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About CAD (1 Viewer)
- Thread starter AnAn
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tWiStEdD
deity of ultimate reason
The CAD, at least in Australia, is essentially caused by two things:
- the net income deficit, which includes everything from interest payments owed to overseas banks and dividends paid to foreigners that own shares in Australian companies to royalties earnt by foreigners in Australia. Any 'income' which flows in and out of Australia is included in the 'net income'. Australia has a huge net income deficit. the first quarter for 2004 has laid a $5,704m deficit on us. This makes up about 47% of the total deficit of $11,997m. This is an insanely huge figure for net income, comparitively speaking.
and
- a weak import competing market. This ensures that imports have a competitive edge over domestic production and that the Australian export industry fails to compete well in overseas markets... as we still largely rely on argiculture and mineral exports.
Thus, Australia's major problems are the net income deficit and domestic market efficiency and the types of production that Australia generates.
Overseas investors can put money into in short term speculative investment or longer term foreign direct investment.
The short term investment market includes the ASX and the financial exchange, causing fluctuations in both the all ordinaries (that's right isnt it?) index and the exchange rate. Essentially the effects on the Aust economy are felt, albeit lightly.
Foreign direct investment involves long term business or personal investment (e.g. McDonalds putting 50 more restaurants into Australia or a German buying a a huge building in Sydney's CBD). This affects economic growth as these investments will perhaps result in more production > more employment > increased demand > increased economic growth.
does that answer your question?
- the net income deficit, which includes everything from interest payments owed to overseas banks and dividends paid to foreigners that own shares in Australian companies to royalties earnt by foreigners in Australia. Any 'income' which flows in and out of Australia is included in the 'net income'. Australia has a huge net income deficit. the first quarter for 2004 has laid a $5,704m deficit on us. This makes up about 47% of the total deficit of $11,997m. This is an insanely huge figure for net income, comparitively speaking.
and
- a weak import competing market. This ensures that imports have a competitive edge over domestic production and that the Australian export industry fails to compete well in overseas markets... as we still largely rely on argiculture and mineral exports.
Thus, Australia's major problems are the net income deficit and domestic market efficiency and the types of production that Australia generates.
Overseas investors can put money into in short term speculative investment or longer term foreign direct investment.
The short term investment market includes the ASX and the financial exchange, causing fluctuations in both the all ordinaries (that's right isnt it?) index and the exchange rate. Essentially the effects on the Aust economy are felt, albeit lightly.
Foreign direct investment involves long term business or personal investment (e.g. McDonalds putting 50 more restaurants into Australia or a German buying a a huge building in Sydney's CBD). This affects economic growth as these investments will perhaps result in more production > more employment > increased demand > increased economic growth.
does that answer your question?
tWiStEdD
deity of ultimate reason
loss of economic sovereignty.
reliance of overseas investment: capital flight could be disasterous for the Australian economy.
short term stability is violated thanks to the speculative nature short term investment. these fluctuations are hard to control, and generate instability and uncertainty.
balance of payments position: CAD (through the net income deficit)
reliance of overseas investment: capital flight could be disasterous for the Australian economy.
short term stability is violated thanks to the speculative nature short term investment. these fluctuations are hard to control, and generate instability and uncertainty.
balance of payments position: CAD (through the net income deficit)
ToO LaZy ^*
n/a
if foreign investment continues to be high, it may push our $A through the roof which decimates our international competitiveness causing our exports to be dearer and imports cheaper hence the increased demand of imports leads to an imbalance of export/import incomes (M>X)..
