The UN

- Although best known for peacekeeping, conflict prevention and humanitarian assistance, there are other roles of the UN
- In Sept 2015 the UN adopted the 2030 agenda for sustainable development called millennium development goals established pals
and targets. The first goal is to “end poverty in all its forms everywhere”

The OECD
- The OECD is based in Paris and engages in research, consultation and coordination of a range of economic, trade and development
issues.
- It published regular reports such as the OECD economic outlook on each members economic performance and prospects
- The OECS is a reliable source of statistica, economic data and social data
- The OECD makes policy recommendation to improve the economic performance of its member nations

The influence of government economic forums

- There are global government economic forums that influence world trade and economic policies
- World leaders (presidents, prime ministers, treasurers, heads of central banks) meet to coordinate policies

G20
- The G20 was established to bring together important industrialised and emerging economies to discuss key issues in the global
economy
- The G20 is the main forum for international economic development
- It promotes discussion between industrial and developing countries on key issues related to global economic stability
- Australia hosted the G20 in brisbane in Nov 2014 and has been a member since the start
- The 2021 meeting of the G20 is taking place in Rome (Oct 2021)
- The G20 same about because G7/8 wasn't truly global
- Member countries of the G20 represent around 80% of the world's economy, 75% of the worlds trade, and 60% of the world
population
- They include the major advanced and emerging countries in the world - 19 countries plus the EU
- Key issues discussed at the G20 are trade and investment, innovation, terrorism, Covid 19, and the environment
- Australia has played its part in all of these discussions and initiatives
- The G7 included Canada, France, Germany, Italy, Japan, USA, and UK (and Russia which has been out since 2014)
- The 2021 meeting was held in cornwall, england and the biggest issues were the general agreement to mace TNCs pay their fair
share of tax in countries and the global health system in light of Covid19

Trading blocs, Monetary unions and Free Trade Agreements

- Economic integration is the liberalisation of trade between countries and the growing dependency upon each other
- A trading Bloc occurs when countries enter preferential trade agreements
- These countries may have free trade between themselves and may impose tariffs on imports from the rest of the world
- Australia is a member of the ASEAN and APEC blocs
- A trading bloc is beneficial if there is trade creation rather than trade diversion within regions
- The law of comparative advantage in relation to trade should still apply if deciding whether or not it is beneficial to trade
- Monetary unions are formed when groups of countries share common currency such as the Euro (in the EU) and a single market
where there is free movement of labour, recourses, and capital
- With the EU monetary union there is a coordination of Monetary policy through a single central bank called the european central
bank (based in frankfurt)
- However, the key question roday surrounds the future of the EU
- What is the future of the Euro as a currency?
- Will it survive as the world's only monetary union?
- Free trade agreements (FTA’s) can be bilateral or multilateral such as a regional agreement
- Under a FTA, trade barriers such as tariffs are reduced or abolished between countries in the agreement
- However, they may retain restrictions against non-member countries

Advantages and disadvantages of multilateral and bilateral trade agreements

- The advantages of trade agreements are the same and the advantages of free trade itself.
- Two of the main benefits are:
- Increase economic growth because countries increase their trade [economic growth is C+I+G+(X-M)]
- Political benefits as agreements promote closer relationships between countries
- A disadvantage is trade diversion - the global economy may become divided along regional lined whereby trade with non-
member countries decreases but overall trade doesn't actually increase - it simply shifts from one trading partner to the other
- Bilateral trade agreements are always more specific
- They come before multilateral trade agreements which are often more generic

EU
- The european union is a union consisting of most european countries
- The EU has a common single market with a single currency (the Euro) manages by the European central bank
- There are common trade, agricultural and migration policies often referred to as the Eurozone
- In 2016 britain decided to leave the EU in a move that has been called the ‘Brexit’
APEC
- The Asia pacific economic cooperation is a multilateral trade agreement formed in 1989 in canberra
- APEC is huge and, as such, the significance of it as a trading bloc had declined
- Today it tends to deal with other issues such as terrorism and climate change
- APEC leaders meet annually and the broad goals are trade liberalisation and technical cooperation to facilitate development
- Australia last hosted APEC in sydney 2007

NAFTA (now called USMCA)

