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Foreign Investment on Aussie eco (1 Viewer)

BunJai

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Jul 11, 2002
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Can someone answer this question for me?

Explain the impact of foreign investment on the Australian economy.

this was in CSSA trial

by the way....do u reckon this is bad?
i got:
17/20 for m/c
23/40 for Section II
8/20 for Section III
14/20 for Section IV

coz i nearly came last......

gimme your opinion (good or bad would be helpful).....and please tell me which part do u reckon i need to improve on......thanks......
 

p00_p00

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Originally posted by BunJai
Can someone answer this question for me?

Explain the impact of foreign investment on the Australian economy.

this was in CSSA trial

by the way....do u reckon this is bad?
i got:
17/20 for m/c
23/40 for Section II
8/20 for Section III
14/20 for Section IV

coz i nearly came last......

gimme your opinion (good or bad would be helpful).....and please tell me which part do u reckon i need to improve on......thanks......

To be Frank, its a bit of a shocker comparing with my standards. My advice is to improve on Short answers since they are reeeeaaaallly easy compared 2 everything else and if u know ur stuff, u can easily get 40 however the essays are harder 2 obtain top top top marks.

To answer ur question, talk about the 2 types of investment: portfolio and FDI. Then u need to give the pros and cons:
Pros: Investment into the economy improves aggregate demand and shows that the economy is healthy and stable. It allows firms and governments to utilise overseas funds to devlop and achieve growth etc. Also u should take into account the multiplier effect and the ammount of jobs that will be created.

Cons: Appears on our Cap and Fin account and hence we must service the interest repayments etc. Deterioation of our CAD


hope that helps but i only got 4/5 for that question, but i didnt explain Port and FDI, but as investment in general - which is how u will get top marks for that question
 

Jason

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Tamworth
Here's my answer (slightly edited, 'cos when you're in an exam, your answers aren't always completely coherent! ;) ):

"Foreign Investment has both positive and negative effects. It can generate growth, caused by increases in spending, and can lead to the creation of jobs. However, the problems are that it increases our net foreign equity levels, making us more susceptible to the international business cycle (a global economic downturn may cause investors to pull funds out of Australia) and it adds to our CAD, directly as the Capital and Fin. Account surplus increases (which corresponds to an increase in the CAD) and indirectly as the interest paid back adds to the net income defecit, which adds to the CAD."

I got five out of five and I didn't mention portfolio and direct - the question didn't really ask you to explain what foreign investment is, just its impact. I agree that you need to improve you're short answers - thats were some of the easier marks are. Which Essay questions did you do? Maybe if you told us which topics you looked at, we could help you with those?
 

BunJai

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Sydney
well...i did Q25 and Q28 for my essays
the one on exchange rate and the one on econ objectives

thanks guys.....now i know which part i really need to focus on

which chapter do u think is the hardest to understand?
i dun like the 1st chapter that much.......

by the way if i were to talk about globalisation, what aspects do i have to look into?
 

sif not 99

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no offence Jason but how much did you pay your teacher to give u full marks for that question???

there wasn't even any mention of the loss of sovereignty and control of Australian businesses and financial entities that has eventuated as a result of increasing levels of portfolio and direct investment. That is a critical shortcoming of your response.

How did u get 5 marks without mentioning that, I would really like to know if I could??
 

Minai

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mm yeah
the answer was a bit broad, but before u say that it didnt deserve the 5/5, read the marking guidlines, coz if he did get 5, he must've at least addressed everythin in the guidlines (unless the teacher used his/her own guidelines?)
 

Jason

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Yes, we are all incredibly talented here in Tamworth, if that's what you mean.... Thanks for the analysis of my answer: I wasn't looking for one. Maybe you were just wrong? And even if you weren't, try not to be so rude about it, ok? :)

In regards to critical short-comings, I think you may have made one of your own. I did mention increases in net foreign equity levels, which is foreign ownership of assets - and I mentioned its effects (eg. int. bus. cycle etc). Granted, I didn't go into detail about how people get worried about foreign ownership, but I didn't think that was counted as an economic impact - more of a social one. If you want to criticise my response, sure, fine whatever. Like I said, it wasn't asked for.

