Question:
Economic Growth – Compare Australia with any other advanced economy or developing country and discuss their economic growth during last 5 years and its effects on the society. (both positive and negative)
Structure of the Essay
- Introduction – which topic 300 words
- Body- Discuss the topic from your secondary research with some theory -2500 words
• Conclusion 200 words
Answer:
Introduction
This report is consisted of various economic and social growths of Australia and United Kingdom. With the increasing ramification, Australia and United Kingdom have been observing increment in overall gross domestic products throughout the time. The Australian economy has experienced consistent growth and featured low unemployment, contained inflation and strong and stable economic growth. Economic growth could be defined as increase in value of goods and services produced by an economy. Ideally, it is conventionally measured as the percentage rate of increase in real gross domestic product or GDP. In this report, economic and social growths of Australia and United Kingdom have been measured to determine which economy has been performing better as compare to each other. However, there are several factors which have been taken into consideration such as employment growth, inflation rate, economic conditions, capital expenditure per person and how government of particular country is making efforts to mitigate the negative impact of economic conditions. The real GDP per capital of an economy is being used by both countries to determine the average standard of living in their particular countries. Gross domestic product of country is accompanied by private consumption, private investment, export of goods and services and import of goods services. Economic of Australia is one of the strongest economies in the world. It is analyzed that since 1991 Australia’s real economy has grown by an average of 3.3 percent in a year. In brief, GDP per capital of Australia is 56,327.72 USD (2015) which is 20% high as compare to GDP rate of UK. In addition to this, Australia has faced various ups and down due to its ramified changing domestic and international economic environment. Ideally economist uses GDP rate as broad gauge of the overall economic health. After analyzing all domestic and international factors of economic of the world it is evaluated that Australia has one of the strongest economics in the world. It is evaluated that structure and policies of Australia is very flexible which has resulted into various economic losses and business destruction throughout the last five years. On the other hand, UK has been maintain strong economic conditions by adopting stagnate and strict economic policies and liberal foreign trade policies (McCombie and Thirlwall, 2016).
Body context
With the ramified changing in economic conditions of various countries, this report has been prepared to analyze economic performance of Australia and United Kingdom. The Australian economy has experienced consistent growth and featured low unemployment, contained inflation and strong and stable economic growth (Robinson, Nguyen, and Wang, 2017).
To compare and contrast economic system of these two strongest countries, Australia and United Kingdom there is need to understand the economic system and its roles played in the society. It is evaluated that economic system of country revolve around the nation’s will to improve the standard of living of each individual (Rudd, 2009). It is related to the production of goods, services consumption, distribution and allocation of economic resource. The main concern in Australia economic is related to its balance of trade. It is the amount of difference between total export and total import done by economy. Since last five years, Australia has been increasing its balance of trade. In 2016, Australia ended up its trade surplus around AUD $ 17,058 Million which is 30% higher compare to its last five year data (Borio and Lowe, 2002).
General information about Australia
Australia is a leading economy which has been increasing its international trade throughout the time. Since 1991 Australia’s real economy has grown by an average of 3.3 percent in a year. In brief, GDP per capital of Australia is 56,327.72 USD (2015) which has increased 25% as compare to its last five year data. In addition to this, per capital of Australia 56,327.72 USD (2015) which is 20% high as compare to GDP rate of UK. As per the international statistical data, Australia is the twelfth biggest economy in the world in 2017. It is considered that structure and policies of Australia is very flexible which has resulted into various economic losses and business destruction throughout the last five years (Murphy, 2011).
General information about United Kingdom
United Kingdom made up of England, Scotland, Wales and Northern Ireland. Gross domestic product per capital of UK is 43,734 USD (2015) which is 20% less compare to Australian GDP. In addition to this, gross national income of United Kingdome is 2.64 trillion dollar which is 25% less compare to Australia. However, UK has been making impressive changes in its economic condition and business economy since last five years. It is also observed that UK has made drastic changes in its business conditions. It has made its FDI policies and rules liberal and open economy its existing foreign trade policies and frameworks to attract foreign investment (Barker, Ekins, and Foxon, 2007)
Monetary policy and inflation
In both the countries monetary policy is implemented by their reserve bank. In Australian economy due to the increased level of inflation rates, reserve bank of Australia increased to 1.5. These changes in Australia have been observed due to its high liquidity position in market. Reserve bank of Australia has strengthened its monetary policies in order to curb market liquidity position in determined approach (Turner, 2009).
Australia’s trade with United Kingdom
Trade and investment nexus between Australia and United Kingdom is considerable. However, balance of trade in Australia is always considered higher as compared to United Kingdom.