- NAFTA is Canada, Mexico, and USA
- The NAFTA agreement centres on agriculture and manufacturing
- This is an important trading clov because it includes the USA and there is access to the american markets for the smaller
economies Canada and Mexico
- However, NAFTA may have created trade diversion rather than have increased trade as a whole
- Under the agreement many american manufacturing firms simply relocated to mexico to take advantage of cheaper labour
- President trump called it “the worst trade deal in history” and a “catastrophe”
- He claimed that canada used NAFTA to treat America unfairly with high tariffs and by dumping huge surpluses of produce in the
USA, while mexico provided cheaper labour to american companies and encouraged them to relocate

ASEAN
- ASEAN is an agreement between SouthEast Asuan countries
- The broad idea is to encourage trade between these countries
- ASEAN is a major free trade area but it does not include CHina
- Australia and NZ joined in 2009 and it's called AANZFTA (ASEAN - Australia NZ Free trade agreement)

Regional Comprehensive economic partnership (RCEP)

- RCEP is a regional free trade agreement involving Australia’s and 14 other indo-pacific countries
- It is a comprehensive free trade agreement covering trade in goods and service, investment, economic and technical cooperation
- It creates new rules for electronic commerce, intellectual property, government procurement, competition, and small and
medium sized enterprises
- RCEP was signed in November 2020 by ministers from 15 countries

Protection
- Protection is defined as the use of artificial barriers that restrict the free flow of goods and services in international trade i.e tariffs
- It can be government assistance or taxes on local imports (tariffs) that are aimed at giving local producers advantages over
competing foreign companies

Reasons for protection

- Infant industry argument: - involves helping out industries which are staring out for a shot time until they are able to compete or
survive on their own without the protection of the government from large, established international companies
- Domestic employment - if overseas countries offer cheaper production costs, the often domestic jobs are at risk. To prevent job
losses is a valid reason given for imposing tariffs and giving subsidies, especially in either manufacturing or agriculture
- Domestic employment is generally ‘the number one’ reason for any form of protection
- However, protection doesn't really save jobs in the longer term if the industry is inefficient
- It just attempts to save jobs in the favoured industry in the shorter term and it potentially reduces jobs in all other industries
(opportunity cost)
- Protection is a short term redistribution from the efficient to the inefficient and therefore cane make the economy less efficient in
the longer term if resources are diverted for too long
- Its a question of balance: in the short tem, jobs may need to be saved, but in the longer term, the industry itself needs to become
more efficient to compete on a global scale
- Dumping - if a country has an oversupply of goods, it could dump excess products cheaply on a foreign market thus damaging local
businesses and even potentially forcing them to close down. The local country may then impose a quota (a limit on the number
imported) to protect their industries
- Defence - This means either defence of the nation (in the event of war) or defence of a culture e.g Italy with parmesan cheese,
France with champagne. It is also a form of national security (especially during war) to also have your own goods, including
weapons, rather than rely on imports. It could also be argues that having your own vaccine production during a pandemic is a
form of defence

Methods of protection
- Protection includes the following: tariffs, quotas, subsidies, bans, local content rules, and export incentives
- Tariffs - some advantages of imposing tariffs/tax on imports include
- Domestic firms may increase their sales
- Domestic firms can increase the price at which they sell to consumers
- Workers in domestic firms gain ‘job security’ but only in short term
- Government gains revenue
- Local resource suppliers increase sales
 - Imports may decrease thus improving the current account section of the balance of payments
- Some disadvantages include
- Consumers pay more goods and services which may lead to imported inflation
- Consumption quantity may fall because of the higher prices
- Other industries may pass on the higher costs if they are in the supply chain
- Long term inefficiency of local industries if they are protected too long

Effects of Protectionist Policies on the Domestic Economy

- Local industries gain in the short-term but in the longer-term protection distorts resource allocation and income distribution;
away from efficient industries to less-efficient industries.
- Australia moved away from highly protectionist policies to allow the economy to be exposed to international competition. The
‘tariff wall’ was gradually torn down from the mid-1980s.
- Inflation may increase as a result of the tariff on imported goods (called imported inflation). If inflation increases, then wages may
increase to keep up with rising prices which in turn leads to an increase in the cost of production.
- Economic growth may be slower as the resources are not used efficiently. Exports therefore may be lower because the protected
industries may not seek overseas markets and are not as competitive.
- The longer-term microeconomic effects of protection tend to be negative. Some industries may never become efficient as they
remain less innovative. In short, productivity gains may never occur – therefore, in general, the economic theories of David
Ricardo from 200 years ago are valid today. In summary, Ricardo’s contribution was to introduce comparative advantage:
specialise in what you are good at and then trade.

