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The Tyranny of Distance or the Power of Proximity?

The Tyranny of Distance or the Power of Proximity?. Coming soon…………The Airport Economist. Openness to trade is an important part of the Australian success story…. And despite the anxiety about trade issues and globalisation…. Trade has been associated with higher living standards.

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The Tyranny of Distance or the Power of Proximity?

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  1. The Tyranny of Distance or the Power of Proximity?

  2. Coming soon…………The Airport Economist

  3. Openness to trade is an important part of the Australian success story….

  4. And despite the anxiety about trade issues and globalisation…..

  5. Trade has been associated with higher living standards

  6. Before sub-prime, the world economy seemed to be firing on all cylinders…

  7. Australia is a major beneficiary of this strong growth in the emerging economies

  8. Australia has experienced its longest expansion in recent times

  9. The labour market is strong with unemployment is at its lowest rate since the 1970s

  10. Australian export values have been fuelled by the resources boom

  11. Taking a walk on the supply side - the issue of bottlenecks or ‘capacity constraints’ has become topical

  12. Living in the 70s? The Gruen thesis says that export volumes grew with a lag after a boost in investment

  13. The export-dependent states are riding the resources boom - a tale of two economies?

  14. Which is affecting population trends – ‘the Gilly effect’ and from ‘Rio to Freo’

  15. Although manufacturing and service volumes have been growing too…..

  16. Australia’s attitude towards Asia: ‘Once were worriers’ because of the ‘The Tyranny of Distance’

  17. We are now in the right place at the right time: ‘The Tyranny of distance’ has been replaced by ‘The Power of Proximity’

  18. Japan’s economic development has partially driven Australia’s export growth in the past

  19. Now it will be China and India who will drive much of our export growth

  20. Riding the Dragon - China has certainly been playing an important role for Australian exporters

  21. China and India are reclaiming their strong historical position in the global economy

  22. Depending on how you measure it……

  23. Do you want fries with your poppadom?

  24. Or your dim sim?

  25. A quiet revolution - Australia has built a strong ‘heartland’ of true blue exporters Non-Exporters ‘Domestic Businesses’ Exporters/ Non-Exporters ‘Opportunistic/ Irregular’ Exporters ‘Heartland’

  26. Keep your sunny side up: the heartland is nearly always optimistic…

  27. Women are especially important in the ‘exporter heartland’ • Approximately one in five females assume the CEO or Head of exporting role within Australian businesses. • In QLD, there is a significantly higher proportion of female CEOs in comparison to the other states.

  28. Is there a Gregory effect? Mining exporters are the most optimistic Last 12 months Last 3 months Next3 months Next 12 months Industry differences - NSS 29

  29. But there’s optimism even in the non-resource states…. • A significantly higher proportion of exporters in VIC/TAS have had export increases over the past twelve months compared to exporters in QLD. 30

  30. The Victorians top the list in terms of exporting SMEs

  31. There is concern about the exchange rate • Exchange rates continue to be the main factor negatively impacting exporters’ sales in the last 12 months. • As for 2006, high oil/fuel prices is the second most often mentioned response by exporters. N=364 32 NB: Factors prompted/shown

  32. But the exchange rate has had a differential impact Exchange rates % negatively affected by exchange rates in the last 12 months • Exporters in the agricultural sector are significantly more likely to have had their sales negatively affected by the exchange rate compared to exporters in the tourism sector. Different at the 0.05 level of significance Location differences - NSS 33

  33. Prices and Profits are hit the hardest….. • The strengthening of the Australian dollar has had a negative effect on the greatest proportion of exporters’ prices, profit and sales revenue. N=364 34

  34. Capacity constraints are a major issue • Of the exporters who believe capacity constraints have had a negative effect on their sales in the past twelve months (23%), manufacturing capacity (58%) has been the main hindrance for exporters. N=67 35 35

  35. What about the workers? Like all employers, exporters are facing labour shortages

  36. Exporters used to have ‘Europhobia’ but now they have ‘Eurovision’

  37. Although China rates number one looking 5 and 10 years out

  38. Austrade surveys do show a fair bit of ‘panda-hugging’ amongst both exporters and importers

  39. China tops the poll as far as FTAs go Impact on your business of FTAs or Closer Economic Partnership with the following countries • FTAs or closer economic partnerships with China, ASEAN and the United States will have the most positive impact for Australian exporters. 40

  40. China is in the mix with small business too with major gains for the USA

  41. Trade barriers are becoming less of a problem (notwithstanding the need for agricultural reform)

  42. FTAs certainly help to generate press coverage on trade • stories nominated from those that said they had had recalled hearing or seeing in the media included:

  43. Normally we use “star power” to help promote exports • Megan Gale helps Ganehills – a small Perth based company selling skin care products in Italy

  44. Some economists work very hard to promote Australian exports

  45. Doing it tough…with Kate Fischer and Pru Goward

  46. Doing it tough…with Miss South Africa

  47. Doing it tough… with another famous Australian female celebrity exporter!

  48. Generation Next? Many Australian global firms are still run by baby-boomer exporters

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