Australia merchandise trade with France
In 2017, the Australian imports had increased by 27% and its exports by 30% as compare to its last five years data. It is evaluated that for Australia, UK is 12th largest merchandise trading partner. Australia through its import and export policies has increased its overall balance of trade from other countries. On the other hand, UK has also shown tremendous growth in its export of raw goods and services which has increased its overall foreign funds in determined approach (Gill, 2016).
Fiscal policies of both countries
It is the policies which are used to control the market conditions and economic environmental factors through changes in budget by changes in government budget and expenditure. Australia has observed high inflation growth in since last five years. Therefore, in order to curb these situation Reserve bank of Australia should increased its interest rate, and yield on its gilt securities. On the other hand, UK has also observed high inflation rate and positive economic growth which could be seen by evaluating its present gross domestic product of around 43,734.00 USD which is already 25% more as compare to data shown before last five years (Wirtz Tuzovic and Ehret, 2015). In addition to this, after evaluating the gross national income of 2.62 trillion dollar, government of UK has made several changes in its existing economic policies on domestic and international level as well such as increasing the FDI sartorial cap, relaxing its monetary policies and strengthening its economic conditions (Jones, 2013).
Promotional bilateral trade and investment
Australia established Australian business Europe in 2007 with a view to boost its trades and investment with other countries. After analyzing five years economic conditions of Australia, it is evaluated that Australia has entered into several bilateral trade and investment relationship with other countries. These international treaties with other countries have increased overall business trade and enhanced international brand image with other countries in determined approach (Forsyth, et al. 2014).
Foreign exchange reserve in both countries
This is the reserve of other currencies which Australia and UK collected by its exporting and grasping investment from other countries. FDI policies of UK have allowed 100% investment from other countries in order to establish positive international relation with other countries. In addition to this, Australia has opened up its economy by increasing sartorial cap in its various sectors such as education, Railway, insurance and other entertainment sector (Martin, et al. 2015).
Climate condition of UK and Australia
It is evaluated that with the ramified changes in the economic conditions of UK and Australia, there is positive business climate environment for businessmen and entrepreneur to run business effectively. However, reserve bank of Australia with the collaboration of Government has been providing subsidiaries and funds to newly start up business organizations. In addition to this, UK government has also provided several collaborative steps to business organizations so that employment rate could be increased (Campiglio, 2016).
Impact of recent financial crises on the economies of both countries
Australia is dominant country on other countries due to its high foreign reserve. The value of Australian dollar is also marked higher as compare to other countries. Therefore, due to its high foreign exchange funds, the impact of financial crises was seen comparatively low. However, many industries and businessmen had to face problems due to loss of their business in other countries and blockage of amount in other currency. However, UK faced these financial crises problems by adopting new FDI policies and after providing subsidies to other start up so that they could create steps and employment to other people in determined approach (Herndon, Ash, and Pollin, 2014).
Expenditure on educational sector
Australian government is more inclined towards developing valuable employees for making optimum level of utilizations. In order to accomplish these set of goals and objective, Education ministry of Australia has proposed 5.9% of GDP on its educational sector. In addition to this, for more level of expenditure in education industry Reserve bank of Australia has increased its interest rate and standard level of cash rate for other financial institutions. Apart from that, UK Australia is more inclined towards developing infrastructure and technical advancement in its existing machines in order to covert its raw material into finished goods. It is evaluated that government of UK has been making high amount of export of its raw materials and importing finished goods which have resulted into negative balance of trade. Therefore, in order to establish effective level of balance of trade, government of UK has planned to make development in its existing technical advancement and developing infrastructure (Martin, et al. 2015).
Similarities and differences in their economic system of Australia and UK
As per the World Bank account data, it is evaluated that UK service sectors account for 79% in gross domestic products while, the agriculture and industry sectors is accounted for 2.2 and 39% respectively. In addition to this, economic system of Australia has been reflecting 71.3% part of its GDP comes from its services sector while, agricultural sector denominate 3.8% and industry sector denominates 24.9% (Shahiduzzaman and Alam, 2014).