China’s Economic Growth Rates

- China’s growth rate was about 10% per year for approximately 20 years until 2007 (when the GFC hit). Economic growth has
fluctuated between 6% and 7% in recent years (remember Australia averages about 3%) but in 2020, with the effects of Covid and
the tariffs imposed by the USA, it fell to 2.3%.
- China’s economy slowed in recent months due to weak domestic demand caused by a real estate downturn, electricity shortages
that have slowed industrial output, and weak consumer spending due to Covid.
- China is generally called an ‘emerging country’ i.e. there is still room for economic development, whereas Australia is a developed
country and therefore it is not possible to achieve very high growth rates. However, these definitions are never precise or
universally agreed.
- In China, Gross Domestic Product is divided by three sectors: Primary (about 10%), Secondary (about 40%) and Tertiary (wholesale
and retail trades, transport, storage, postal services, finance, real estate, hospitality, catering etc).
- China considers itself as a “developing country”. The WTO does not define "developing country” and it is up to the individual
countries to allocate themselves. Under WTO rules, developing countries are given special provisions such as longer time periods
for implementing agreed changes
- The World Bank defines a "developed country” by setting a threshold for gross national income (GNI) per capita at about
$US12,500. China's GNI per capita is about $US10,500
 - Strategy 5: When the GFC slowed China’s economy and the world economy, the Chinese Government used massive fiscal stimulus
to build infrastructure projects and encourage export growth.
- Evaluation and Influence: China’s exports grew by an average of 20% between 2005 and 2010 but have slowed down post GFC but
are picking up strongly now post Covid. China operates a trade surplus with the world – it sells more to the world than the world
sells to China.
- Machines, computers and electrical products accounted for almost 60% of Chinese exports in 2020. Labour-intensive products
such as clothing and plastic products made up another 20%.

China’s Currency – The Yuan

- China’s central bank (the People’s Bank of China) generally pegs the Yuan to the $US. The Chinese central bank sets the value of
the Yuan on a daily basis at below real market value.
- The USA has argued that China needs to integrate more with the global financial system and therefore should allow the Yuan to
trade more freely, and thus increase in value.
- The IMF in Nov 2015 included the Yuan in its ‘elite club’ of major currencies. The Yuan, also known as the Renminbi, was added to
the IMF’s group of international reserve currencies. To be a part of this ‘club’ carries no particular conditions as it is largely
symbolic.
- The Chinese Government has reserves of foreign exchange (mainly $US), about $3.2 trillion, according to the People’s Bank of
China (PBOC). China's today currency is lowest and the USA labelled China as a currency manipulator (about 6.5 yuan = $US 1).
- In 2019, US President Trump imposed a 10% tariff on $300 billion worth of Chinese goods, effectively hitting all of China's imports
to the US with tariffs because they were too cheap.

- Strategy 6: The Yuan (CNY) is not freely traded and the government limits its movement against the US dollar.
- Evaluation and Influence: A weaker Yuan makes Chinese exports more competitive (cheaper). The USD/CNY exchange rate, in
addition to being an indicator of relative economic strength, has a direct impact on each nation’s economy by affecting the value
of imports and exports.

- In general, a higher exchange rate makes a country’s exports more

expensive, which can reduce demand for them. But a higher exchange rate
makes imports, in particular energy products, cheaper, potentially
increasing demand in the longer run and helping to hold down domestic
inflation (import inflation).
- China has a weaker Yuan. What does this mean? Imports into China are
more expensive and therefore discouraging consumption of those imports
in China. Chinese exports are therefore cheaper which is what President
Trump argued against and in return imposed the tariffs.
- Currency manipulation is also possibly responsible for jobs lost in the USA
and other developed countries i.e. the world is encouraged to buy China’s
manufactured goods instead or contract out their manufacturing to China.

