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Comparison of the Economic
Introduction:
Every country possesses uniqueness, strengths, and weaknesses. Various economic elements and factors determine its reputation and the overall reputation in front of the international community. Australia and Canada are developed countries. Both the nations are progressing with growing GDP. There are various indicators which can be used to compare both the countries. The main purpose of the paper is to analyse the economies of Australia and Canada. Being a developed nation does not imply the country acquires all the potential resources or outcome. Several grave challenges are also faced problems similar to a developing country or other developed countries. The problem behind the growing pattern of the economy relies on the number of economic factors like trade, trade pattern, fiscal and monetary policy, inflation, and unemployment rate.
Discussion:
Canada and Australia have their own uniqueness and problems which determine their economic growth. Canada is the country with the population of 36.7 million people while Australia has lower population than Canada. The total population of Canada is 24.8 million. Similar to the phenomenon of population increase, economy size is also different. Canada’s economy is larger than the economy size of Australia. The total GDP of Canada is 1.76 trillion dollars while GDP per capita is $48,256. The total GDP of Australia is 1.2 trillion dollars and GDP per capita is $50,334 ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"WGYNiUi4","properties":{"formattedCitation":"({\\i{}Canada Economy})","plainCitation":"(Canada Economy)","noteIndex":0},"citationItems":[{"id":236,"uris":["http://zotero.org/users/local/mlRB1JqV/items/HQ76C5IX"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/HQ76C5IX"],"itemData":{"id":236,"type":"webpage","title":"Canada Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption","abstract":"Learn more about the Canada economy, including the population of Canada, GDP, facts, trade, business, inflation and other data and analysis on its economy from the Index of Economic Freedom published by The Heritage Foundation.","URL":"//www.heritage.org/index/country/canada","shortTitle":"Canada Economy","language":"en","accessed":{"date-parts":[["2019",4,11]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Canada Economy). Therefore, it can be observed that the total GDP of Canada is higher in comparison to Australia but the GDP per capita of Australia is higher. The primary factor causing the presence of this high per capita GDP of Australia is the policy for healthcare. Australia is more concerned toward healthcare therefore, the standard of living is much improved there. However, the overall growth rate is higher in Canada with 3.0% while Australia has a 2.3% growth rate.
There are some specific and unique features about both countries which somehow determine the economic activities including, trade, fiscal and monetary policy, and international relations. The economy of Australia is unique due to its dominance over the service sector. The service sector of Australia comprises seventy percent of GDP and employs about seventy-nine percent of the labor force. Canada is unique from other developed countries due to its dominance over the primary sector where the oil industry is the most powerful. The main industry sectors of Australia are perceptibly the sectors that comprise the 70% of GDP followed by tourism, healthcare, media, and entertainment. Australia is home to breathtaking landscapes that attracts thousands of tourists every year. Australia comprehends the significance of tourism and making the best use of the resource to increase economic growth. Healthcare is also one of the priorities of Australia where the sector is not only used for the improvement of the living standards but also to enhance the trade. For Canada, the service sector is diverse, comprises seventy percent of total GDP and provides a large amount of employment. Other main industries of Canada are energy, manufacturing, and agriculture sector. In most of the countries, agriculture becomes the main source of economic growth especially in developing countries but in the case of Canada and Australia, agricultural sector is not even listed in the top five industries.
Although both the countries are developed countries and reflect positive growth however, they both are in different phases of the business cycle. Canada is in the phase of expansion. The low rate of dollar is beneficial for the exporters of Canada. Besides the exchange rate, the trade agreement of NAFTA is beneficial for the expansion of trade in various European countries. However, due to the increase in the interest rate of America borrowing becomes difficult for Canada. On the other hand, Australia is in the recovery phase because of the high unemployment rate ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"OL0RFQ56","properties":{"formattedCitation":"({\\i{}Christopher Kent: The Business Cycle in Australia})","plainCitation":"(Christopher Kent: The Business Cycle in Australia)","noteIndex":0},"citationItems":[{"id":237,"uris":["http://zotero.org/users/local/mlRB1JqV/items/437WFLN6"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/437WFLN6"],"itemData":{"id":237,"type":"article-journal","title":"Christopher Kent: The business cycle in Australia","page":"11","source":"Zotero","language":"en"}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Christopher Kent: The Business Cycle in Australia). The other reason that can lead to the crisis is the use of spare capacity. An important situation arises by comparing both the countries that Australia is in the recovery phase because of the unemployment rate while Canada has a higher unemployment rate than Australia. One of the crucial factors behind this situation is the inflation rate. In Canada, the unemployment rate is 6.3% with the inflation rate of 1.6% while Australia has a 5.6% unemployment rate with 2.0% inflation. Philips curve indicates that with the higher inflation rate, unemployment decreases but this model does not seem to be working while making a comparison between Australia and Canada ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"JUVJMQSE","properties":{"formattedCitation":"({\\i{}Australia Economy})","plainCitation":"(Australia Economy)","noteIndex":0},"citationItems":[{"id":238,"uris":["http://zotero.org/users/local/mlRB1JqV/items/MAH5D69Z"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/MAH5D69Z"],"itemData":{"id":238,"type":"webpage","title":"Australia Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption","abstract":"Learn more about the Australia economy, including the population of Australia, GDP, facts, trade, business, inflation and other data and analysis on its economy from the Index of Economic Freedom published by The Heritage Foundation.","URL":"//www.heritage.org/index/country/australia","shortTitle":"Australia Economy","language":"en","accessed":{"date-parts":[["2019",4,11]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (Australia Economy).
