Government and Business Relations for Economy- myassignmenthelp

Question: Discuss about theGovernment and Business Relations for Remote Economy. Answer: The article is in relation to an overview of the industry and trade policy followed in Australia since the time of federation with respect to issues facing a resource based, rich, small and remote economy. The emphasis of the paper is in relation to attempt made in the country form moving away from exporting primary goods through the process of diversification even through exploiting the natural competitive advantage of Australia. The paper analyzes the growth and fall, efforts and purpose in relation to protectionism. The paper also analyses the situations where experiments were done in relation to the industrial policy which was interventionist in nature. The effects of the mining boom is also described and analyzed through the paper. For the purpose of carrying out such analysis the paper has made considerations in relation to the specific economic circumstances of Australia along with the facts relating to endowments with respect to competing notions of comparative advantages alo ng with the role of the government towards promoting competitiveness and economic development (Fenna 2016 pp 31) The article provide that the varied and abundant resources of the country have been utilized in a good manner by Australia where the country was found to excel significantly in specific historic periods. The economy of the court continued to be very rich and resource dependent till the present day (McLean 2013 pp 102-107). However a persistent theme in the Australian economic history has been the diversification way general dependence. One of the most prominent efforts to trigger the diversification was the introduction of the tariff protection system in relation to the nascent manufacturing sector (Langcake 2016 pp 32-34). The article states that the reason because of which the ISI policy was introduced in Australia was in relation to its comparative advantage and particular factor endowment. The result of such implementation was mixed as on one had the policy was found to be largely successful as it fostered a large manufacturing sector which enhance the process of development and growth in Australia and on the other hand it was considered as a major failure as it initiated an uncompetitive and inefficient manufacturing sector which was not able to adjust with economic realities taking place in the late 20th century. When the system in relation to tariff protection had been dismantled the question which had to be addressed was in relation to the fact that what policies are required to replace it. There were two view which were present during the time firstly, it was inevitable that the if brisk completion is introduced along with reforms to enhance the market the sector would be invigorated which would subsequently result in high degree of rationalism and an enhanced competitive and efficient profile. Although the condition would have been necessary but it cannot be regarded as sufficient. Secondly, characteristics of extensive market failure with respect to spatial location of economic importance a much enhanced market policy would be needed. It has been argued by the paper that the Australian economy moved in a very hesitant manner in the direction of the second view. There have been various persuasive arguments which have depicted that a more systematic approach should be taken by Australia to wards the development of industries. This could have been done in relation to existing comparative advantage. Persuasive arguments have also been made with suggested that under existing circumstances the re-orientation towards active industry policy cannot be made. The paper argues that only more of the same is expected in the absence of a present and clear strategic of economic danger. References Alan Fenna (2016) Shaping comparative advantage: the evolution of trade and industry policy in Australia, Australian Journal of Political Science, 51:4, 618-635, DOI:10.1080/10361146.2016.1239565 Langcake, S. 2016. Conditions in the manufacturing sector. RBA Bulletin Quarter (June): 2734. McLean, I.W. 2013. Why Australia prospered: The shifting sources of economic growth. Princeton, NJ: Princeton University Press. The article is in relation to the concept of Industry policy: protectionism to free trade as discussed in the unit. The article states that the desire of the Australian economy to move away from the use of primary products added on with its structure have resulted in enduring issues for the Australia Economic policy since the time of federation. According to Tilton (2013 pp, 27-29) protectionism is a strategy which is used by the governments to provide protection in form of a shield to the domestic industries by imposing high taxes on import. One of the purposes of the article is to examine the purpose and effect along with growth and decline of protectionism. According to the Iain Murray of the Competitive Enterprise Institute Washington DC regulations have to be light, freedom has to be provided to the industrial players so that they can fix their own contracts this is because political and regulatory risk can restrict the investigation to be made into the industry. In the UK there have been woes to the railway due to the process of Bureaucracy and not because of privatization. An over complex structure had been forced by the bureaucrats onto the industry and where it had too many regulations the situation turned from bad to worse. The mixed result of over complexity, over regulation and public ownership of the structure made is next to impossible for the private sectors to be able to provide better services to the consumers. Privatization could have resolved the issue but the situation reached a stage where deregulation was mandatorily required. It was argued that for the railway system to be efficient and meeting the needs of the consumers the regulatory