DEVELOPMENTAL ECONOMICS

FINAL PROJECT
TOPIC: ECONOMY OF AUSTRALIA
PRESENTED BY: ARBAN SIKANDER
WAHAIB HABIB
MUHAMMAD SARIM HUSSAIN
CLASS: BBA-5B
PRESENTED TO: SIR LIAQUAT ALI
DEPARTMENT: MANAGEMENT SCIENCES

AUSTRALIA

CONTENTS TO BE COVERED IN THIS PRESENTATION:

Introduction of the Country
Overview of the Economy
Magnitude and Trends of Socio-Economic Indicators
Applications of Growth & Development Theories
Conclusions and Implications

GEOGRAPHICAL LOCATION
Lies Southeast of Asia, between the Pacific and Indian Oceans and
It is a smallest continent.
Total area of 7,686,850sq km(2,967,909 sq mi) and with a total
coastline of 25,760 km (16,007 mi).

INTODUCTION

Neighboring areas includeIrian Jaya(part of Indonesia) and Papua

New Guinea to the north, New Zealand to the southeast, and
Indonesia to the northwest.
Time Zone of Australia is AEST (Australian Eastern Standard Time)
UTC/GMT+10hours. It is the world's
sixth-largest country by total area.
Australia's climate is governed by the hot, sinking air of the
subtropicalhigh pressurebelt. This moves north and south with the
seasons

HISTORICAL BACKGROUND
For about 50,000 yearsbefore the firstBritish settlement, Australia was
inhabited byindigenous Australians, who spoke languages grouped into
roughly250 language groups.
On 1 January 1901, the six colonies federated, forming the
Commonwealth of Australia. Since federation, Australia has maintained a
stable liberal democratic political system that functions as a federal
parliamentary democracy and constitutional monarchy comprising six
states and several territories.
The population of 24 million is highly urbanized . In 1990s
unemployment rate was high but at the beginning of the 21st century the
situation improved. Unemployment in Australia stood at 5.2% in March
2012. However by November 2015 it had fallen to 5.8%.
Australia is 13th World Largest Economy. In 2014 Australia had the world's
fifth-highest PCI and military expenditure is the world's 13th-largest. With
the HDI, Australia ranks highly in many international comparisons of
national performance.

ETHNIC & RELEGIOUS COMPOSITION

RELIGIONS

PERCENTAGE OF POPULATION

Roman Catholic

25.3%

Anglican

17.1%

Other Christian

18.7%

Buddhism

2.5%

Islam

2.2%

Hinduism

1.3%

Judaism

0.5%

Other

0.8%

No Religion

22.3%

Undefined or No Religion

9.4%

POLITICAL STRUCTURE & INTEREST GROUPS

STATUS AT INTERNATIONAL LEVEL

Australia is recognized as HIGH INCOME country at the
International Level with a GDP PER CAPITA of approximately
$50,000.
Australia is a member of the United Nations, G20,
Commonwealth of Nations, ANZUS, Organization for Economic Cooperation and Development (OECD), World Trade Organization,
Asia-Pacific Economic Cooperation, and the Pacific Islands Forum.
Australia ranks highly in many international comparisons of
national performance.

OVERVIEW OF THE
ECONOMY

YEAR
YEAR
POPULATION
GROWTH
RATE
OF AGR.
YEAR
CONTRIBUTION
OF EMPLOYED
AGRICULTURAL
Main Crops
in Agricultural
Main
Livestock
inSector(2014)
Agriculture
Main
Agricultural
Products(2014)
SECTOR
NATURE:
Beef
Sector(2014)