Back to the topic - I did the same essay questions - so if you want to go over any particular areas, I'd be happy to help. When talking about globalisation, it depends on the type of question - usually its impact of globalisation on an economy, or differences in levels of development. For the first section you need to focus on the effects of changes in Labour markets/flows, Technology, Investment flows, Financial flows (eg. Exchange rates), Trade patterns and the impact of the International business cycle. For the second bit, you usually need to look at reasons for variations in development standards, in which case you'd go back to the first section, and then talk about why the changes in flows had the effects they did. eg. why did the sudden outflow of funds during the Asian Financial Crisis have the impact it did on Indonesia's economy. That might be wrong, because I don't have the syllabus in front of me - so I'm willing to take criticism. Plus, my hardest topic is globalisation - its so broad!
 
Last edited:

sif not 99

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as for critical shortcomings YOU DID MAKE ONE OF YOUR OWN

the question asks for the impact on the economy, where is it asking for an economic impact only? perhaps this city air down here is a bit polluted and I can't see through it to see the question asking specifically about economic effects but I dont think so, the question allowed scope for a discussion of non economic effects ALSO.

anyway enough of rocking the country boy, I suggest u get your ass outa there and head for the city, i think you would be wasted in tamworth, u show some potential =)
 

Jason

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Well, I was told to interpret impact on the economy as economic impact - however, thanks for pointing out that it might not be enough, I'll be sure to keep that in mind for the HSC. And thanks for the compliment - however, I think it may be a teensy-weensy bit too late to change schools to Sydney now.... I've got something called the HSC in a few days. :)
 

sif not 99

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yeah well i was meaning for uni

hey i reckon agricultural economics would suit ya eh?

hope u dont get ur ass scaled down coz of ur "less talented classmates" thats not to say that country ppl aren't as talented but u would know what I mean =)
 

Jet Girl

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Hey sif, do they put something in the water in Sydney schools to make all the students arrogant or something? Oh, wait there, half the time you can't drink your water, hey. I'm so sick and tired of the attitude of students that go to school in Sydney - you guys think you are so much goddamn better than us! And I live in a town that is smaller than Tamworth! It's pretty damn obvious that you guys have a HUGE advantage over us - you have resources that we don't have access to, plus most of the markers are teachers from Sydney schools, so why rub it in?
 

bandwagon

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im in with jas and jet girl for this one. but i can tell you theres nothing wrong with da water. probably just sif and the rest of his school.
 

Jet Girl

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Yeah, thanx bandwagon, you have totally changed my opinion of Sydney students - obviously not all of them are arrogant dicks! Good luck dude! :)

P.S. Maybe sif isn't that bad after all - he was pretty nice to me on the History ext post......
 

Porphyria_J

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This was my answer and i got only 4/5 but i guess it might give you an idea???

Foreign investment represents a capital inflow into teh economy and has the positive effect of leading to an increase in Australia's productive capacity leading to an increase in outputs and wages and reduced unemployment and in increase in the standard of living (my teacher put 'how' there). They also bring new beneficial managment practices and technological channge leading to an increase in the firms efficiency and economics of scale for Australias economy. However, heavy reliance on investment has other negative effects such as out increased reliancy leaves us vulnerable to the prospect of capital flight which may have detrimental effects on the Australian economy in particular regards to the AUD. Also for the long term, it is not good as it not only represents a percieved loss in national soveriegnty but the government must always be careful in its policy decisions as not to alarm investors in Australia which again may lead to capital flight. There is also the issue of profits not staying within the economy to represent an injection, but going overseas.

Long winded =p
 

Alex

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How about also the fact that it also foreign investment in the Australian economy increases net income debt which in turn increases our CAD which means a surplus on our current and financial account
 

BunJai

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How about also the fact that it also foreign investment in the Australian economy increases net income debt which in turn increases our CAD which means a surplus on our current and financial account
I don't get it Alex....

Y would foreign investment cause "a surplus on our current and financial account"
 

sif not 99

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i think he means the net income deficit caused by profits going offshore from foreign investment will blow out the CAD

which in turn will drive the capital and financial account into surplus

otherwise their is the pitchford thesis which is the other way around so u decide
 
B

Bambul

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Yeah, I think Alex wrote current instead of capital, making it the capital and financial account that is is surplus, meaning that the current account is in deficit.
 

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