straitjacket have to be removed from the system. Industry policy initiatives as defined by Madsen (2015 pp 233-247) are the official strategies which are implemented by the government towards enhancing the growth and development of section or the total sector of manufacturing along with other parts of the economy. The policies are interventionist steps which are taken in a country having mixed economy. Measures are taken by the government which has the intention of enhancing competitiveness and capabilities of domestic businesses along with structural transformation of the business. The infrastructure of the country such as energy , telecommunication and transportation industry is a key composition of the manufacturing sector which play a major role towards Industrial policies. The article states that in Australia diversification was attempted to be triggered through Import Substitution Industrialization (ISI). The issue which have been faced by Australia with respect to its history is in relation to choosing between its competitiv e advantage or to move beyond it through the process of Industry policy initiatives. The states in Australia have been provided with the role of developing, promoting and regulating activities in the entire economic sector whether primary, secondary or tertiary References Madsen, J. 2015. Economic growth and its drivers since European settlement. In S. Ville and G. Withers, eds. The Cambridge economic history of Australia. Port Melbourne: Cambridge University Press. Tilton, J. 2013. The terms of trade debate and the policy implications for primary product producers. Resources Policy 38: 196203 The article is based on various theories such as the competitive advantage theory, economic theory, and the strategic trade theory. The paper also relates to the doctrine of free trade. It has been stated by the article that the theory of competitive advantage along with the associated doctrine of free trade provide a compelling logic. An argument has been provided by BCA (2014 pp 07) that economies are allowed to allocate efficiently the available resources through free trade. The structure involves exporting what is best produced by the company and importing what it is not able to produce. Trade always results in a win-win situation. These arguments have been complied and modified to give rise to the theory of competitive advantage as stated by Robert Torrens (1815) and David Ricardo (1817). According to the theory focus has to be provided on what is done in the best manner by a person which are the most efficient sectors of the company productively rather than restricting ones sel f to what is done better than everyone else. It has been provided by HeckscherOhlin (Ohlin 1933) model that competitive advantage is determined by relative factor endowments. The natural competitive advantage of Australia based in the theories therefore lies in exploiting its natural resources as it has scarcity of capital and labour. The article also discuses an economic structure which is blind to the issue of economic development and emphasizes in relation to the spatial area of market relations. According to Taylor (2016 pp 321-325) the theory of competitive advantage is based on the concept that cheap labor are omnipresent whereas there is no need for natural resources for an economy to be good. Countries are lead by the theory towards specializing the export of primary goods along with raw materials which lock in countries having a low wage economy with respect to the terms of trade. The theory of competitive advantage as provided by Michael Porter set out advanced tools for a nalyzing competitiveness along with its implications. According to the theory the competitiveness of a country is the function of four key determinants namely, factor conditions, demand conditions, related and supporting industries and firm , rivalry, structure and strategy. In addition the theories suggest that such factors although considered in relation to a country provide more specific results in relation to a particular industry. The paper states that one of the strongest conclusions provided from the economic theory is that the per capita income of the citizens of the contract in a small economy is reduced by the introduction of protectionism. The per capita income of Australians was 40% higher than that of any other nation in the 1870s. however although there was a steady growth in the Australian GDP by 3.2% the growth in per capita income of the Australian was lesser than any other country indulging in industrialization. The paper bases its arguments on the strategic trade theory. According to Merrett (2015 pp. 151-160) the STT which is also known as the ST policy are measures which are adopted by countries towards affecting the results off strategic interactions between firms consisted in an international oligopoly. The paper argues that the experiments conducted in Australia in relation to active industrial policies were decidedly of a nature which was less grand. References Taylor, M.Z. 2016. The politics of innovation: Why some countries are better than others at science and technology. New York: Oxford University Press. BCA. 2014. Building Australias comparative advantages. Melbourne: Business Council of Australia. Merrett, D. 2015. Big business and foreign firms. In S. Ville and G. Withers, eds. The Cambridge economic history of Australia. Port Melbourne: Cambridge University Press. This section of the paper discussed few of the underlying assumptions, ideologies and values which have been provided through the article. The paper carries on its discussion based on the assumption that a route of consistently led progress had been followed by Australia through which by using agricultural potential and natural resources provided for a standard of living which can be compared to the first world. The society was therefore allowed to thrive and survive. The paper also assumes that the competitive advantage of Australia