IN AGR.
SECTOR
SECTOR

2006
3.0%
Wheat
2006
2.7%
2006
3%
Wheat
Sheep(wool
and lamb),
Australia is a major agricultural producer and exporter, with over 325,300
2007
2.4%
Coarse
grains(barley,
oats,
sorghum,
maize,
employed
in
Agriculture,
forestry
and
fishing
as
of
February
2015.
Meat
2007
3%
2007
-15.1%

andtriticale)
2008
2.5%
Agriculture and
its closely related sectors earn $155 billion-a-year
for a
Dairy
2008
3%
Beef
Rice
2008
6.8%
12% share of
GDP. Australian farmers and grazers own
135,997 farms,
covering
61%
of Australia's landmass.
Wool
Oil
Seeds(canola,
sunflowers, soybeans,
and
2009
3%
2009
2.5%
2009
17.9%
peanuts)
Cotton
2010
3%
Pork
2010
2.4%
2010
-0.8%
Grain legumes(lupines
and chick peas)
Wine
2011
3%
Sugarcane2011
2011
2.5%
3.6%
Barley
2012
3%
Cotton
Poultry
2012
2.4%
2012
1.4%
Live
Animals(Excluding
Seafood)
Fruits
2013
3%
2013
Grapes &2013
Oil-seeds
oleaginous fruits, soft
2014
Dairy Products
Tobacco
2014
2014
2015
Vegetables

2.5%
-0.6%
3%
2.4%
0.7%
3%

INDUSTRIAL SECTOR
HISTORY:
The contribution of manufacturing to Australia's gross domestic
product peaked in the 1960s at 25%, and had dropped to 13% by
20012 and 10.5% by 20056.
In 200405, the manufacturing industry exported products worth
$67,400 million, and employed 1.1 million people.
In 20002001, $3300 million was spent on assistance to the
manufacturing industry, with 40% going to the textile, clothing and
footwear industry and the passenger motor vehicle industry.
At that time, manufacturing accounted for 48% of exports, and
45% of Australian research and development.

YEARS
Contribution
of
Industrial
YEAR
POPULATION
EMPLOYED
YEARS
GROWTH
RATE
OF
Main
Processing
Industries
MainFood
Industries
Sector to GDP
IN INDUSTRIAL
SECTOR
INDUSTRIAL
SECTOR

Food,beveragesandtobacco
Meatand meat products
2006
2006
2006
Textile,clothingandfootwear
Beverageandmaltmanufacturing
2007
2007
2007
Woodandpaperproducts
Dairy products
2008
2008
2008

27.9%
22%
2.7%
27.9%
22%
4.8%
27.7%
22%
4.0%

Printing,publishing
andrecorded media
Sugarandconfectionerymanufacturing
2009
2009
2009

22%
0.9%
28.9%

Petroleum,coalandchemical
products
2010
Fruitandvegetableprocessing
2010
2010

21%
2.6%
27.1%

2011
2011
Non-metalmineralproducts
Bakeryproducts
2011
2012
2012
Metalproducts
Flour
millandcerealfood
manufacturing
2012
2013
2013
Machineryand
equipment
Oiland fat manufacturing
2013
2014
2014
Othermanufacturing
Seafoodprocessing
2014
2015
2015

20%
1.8%

28.6%
19%
5.4%
28.3%
21%
2.4%
26.9%
20%
3.7%
27.1%
20%
3.5%

YEAR
CONTRIBUTION
MAIN SERVICES
YEAR
INDUSTRIES
GROWTH
RATEOF
OF
YEAR
Employment
in
SERVICES
SECTOR
IN GDP
SERVICES
SECTOR
Electricity, gas and
water
SERVICE SECTOR
Services Sector
Construction
NATURE & HISTORY:
2006

2006

Wholesale trade
2007

68%

3.0%
69.1%
69%

2007
4.0%
69.7%

The
services
sector
accounts
for
about
three-quarters
of
Retail trade
2008
68%
Australias2008
GDP and an even larger share
of
4.0%
69.7%
Accommodation, cafes and restaurants
employment.
2009
68%
2.0%
Transport and
2009
storage
68.6%
Around 8.8Million
(85%) of the Australian68%
works in the
2010
Communication
services
2.0%
2010 as at February 2007. 70.6%
services sector,
Finance and insurance
2011
2011

