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Global Interdependence

Concept and Factors of Globalisation


What is Globalisation?

Globalisation is the increasing integration between countries over trade, investment, ideas and people.


Economic Evidence of Globalisation
  • Average annual foreign direct investment of US $47 billion (Source: Aus Trade)

  • Direct tourism is valued at $55.2 billion or 3.2% of GDP in 2016-17 (Source: ABS 5249.0)

  • Tourism directly employs an estimated 598,000 people or 4.9% of the workforce in 2016-17 (Source: ABS 5249.0)

  • Personal travel makes up Australia's 5th largest export valued at $21.2 billion and 5.5% of all exports in 2017 (Source: DFAT)

  • Personal travel makes up Australia's largest import, valued at $39.9 billion and 10.6% of all imports in 2017 (Source: DFAT)

  • The GFC which started in the United States, saw Australia's economic growth fall from 4.3% in Sep 2007 to 0.3% Dec 2008

Non-Economic Evidence of Globalisation
  • Net overseas migration into Australia has totalled a gain of 236,700 persons for the year ended 30 June 2018 (Source: ABS 3101.0)

  • Estimated 28.5% of Australians or 6.9 million Australians were born overseas (Source: ABS 3412.0)

Factors Facilitating Globalisation


Advances in transport technology

Australia being an isolated country has experienced significant trade growth from advances in transport technologies, decreasing freight costs and transportation times


Growth of multinational corporations

Multinational corporations are large companies with subsidiaries companies located around the world. These corporations provide flows of investment, people and trade between their subsidiaries.


Examples of multinational corporations operating in Australia include:

  • Apple

  • Microsoft

  • IBM

  • BHP Billiton ​

Information Technology

IT has enabled greater virtual communication between countries. IT links international buyers and sellers. In addition, IT communicates global news, knowledge and other information quickly and cheaply.


Trade Organisations

Global trade organisations such as the World Trade Organisation, encourage freer movements of trade through the reduction or removal of protectionist measures. 


Growth of Free Trade Agreements

Free trade agreements have developed political and economic ties between member countries. Free trade agreements can be bilateral, that is between two countries, and multilateral, between three or more countries.


Examples of Australian bilateral free trade agreements:

  • ChAFTA - China-Australia Free Trade Agreement

  • JAEPA - Japan-Australia Economic Partnership Agreement

  • KAFTA - Korea- Australia Free Trade Agreement


Examples of Australian multilateral free trade agreements:

  • Trans-Pacific Partnership (TPP)

  • Asia-Pacific Economic Co-operation (APEC)

  • Association of South East Asian Nations (ASEAN) - not technically a member, but does have a bilateral free trade agreement with ASEAN in the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA)

Global Value Chains

Global value chains are supply chains were components of a manufacture are sourced from locations around the world and assembled in a central location. The growth of global value chains has seen an increase in economic integration between countries.


Example of a Global Value Chain - Apple iPhone

  • Display - LG Technologies (South Korea), Japan Display (Japan) and Innolux (Taiwan)

  • Cameras - Sony (Japan)

  • Conductor Coils - TDK (Japan)

  • Storage - Toshiba (Japan) and SK Hynix (South Korea)

  • Central Assembly - Foxconn (China) and Pegatron (Taiwan)




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