The main difference between Australian economy and UK economy could be determined on the basis of allowance of tax rate. Economy of UK has been more inclined toward providing more tax allowances to newly start up foreign business and also limit government interventions in determined approach (Yellishetty, and Mudd, 2014). These policies of UK have attracted much foreign investment from the world outside (Castles and Henderson, 2014). On the other hand, Australia has tough competition and the government of Australia has followed standard tax policies for domestic and international business. Nonetheless, due to the ramified world, Australia has been supporting businessmen who are running their business in agriculture sector. It is evaluated that Australian government has been promoting entrepreneur and businessmen who are running their business in agriculture and industries business. After analyzing all the secondary data, it is evaluated that in UK and Australia both market and mixed economic system are operating successfully (Fioramonti, 2016). However, as compare to Australia, UK has been making changes in its existing polices to promote foreign investment proposal by lower down its tax and tariff rate. The recent amendment made by UK in its tax rate was related to introduction of double taxation avoidance rules. With the help of this rules, all the corporations who are running their business in UK and other countries would be offered special rebate for the eliminating the cascading effect of tax. For instance, if one Organization is having tax payable in one country on its comprehensive income and due to its international business it becomes taxable in two countries. Therefore, in order to mitigate these types of problems UK government has entered into double taxation avoidance agreement. On the other hand, as per the economic and taxation policies of Australia, if one organization is having tax payable into two different countries on the same income earned then in this case, Australian tax authority will provide relief for the amount of tax paid by organization in other country. Moreover, in context with wages and salaries paid by Australian government to its employees are also very efficient and people’s oriented. For instance, Australian government has provision of providing minimum wages rate under its workmen compensation act while, In UK there is no such provisions and people work there on the basis of their hourly work. These both economies are changing throughout the time by their particular government departments for handling all the international threats and problems such as unemployment, inflation, continuing aging of population and low level of foreign funds (Wong, et al. 2017). In context with the public interest theory, various government department of these countries as passed several rules and regulation for developing the business infrastructure and preparing shield for the business against sluggish market conditions. For instance, Australian economy has been following mixed economic system in which business and organizations are kept free to decide what to produce and how much quantity is needed in the market (Manalo, Perera, and Rees, 2015). Moreover, government of Australian has been using foreign direct investment policies and liberalizing rules and regulation for foreign investors in its economies such as Allowing reduction in overall tax payment, reducing complexity in business establishment process system in Australia and disappearing government intervention in their value chain activities. Furthermore, government of UK has also been following mixed open economy. However, government and other authorized department of UK at central level have adopted treaty of double taxation avoidance agreement with other countries which has reduced businessmen and entrepreneur tax burden for the initial term of their business. Tax implication on new business in UK is comparatively lower in UK as compare to Australia (Stone, 2016).
Growth of economic and social development of UK and Australia and its effects on society
The Australian economy has observed consistent growth and characteristics by unemployment, accompanied by inflation and strong and stable economic growth. Economic growth could be defined as increase in value of goods and services produced by an economy. On the other hand, Economic conditions of UK is more inclined towards developing infrastructure and technical advancement in its existing machines and plants in its economy in order to covert its raw material into finished goods. It is evaluated that government of UK has been making high amount of export of its raw materials and importing finished goods which reflects negative balance of trade. Therefore, in order to establish effective level of balance of trade, government of UK has planned to make development in its existing technical advancement and developing infrastructure. The main impact of Growth of economic and social development of UK would be seen by analyzing the consistent increment in its foreign reserve. In addition to this, it is also analyzed that tax implication on new startup business in UK is comparatively lower in UK as compare to Australia which will help in increment of overall employment, increment in foreign trade reserve and developing society in determined approach. Nonetheless, in context with Australian economy it could be inferred that if these several bilateral trade and investment strategies adopted by Australia with other countries will help in promotion of society and increase the international relation with other countries (Schmitz, et al. 2014). These international treaties will increase the business efficiency and allow country to grasp talented people from other countries as well. Australia has been facing tough level of competition and the government of Australia has followed standard tax policies for domestic and international business. Australia has been providing assistance to newly startup businessmen and persons who are running their business in agriculture sector. It is evaluated that Australian government has been promoting entrepreneur and businessmen who are running their business in agriculture and industries business by providing them special subsidiaries and reducing their tax and tariff burden in determined approach. After analyzing all the secondary data, it is evaluated that in UK and Australia are both inclined towards making advancement in their business structure and customizing its business policies more people oriented (King, 2013). However, Australia, UK both are making changes in its existing polices and investing money in agriculture and infrastructure development projects to promote foreign investment proposal by lower down its tax and tariff rate. In addition to this, Both Australia and UK has been making efforts to develop its services sectors by investing their money in education sectors. Australia has adopted minimum wage provisions in all of its business in order make proper level of welfare to the society and employees development. On the other hand, UK government has been making investment in establishment of proper level of business infrastructure and technical development program for converting its raw material into finished goods. These implemented strategies of UK government will not only increase the overall productivity of the country but also create various jobs and employment to people in UK. The positive level of balance of trade will increase the foreign reserve funds and decrease the inflation rate of UK in determined approach.
Conclusion
After analyzing all the fact and factors of used in this report, it is evaluated that Australian government has been promoting entrepreneur and businessmen who are running their business in agriculture and industries business by providing them special subsidiaries and reducing tax and tariff implication on them. On the other hand, UK government is making investment in establishment of proper level of business infrastructure and technical development program for converting its raw material into finished goods for positive level of balance of trade. Now in the end, it would be inferred that if both countries are making these sorts of efforts then after 10 years these economy will become the most powerful economy on the international level.
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