75%
3.0%
69.0%
As in most
economies,
the share of the services sector
Property
and business
services
2012
75% Main
in Australia
has steadily increased over69.3%
time.
2012
3.0%
Government
administration
and
Services sector
industries
in defense
Australia are as follows:
2013
70%
3.0%
2013
70.7%
Education
2014
2014
Health and community
services

70%
2.0%
70.5%

TOP EXPORTS PARTNERS OF

AUSTRALIA AND THEIR VALUE
Export Partners

Value of Exports

China

$94.4Billion

Japan

$45.4Billion

South Korea

$19.5Billion

India

$10.9Billion

Hong Kong

$10.3Billion

TOP IMPORT PARTNERS OF

AUSTRALIA AND THEIR VALUE
EXPORTS
IMPORT
PRODUCTS
Import
Export PRODUCTS
Partners
China
China
Iron
Cars
Ore

VALUE
OF
Value
of Imports
Exports
EXPORTS(IN
IMPORTS(IN $)
$94.4Billion
$44.7Billion
$68.2BILLION
$17.7BILLION

Japan
United
States
Refined
Coal
Petroleum

$45.4Billion
$24.5Billion
$41.2BILLION
$16.7BILLION

South
Korea
Japan
Crude
Gold
Petroleum

$19.5Billion
$18.1Billion
$21.6BILLION
$15.7BILLION

India Gas
Singapore
Petroleum
Computers

$10.9Billion
$12.2Billion
$15.2BILLION
$7.52BILLION

Hong
Kong
Packaged
Crude
Petroleum
Medicaments
Germany

$10.3Billion
$8.11BILLION
$7.24BILLION
$11.3Billion

Magnitude and Trends of SocioEconomic Indicators

GDP and Growth Rate of GDP.

PER CAPITA INCOME and Growth Rate of Per Capita Income
Savings Rate.
Investment.
Inflation Rate.
Population and Population Growth Rate.
Education Literacy Rate.
Life Expectancy and Infant Mortality Rate.
Poverty and Income Inequality.
H.D.I(HUMAN DEVELOPMENT INDEX).

2007

2008

2009

2010

GDP

$1054.56Billio $926.56Billion $1142.26Billio

$853.05Billion ns
s
ns
s

G.R of GDP

3.8%

3.7%

1.8%

2.0%

Per Capita
Income

$40,957.8

$49,628.1

$42,715.1

$51,845.7

G.R of Per
capita income

3.1%

1.6%

-0.3%

0.4%

Savings Rate

22%

22%

22%

23%

Inflation Rate

3.2%

4.4%

2.2%

2.1%

Population

20.83Millions

21.25Millions

21.69Millions

22.03 Millions

Population
Growth Rate

0.60%

2.00%

2.10%

1.60%

Literacy Rate

N.A

N.A

N.A

N.A

Life Expectancy

81years

81years

82years

82years

Infant Mortality

Income
Inequality

N.A

N.A

N.A

N.A

Investment

$49.57Trillion
s

$55.90Trillion
s

$40.60Trillion
s

$41.05Trillion
s

HDI

0.898

0.027

0.930

0.932

2011

2012

2013

2014

2015

GDP

$1.38TR.

$1.37TR.

$1.56TR.

$1.45TR.

$1.62TR.

G.R of GDP

2.4%

3.6%

2.4%

2.5%

2.4%

Per Capita
Income

$62,216.5

$67,646.1

$67,652.7

$61,979.9

--

G.R of Per
capita
income

1.0%

1.9%

0.7%

0.9%

0.8%

Savings
Rate

25%

25%

25%

24%

25%-

Inflation
Rate

2.8%

3.0%

2.5%

2.7%

1.7%

Population

22.34Milli
ons

22.72Milli
ons

23.13Millio
ns

23.49Milli
ons

23.80Millions

Population
Growth
Rate

1.40%

1.70%

1.60%

1.35%

1.32%

Literacy
Rate

--

99%

--

--

--

Life
Expectancy

82years

82years

82years

82.2years

82.2years

Infant
Mortality

Application of Growth and

Development Theories

21

GROWTH AND DEVELOPMENT THEORIES

Application of Growth and Development Theories.
Rostows Stages of Growth
The Harrod-Domar Growth Model
Lewis Theory of Development
The International Dependence Revolution (IDR)

