Impacts of Import and Export in Australian Economy

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Many countries engage in international trade with the hope ofbenefiting from revenue gains arising from the systematic allocationof production that comes with globalization. However, economists andgovernment leaders in various countries have often expressed concernabout the impact that international trade will have on theireconomies. Most theoretical studies focus on the impact of importsand exports on the economies of countries.

Core Problem

The Australian government has increased openness to internationaltrade. It has reduced barriers to imports and implemented manyreforms to enhance production and exportation among the domesticfirms. Trade intensity has increased significantly over the past fivedecades as evidenced by increased partnerships with foreigncompanies. The increase in business exposure has yielded positive andnegative impacts for the country. The purpose of this paper is toconduct research to explore the impact of international trade on theAustralian economy.

Research Questions

Does international trade always have a positive influence theeconomy of Australia?

In what ways do imports and exports affect the economy of Australia?

Key Research Involved

The impact of imports and exports on the economic growth of a countryhas received attention from many researchers. In 2016, Wong studiedthe contribution of exports and demand from locals in five countriesbefore the financial crisis that lasted from 1997 to 1998. Theresults showed that an increase in both leads to an increase ineconomic growth. Yuhong et al. (2012) also conducted an analysis thatrevealed a relationship between the three variables. However, theirfindings contradict those of Wong. They found out that the growth ofexports had an adverse impact on economic growth while an increase inimports improved economic growth.

The association between international trade and the rate ofemployment is complicated since several channels are linking the two.In most developing countries, exposure to global markets hassignificantly contributed to poverty reduction. It is mostly the caseif the trade has a positive impact on the growth of the country.Several researchers agree with the argument. However, some studiesshowed no correlation between openness to trade and employmentbetween 1980 and 2006 among many developing countries.

The economic structures in the countries have also changed. Theservice industry has grown immensely to occupy the top positionconsistent with the scope of operation and creation of jobopportunities. With many people immigrants settling in the countryand an increase in trade activities, there was an increasing need forfinancial, insurance and education. Services contribute to a largershare of the GDP in developed countries compared to developingeconomies.

Ullah et al. (2013) checked for associations between economic growth,real imports, real exports and real per capita income. They conducteda traditional Granger casualty test to check for unidirectional orbidirectional loss between the variables. The findings and outcomesindicated that there was a unidirectional loss between growth in theeconomy, exports and imports.


The primary method used in gathering information on the topic wasthe Internet. It was an excellent source of information for all thebackground and current issues on international trade in Australia.


Many researchers agree that there is a close relationship betweenimports and exports and the economic growth of a country. However,they have different points of view on the relationships. Past studiesalso indicate or agree that international trade as a strongcorrelation with the rate of employment in a country while otherssuggest that the level of openness to international trade is not asignificant factor affecting the rate of employment in any economy.


The structure of the Australian economy has changed significantlyover the years. The service sector has expanded and has become amajor source of employment and has been many citizens securing jobs(Gorg, 2011). According to Tuhin (2015), imports have an adverseimpact on careers in the manufacturing sector in Australia. It hasdecreased significantly in the last four decades following intensityin international trade in the country. The primary explanation behindthis effect is import competition from low-wage countries. Importsact as substitutes for domestically manufactured goods. Hence, fewerpeople get jobs in local firms.

Another notable effect of international trade in Australia is thetrend in income flows and the balance of payments. Mining booms inthe country have led to an increase in exports and the income ofoverseas investors with regard to profits and reinvestments in themining sector of Australia (Riley, 2012). The situation haspersistently led to revenue deficits in the current account.


Group members had their points of disagreement within the researchstudy. However, it was an exciting experience since each one had toprove their point and reach an agreement before moving on.

Scope for Extending Research in Semester 2

After a successful study and assessment of the effects of imports andexports on the Australian economy, semester two (2) will be a time tonarrow down on one research area within the topic, preferably acloser study of the deficits, what they mean and how to prevent orreduce their impact in future. The research would also cover thegovernment’s efforts in alleviating the present account deficit.

Benefits of Group Project Work

Working in a group enables one to achieve a thorough understanding ofthe research topic. As members ask each other questions, contributeto ongoing issues and make arguments, they clarify their thinking andthat of other students. Also, it reduces the amount of time taken towork on a project to completion. It also enhances cooperation withpeople outside one’s circle of friends.


Trade liberalization in Australia has led to various changes in thecountry’s economy. The effects of imports and exports are in linewith existing the existing body of literature. The structure of theeconomy has transformed, with the service and mining sectors makingthe largest contribution. The rate of employment in the servicesector has gone up while that in the manufacturing sector has gonedown. On the other hand, an increase in exports in the mining sectorhas led to deficits in the current account since the industry hasmany foreign investors.


Görg, H. (2011), Globalization, Offshoring, and Jobs‖, in M.Bachetta and M. Jansen (eds.), Making Globalization SociallySustainable, World Trade Organization, pp. 21-41.

Riley, T. (2012), Australia’s Trade and the Balance Of Payments,Economic Literacy Centre and Tim Riley Publications Pty LtD, TheUniversity Of Wollongong.

Tuhin, R. (2015), Impact of international trade on employment:Evidence from Australian manufacturing industries, Research Paper 2.

Ullah, Zaman, Farooq &amp Javid (2013), ‘Cointegration andCausality between Exports and Economic Growth in Pakistan.` EuropeanJournal of Social Sciences – Vol. 10 (2)

Wong, H. T. (2016), Exports and Domestic Demand: Some EmpiricalEvidence in Asean, World Development Indicator (WDI)

Yuhong L. Zhongwen C. &amp Changjian S. (2012), ‘Research on theRelationship between Foreign Trade and the GDP Growth of East China:Empirical Analysis Based on Causality’, Modern Economy, Vol.1, pp. 118-124

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