Direction of Trade

Chapter Review
  1. Composition of trade:
      * Primary industries have always been the main focus of Australian exports as it is in commodity goods that Australia has had the greatest comparative advantage
      * Agricultural and mineral exports still account for the majority of products exported
      * Australia is less comparative in manufacturing
      * Australia has experienced more changes in its export flow while its imports have stayed relatively stable
      * While the agricultural sector has been declining in relative importance as an export earner, exports of minerals and metals have increased in relative importance
      * Factors contributed to decline of agricultural exports?
Direction of trade:
  * In the 1950’s Australia mainly traded with the UK and other European countries, in subsequent years trade patterns have shifted making Japan the major buyer of Australian exports. More recently China, South Korea and ASEAN countries have become increasingly important as export markets
  * Key factor that changed the direction of Australian trade was the decision of the UK to join the European Economic Community trading bloc (EEC), now known as the European Union (EU), in 1973
  2. Direct investment convers foreign financial transactions to fund new investment in Australia or overseas or to buy more than 10% of shares in an existing company where as portfolio investment refers to the buying of land, shares and other marketable securities in existing companies only.
  3. Balance of payments: the record of the transactions between Australia and the rest of the world during a given period, consisting of the current account and the capital account and financial account.
      * Current account – Net goods, net services, balance on goods and services, net primary income, net secondary income
      * Capital and financial account – capital account, financial account, balance on capital and financial account
  4. The balance of...