22

Rostows Stages of Growth

Rostow identified 5 stages of growth:

1. The traditional society
2. The pre-conditions for take-of
3. The take-of
4. The drive to maturity
5. The age of high mass consumption
All advanced economies have passed the stage of take-of into self
sustaining growth.
This model can be implemented on country Australia, the country can
be classified as in Fourth (drive to maturity) and Fifth (the age of high
mass consumption).
The country economy satisfies all the assumptions of the 4 th stage.
The country's economy is driven mostly be services sector and very
low percentage of population is employed in the agriculture sector of
the economy.
The GPA per capita of the economy is also very high almost $60000.
HDI is 0.936, which indicates that the country has very high standard
of living.
23

The Harrod-Domar Growth

Model

The principal strategy for development is mobilization of saving

and generation of investment to accelerate economic growth
Importance of H-D growth model (AK model): It explains the
mechanism by which savings leads to growth.
This has been proven by the data, as the saving rate and
investment are increasing a countrys GDP, as savings rate
increased from 22% of GDP in 2006 to 25 % GDP in 2015, so the
investment is also increased.
The amount of investment in 2006 was $35,000,000,000 and in
2014 it increased to $57,000,000,000.
The GDP in 2006 was $746,000,000,000, which increased to
$1,530,000,000,000 in 2015.
Relationship Between Savings and GDP.

24

YEAR

INVESTMENT
(FDI INFLOW)

SAVINGS RATE

GDP

2007

$49.57Trilllions

22%

$853.05Billions

2008

$55.90Trillions

22%

$1054.56Billion
s

2009

$40.60Trillions

22%

$926.56Billions

2010

$41.05Trillions

23%

$1142.26Billion
s

2011

$57.92Trillion

25%

$1.38Trillions

2012

$55.59Trillion

25%

$1.37Trillions

2013

$56.18Trillion

25%

$1.56Trillions

2014

57.25Trillion

24%

$1.45Trillions

2015

---

26%

$1.62Trillions

The International Dependence Revolution

(IDR)

This model totally relates to Developing countries, hence

Australia is not a developing country, so this model is also
in applicable.

Lewis Growth Model

Assumes
that economy is developing.

Economy has Two Sectors.

A developed Industrial sector and a underdeveloped

Agricultural Sector.
A surplus 0f labor is transferred to manufactured sector.
Cant be applied on Australian Economy.
Why the model cant be applied?

CONCLUSION
AND
IMPLICATIONS

REFERENCES
INDUSTRIAL SECTOR:
http://data.worldbank.org/indicator/NV.IND.TOTL.ZS?page=1
https://en.wikipedia.org/wiki/Manufacturing_in_Australia
SERVICES:
file:///C:/Users/ARBAN%20SIKANDER/Downloads/http---www.aphref.aph.gov.

au-house-committee-efpa-services-report-chapter2%20(1).pdf
http://data.worldbank.org/indicator/NV.SRV.TETC.KD.ZG
http://data.worldbank.org/indicator/NV.SRV.TETC.ZS?page=1
http://data.worldbank.org/indicator/SL.SRV.EMPL.ZS
IMPORTS AND EXPORTS OF AUSTRALIA:
http://atlas.media.mit.edu/en/profile/country/aus/
IDICATORS OF THE ECONOMY:
http://data.worldbank.org/indicator/
http://www.tradingeconomics.com/
http://www.unesco.org/uil/litbase/?menu=14&programme=133
http://acoss.wpengine.com/poverty-2/
http://acoss.wpengine.com/wp-content/uploads/2015/06/ACOSS-POVERTY-I
N-AUSTRALIA-FACT-SHEET_FINAL-WEB-July-7-2015.pdf