starting from any nearest available month for desired number of issues.

To purchase the full-text electronic version of the journal’s issue/article please address to the WEB portal of Scientific electronic library eLIBRARY.ru or URL: https://press.gaugn.ru/.

In journal
Years
2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | 1997 |

The author’s opinions may not coincide with the position of editorial