To control the unemployment and inflation both the nations have systematic government structure along with the useful fiscal and monetary policy. Australia consists of the House of Representatives, Senate, and queen where parliament passes the laws. Parliament develops different policies that redirect the spending of the administration towards growth and jobs. The monetary policy focuses on the problems including price stability, employment rate, welfare and prosperity of the economy. Canada has both the constitutional monarchy and queen as the head of the state. Prime minister is the ruling body of the government. He ensures the establishment of policies to enhance the growth and living standards of the people. Canada’s monetary policy has two main objectives to achieve. There are more concerned about the flexible exchange rate and maintaining the inflation rate. Both countries understand their problems and economic factors behind these problems. Therefore, both are trying to harness maximum potential from both the fiscal and monetary policy.
The analysis of international relation indicates that both countries have a strong trade relationship with other nations and free trade is an effective factor for the economic growth of the nation. The main exports of Australia are BHP Billiton (diversified metals), Fortescue Metals Group (iron, steel), oil, and gas. While the primary imports include car, computer, broadcasting equipment, and delivery trucks. China, Japan, South Korea, and India are the topmost trade partners. As Australia has a strong relationship with Asian countries, the country is negotiating with these countries and encouraging FTA to increase free trade ADDIN ZOTERO_ITEM CSL_CITATION {"citationID":"vvlco0uQ","properties":{"formattedCitation":"(\\uc0\\u8220{}Australia\\uc0\\u8217{}s Trade Balance\\uc0\\u8221{})","plainCitation":"(“Australia’s Trade Balance”)","noteIndex":0},"citationItems":[{"id":239,"uris":["http://zotero.org/users/local/mlRB1JqV/items/RMPAGVLG"],"uri":["http://zotero.org/users/local/mlRB1JqV/items/RMPAGVLG"],"itemData":{"id":239,"type":"webpage","title":"Australia’s trade balance","container-title":"Department of Foreign Affairs and Trade","abstract":"Australia's trade balance is the difference between what we export and what we import.","URL":"http://dfat.gov.au/trade/resources/trade-statistics/pages/australias-trade-balance.aspx","language":"en-us","accessed":{"date-parts":[["2019",4,11]]}}}],"schema":"https://github.com/citation-style-language/schema/raw/master/csl-citation.json"} (“Australia’s Trade Balance”). Canada imports vehicles, machinery, electrical equipment, and mineral fuel. Famous exports include crude oil, petroleum gas, and coal. Main trade partners of Canada are the United States, China, and the United Kingdom. Canada is the largest exporter of crude oil to America therefore free trade policy as NAFTA is beneficial for the country. However, Canada is also trying to negotiate with China on FTA which can create difficulties for the country because of the trade war between America and China. The currency of Canada and Australia is Canadian dollars and Australian dollars. Canadian dollar is stronger than the Australian dollar. The fundamental factor contributing to the difference is the relationship between Canada and America in terms of trade.
Conclusion:
Australia and Canada are both developed countries with their own unique features and economic problems. Canada is better in terms of GDP, growth rate, trade, exchange rate, and pursues the expansion phase of the business cycle. Besides, Australia has stable economic growth. Its economy is improved in the framework of GDP per capita, unemployment rate, inflation, living of standards but somehow it is facing the recovery phase of the business cycle. Both the countries have effective fiscal and monetary policy and trade relationship is also positive. It cannot be concluded which country is better but it is obvious that they are looking forward to utilizing all the best opportunities to increase economic growth.
Works Cited
ADDIN ZOTERO_BIBL {"uncited":[],"omitted":[],"custom":[]} CSL_BIBLIOGRAPHY Australia Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. //www.heritage.org/index/country/australia. Accessed 11 Apr. 2019.
“Australia’s Trade Balance.” Department of Foreign Affairs and Trade, http://dfat.gov.au/trade/resources/trade-statistics/pages/australias-trade-balance.aspx. Accessed 11 Apr. 2019.
Canada Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. //www.heritage.org/index/country/canada. Accessed 11 Apr. 2019.
Christopher Kent: The Business Cycle in Australia. p. 11.
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