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Impact of Globalization on Australia

The Meaning of Globalization

Globalization can be described as an economic system that is open and allows the international movement of people, goods, services, and capital. It involves greater integration of economic systems of countries through international trade, the flow of capital, and international investments. Economic globalization connotes the interrelationship among similar industry players in different countries. (Shanahan, 1998).

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Through economic globalization, single national economies are joined to form international economies. This is achieved through trade, global labor relocation, increased international investment, free capital movement across borders, advanced technological transfers, and others. It involves more than just cross-border commercial activities but rather a qualitatively new degree of international integration of financing, production, and exchange followed by a partial eclipse of the interventionist presence of the national state. This kind of integration is accelerated by growing social and cultural penetration of different societies, the advance of information communication and technology, unprecedented free border flow of capital, and neo-liberal economic strategies on the national level (Shanahan, 1998).

The Drivers of Globalization

Globalization may be attributed to the lack of barriers in tariffs. In addition to this, other major drivers of globalization include; technological progress and a deliberate reduction in the cost of transport and communication (OECD, 2007). The intervention of set airlines, super freighters and containerization has significantly reduced costs and time of doing business. Most advanced countries have also reduced both their tariffs and regulatory procedures to encourage globalization. In addition, the decline of international communication costs has encouraged the aspects of globalization. Furthermore, the advance of the power of computing and the internet has significantly reduced the cost of processing and conveying information therefore facilitating international transactions and trade (Griffin, 2008).

The internationalization of production is another key factor that drives globalization. Lower costs of trade and communication have enhanced trade in the final products and hence internationalizing the production aspect. This has made trade be conducted within firms hence making producers to develop supply chains that cover the global market. Moreover, countries nowadays gear their efforts towards business deals that involve several industries rather than concentrating on a specific class of finished products (OECD, 2007).

Financial markets have become global. Financial markets have enhanced the level of international convergence as localized services can now be provided across borders. The increased trade in products and services means that international markets have become integrated (OECD, 2007).

Labor mobility is another significant aspect that drives globalization. The intensity of human resource immigration has strengthened the international labor market. Since the mid-1950s, most countries utilize foreign labor as a more important workforce. Global relocation of skilled personnel has been part of this trend (Rowley, 2000).

Some Specific Examples of Globalization in Operation

Globalization can be exhibited in operation through several specific examples such as; one, the tendency of domestic markets becoming international rather than national, elimination of barriers to trade such as reduction of tariffs by countries, improvement of international transport and communication, and the efforts of multinational companies to offer services in international markets. Two, the increasingly common trend where there is movement towards more economic connectivity between individual businesses and public organizations across nations. Three, another key specific example of globalization is greater emphasis on international financial transactions, the tendency of nations to remove trade barrier restrictions, and increased communication worldwide. Last but not least, the enhanced and increasing interaction of national economic systems (OECD, 1998).

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Analysis of Effects of Globalization on Australia

Globalization has both negative and positive effects on Australia’s economy, social life and culture. On economy, globalization has led to a growth in trade through a larger market for goods especially in mining and other industries, change in the foreign policy for instance, increased openness to foreign investment and reduced tariffs (Gyngell, 2008). It has also given rise to immigration and the adoption of high technology. Competition is yet another effect of globalization on Australia, companies here can venture into new markets hence increase their customer base. However, foreign countries can also penetrate the local market. Competition ultimately leads to a reduction of commodity prices. However, globalization has given rise to a significant disparity in terms of wealth between the rich and the rural poor. In addition, there is a high rise in materialism and long working hours.

The Overall Impact of Globalization on Australia

Globalization leads to the rise of social polarization and fragmentation of cultures. This polarization is in terms of power and resources (Wiseman, 1998). Globalization has had a significant impact on Australian markets opening up to foreigners. This has resulted in increased international convergence as other nations depend on Australian products for trade. It has made her open the domestic markets to international investors’ thus increasing trade and commerce with other nations. Today, world economies are converging in economic performance. A classic example of this phenomenon is the Asian crisis of 1997/98 which affected the Australian economy. Australian economy was impacted by this crisis because of the convergence that had happened hence linking Australia’s economy to that of Asia. The September 11, 2001 terrorist attack in America is yet another good example to illustrate the impact of globalization. This act affected not only the American economy but also other world economies affiliated with it in terms of trade.

Globalization has led to the improvement of transport and communication in Australia, hence enabling her rural producers to individually and collectively become integrated into patterns of world trade. However, the globalization impacts have been realized unevenly in Australia. For instance, some industries have boomed due to increased exports while others have suffered because of the declining terms of trade-related to the failure of globalization to overcome agricultural protectionism from America, Europe, and Japan. Globalization has sharpened disparity in incomes both within rural areas and urban areas in Australia. This is because the Australian government has designed policies to increase corporate domination of rural production in order to expedite globalization. This phenomenon has further brought consolidation of an underclass or rural Australian residents deprived in terms of incomes, education levels, employment opportunities, health, and other services (Shanahan, 1998).

Globalization has significantly influenced trade and investment in Australia.

To embrace this phenomenon, the country has used its trade policies since the 1980s to keep domestic markets open to international markets. This has doubled world trade. To cope with globalization, Australia has undertaken policy reforms geared towards propelling the private sector to compete in both the domestic and international markets. In addition globalization has enhanced the quality of life in Australia because foreign investors are allowed to open up ventures in the country. Last but not least globalization has enhanced the expansion of information and advanced technology.


  1. Gyngell, A, Michael W, 2007, Making Australia’s Foreign Policy, Cambridge University Press, Cambridge.
  2. Griffin, J, 2008, Globalization.
  3. OECD, 2007, OECD Economic Outlook, OECD Publishers, Sydney.
  4. OECD, 1997, Globalization and Small and Medium Enterprise, OECD, Sydney.
  5. Rowley, C, & John, B, 2000, Globalization in the Asia Pacific Region, Routledge, New York
  6. Shanahan, M &Gerry, T, 2003, Globalization: Australian Regional Perspectives, Wakefield press,
  7. Wiseman, R, 1998, Global Nations: Australia and the Politics of Globalization, Cambridge Press, Cambridge.

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