Exports of Goods and Services
International trade involves the movement of goods and services from one country to another. Australia has thrived as the value of goods and services exported to other countries has increased. Figure 1 below shows a line graph of the value of goods and services exported from Australia in the given years. The years are 1 to 31, where 1 represents 1989 and 31 represents 2019.
The increase in the export of both goods and services has been attributed to the trade liberation and agreements that placed Australia at the center of international trade. For example, the Australia-USA trade agreement enabled the country to secure markets for its excess goods in the US. Besides the US agreement, Australia constantly engages with other nations, such as China and Japan, to have mutual trade agreements. Consequently, the volume of goods exported by Australia increased (Ferguson et al., 2023). The diversification of exports has also made Australia have a variety of goods and services to take to other countries.
The expansion of the service industry in the world led to the formation of bodies, such as the General Agreement on Trade in Services (GATS), as an affiliate of the World Trade Organization. Since Australia is a signatory of the GATS, the country was able to liberate its potential and negotiate for the export of experts predominantly in the service sector. The service industries, such as education and tourism, have also increased (Matera et al., 2022). Further, the advancement in medical research made it possible for the country to export service providers to serve in other countries to increase the country’s GDP.
Imports of Goods and Services
Importation is the process through which a country buys goods and services from a foreign country. Australia is engaged in trade tariffs that enable it to export and import. Based on the provided information, Figure 2 shows a line graph for the country’s importation. An increase in imports means that the country’s domestic market has expanded and that additional products and services have to be brought into the country. The line graph shows a positive trend in the goods sector and more negative trends in the service sector.
Both global and domestic issues determine the trends in importation and exportation. When the goods in high demand are not produced in the country, they are forced to import. The costs of production also determine the trends in importation and exportation. Globalization and technological advancement have made customers from Australia notice goods from other countries. In countries with lower production costs, such as China, their goods will be cheaper than domestic products, increasing imports.
International relations and diplomacy play a significant role in determining imports and exports. Australia is in agreements with countries such as the USA, China, France, and the European Union, which help it access foreign markets. Research by Matera et al. (2022) indicates that the relations between Australia and other nations make it possible to import goods and services. The exchange rate also determines the quantity of imports and exports in Australia. For example, when the exchange rate is favorable, buying goods from another country is cheaper.
Australia’s Trade Balance for Goods, Services, and Total Trade Between 1989 and 2019
The economic status of a country depends on the difference between the imports and the exports. The difference between the value of goods a nation exports and those which the nation imports is referred to as the trade balance. A trade surplus shows that a country exports large quantities compared to imports. On the other hand, a negative trade balance, commonly known as a trade deficit, shows that a country depends on imports for sustainability (Schram & Townsend, 2020). Figure 3 below shows a table created in Excel to show trade surplus, deficit, and the total trade balance.
The trade balance in goods is primarily positive, a phenomenon known as trade surplus, signaling that the country is competitive and produces a surplus. In 207, 2018, and 2019, the country experienced more exports than imports, showing exponential economic growth. As the country exports more, it obtains more foreign currency in the discourse, hence the economy’s growth. Although the positive trade balance in goods shows economic growth, it may indicate overdependence on foreign nations and global factors to grow the country’s economy.
The service industry appears to be more negative, meaning that Australia depends on foreign countries, especially in service delivery industries such as healthcare and medicine. According to research by Zhou (2022), importing more services into a country may signal a serious concern and require investment. The overall trends in total trade balance show that Australia is on the right trajectory as it exports more than it imports.
References
Australian Government Department of Foreign Affairs and Trade, (2023). Trade & investment economics branch international investment & green economy division data. New South Wales
Ferguson, V. A., Waldron, S., & Lim, D. J. (2023). Market adjustments to import sanctions: Lessons from Chinese restrictions on Australian trade, 2020–21. Review of International Political Economy, 30(4), 1255-1281. Web.
Schram, A., & Townsend, B. (2020). International trade agreements and global health: Pathways and politics. Handbook of Global Health, 1(1), 1-28. Web.
Matera, M., Allison-Reumann, L., & Murray, P. (2022). Australia and the EU: From trade tensions to FTA negotiations. In A Geo-Economic Turn in Trade Policy? EU Trade Agreements in the Asia-Pacific, 2(3), 247-271. Web.
Zhou, X. (2022). Analysis of the determinants of international trade. In 2022 2nd International Conference on Enterprise Management and Economic Development, 2(2), 46-49. Web.