is based on its primary products and the free trade doctrine and competitive advantage through provides a compelling argument. The paper is based on the idea that economies are pushed towards utilizing there resources in an efficient manner through the use of the free trade policy. Through the policy the economies can export what they produce the most and do best and import what cannot be efficiently produced by them domestically. The paper is also based on the assumption that the commodity cycle has both significant advantages and disadvantages towards the community which results in excess of demands and also insufficiency. The paper also bases its arguments on the assumption that the rise in economic powers such as Germany and USA at the end of the eighteenth century and the beginning of the nineteenth century also posed a significant threat to the doctrine of free trade. These countries considered free trade doctrine to be in the interest of Britain as it had a first mover cumulative advantage. The idea that the government passed various measures to introduce protectionism in form of the Lyne traffic and Commonwealth Customs Tariff Act 1908 and subsequently restrict the notion of free trade has also been used by the author. Thurbon (2012 pp 77-90) states that quicker than any person could have imagined the system of protectionism started to show defects as first came to light through the Veron report. The author made an assumpti on that due to the interest of the government during that period in the policy of protectionism was still in placed stubbornly until 1980. The paper uses the assumption that the Australian economy has hit a considerable downfall since the Second World War from where legal protectionism had been introduced into the Australian economy. There was an idea that Australia due to the introduction of the protectionism ideology into its economy would soon been following the path of Argentina towards a stage of economic implosion. It has been provided by McLean (2013 pp 99-107) that the policy of Australia towards not abiding by the economic laws around the world was an economic sin committed by the country. The paper also rebuts its own ideas by trying to incorporate the ideas of the critiques which state that the economic downfall of Australia was triggered much before the policy of protectionism had been introduced in the economy. References McLean, I.W. 2013. Why Australia prospered: The shifting sources of economic growth. Princeton, NJ: Princeton University Press. Thurbon, E. 2012. Ideas and industrial governance: Has the influence of neoliberalism been overstated? In D. Cahill, L. Edwards and F. Stilwell, eds. Neoliberalism: Beyond the free market. Cheltenham: Edward Elgar. This part of the paper analysis the arguments provided by the paper in order to bring out to what degree are the arguments provided by the paper correct. The basic argument which have been provided through the article is that the country has been able to provide a good performance with respect to its diverse and vastly available resources. The country using its resources has not only become very rich but also is resource dependent to the present day. However Australia has persistently moved away from the use of its staple resources. This is to a large extent true as according to PC (2015 pp 08) and PC (2014 pp 10) there was a trend which was often seen in Australia which depicts that it did not want only to rely on its resources and therefore the ISI strategy of traffic protectionism had been introduced. The paper argues that the attempt of various critiques to manifest protectionism as a failure for the Australian economy were very vague. This is because the policy had been able to provide mixed results which were having both advantages as well as disadvantages for the economy. According to the article the advantages were that a largely impressive manufacturing sector had been fostered which was underwriting development and growth in Australia. In addition on the other hand the manufacturing sector due to the policy was not able to adopt to the economic realities which had initiated in the late 20Th century. The policy of protectionism when compiled with that of industrial policies also provided counterproductive results. This can be stated as a valid argument by the paper as such argument has been provided by various authors such as according to whom when both industrial policies as well as protectionism is applied in an economy it results in uncompetitive industries and firms. However due to the critiques of the policy of protectionism the policy had been lifted from the Australian economy. The question was whether the industrial policy would result out to b e a better measure for the enhancement of the Australian economy. The position of Australia towards high value services was also not strong as provided by the paper. This argument of the paper is also backed by (Zysman et al. 2013 pp 100-110). The article provide that the varied and abundant resources of the country have been utilized in a good manner by Australia where the country was found to excel significantly in specific historic periods. The final and the most string argument which has been provided by the paper is that there is still absence of a proper policy which need to be implemented in Australia with respect to its comparative advantage and disadvantage as both the polices of protectionism as well as industrial policies have significant disadvantages amidst their benefits. References Australias automotive manufacturing industry. Melbourne: Productivity Commission. Trade and assistance review 201314. Melbourne: Productivity Commission. Zysman, J., Feldman, S., Kushida, K.E., Murray, J. and Nielsen, N.C. 2013. Services with everything: The ICT-enabled digital transformation of services. In D. Breznitz and J. Zysman, eds. The third globalization: Can wealthy nations stay rich in the twenty-first century. New York: Oxford University Press.