Before tariff
- Consumer demand (e1)
- Local suppliers at that price can only supply Q1
- The difference between Q1 and Q2 is made up by imports

After tariff
- Consumer demand contracted (e2)
- Local suppliers at that price can now supply Q3
- The difference between Q3 and Q4 is made up by imports
- Overall less imports and more local production

- KLMN represents tax revenue from tariffs

- The tariff is from p-p1 (k to N) and the amount of imports after the tariff is
from (k to L)
- Mathematically (k to N) x (K to L) = tax revenue from tariff
 - For $10 - 100 - 400 = imports
- For $15 - 200 - 300 = imports
- If the tariff is $5 (15-10); quantity of imports at this price is 100 units (300-
200); therefore tariff raises $500 (5x100)

Quotas
- These are legal limits on the quantity of goods which can be imported. It’s an
actual number. It restricts the quantity supplied that can be imported.

2017 HSC

Answer is B

Explanation
Quota is a number. Less competition, less products into the country (imports) and therefore price will increase.

2020 HSC

Answer is A
Explanation
Quota is a number. Reduced quantity of wheat, less competition for wheat and therefore an opportunity for price to increase.

Subsidies
- Definition: financial assistance paid to domestic producers such as
farmers and manufacturers to allow them to increase supply.
-
- Subsidies cause:
- A shift in supply; increase from S1 to S2
- Local producers are able to produce more because of the
government assistance, therefore they should earn more
revenue
- The quantity of imports should decrease as a proportion of
market share
- Price falls from P1 to P2

- The possible advantages of using subsidy over tariffs are:

- They may encourage exports
- They are easier to remove than a tax (governments like tax revenue)
- There is a price advantage for local consumers and therefore less inflationary pressure (tariffs increase price of imports
therefore inflation)
- It is more visible because it could be announced in a government budget, whereas a tariff could be hidden as a tax (political
benefits)

- Tariff: Government gains money

 - Subsidy: Government gives money

Value of a subsidy
-
- The value of a subsidy is the distance from the original supply curve to the new supply curve i.e
S to S1, which on the diagram is the distance A to B

Local content rules

- Definition: a minimum percentage in certain industries must be locally made
- Television channels must show a certain percentage of locally produced content in prime time,
such as home & away, Better homes & gardens, Master chef etc. to protect local jobs such as
actors, directors, journalists, producers etc.
- Previously the car industry had to make available for sale a certain number of new cars that
were made in australia each year

Export incentives
- These can vary between industries but some examples include: Tax concessions, an export grant, and help from Australian Trade
and investment Commission (Austrade)
- Austrade is the Australian Trade and Investment Commission, a government body that helps businesses in importing and
exporting
- It provides advice and guidance on overseas investment opportunities

Effects of Protectionist Policies on the Global Economy

- Many countries subsidise their agricultural industries and this reduces Australia’s access to some markets. It impacts free trade.
- For instance, Australia’s wheat industry is efficient but the USA and EU subsidise their wheat farmers.
- The world price of wheat falls due to the extra supply and this fall in world price impacts on Australian wheat farmers.
- International trade barriers, such as tariffs and subsidies, tend to harm developing and emerging economies who export their
agricultural products and some of their manufactured goods.
- Protectionist policies in general reduce trade between nations and, by extension, economic growth and living standards in the
longer term. [Economic growth formula is C + I + G + (X-M)].
- The policies of protection make it harder for countries to specialise which is what David Ricardo advocated for in the Law of
Comparative Advantage.
- The gains from trade are greater when each country concentrates on exporting the things they are good at and importing the
things they are less efficient at.
- Countries may impose tariffs as a form of retaliation. A government may impose a tariff to punish another country for charging tax
on its exports to them – the classic ‘tariff war’.
- It is colloquially called a ‘retaliatory tariff’ or ‘tariff war’.
- However, this makes matters worse in the long term by requiring people businesses to pay more for imports and it leads to
inflation

Globalisation and Economic development

- There are wide differences between living standards around the world in terms of health, education, life expectancy, access to
fresh water etc.
- It is important to understand and to measure these differences

Differences between economic growth and development Development: Income and quality of life indicators (points 1&3)
- Economic growth is the increase in GDP over time, adjusted for inflation.
- It is a quantitative measure which means that it is an actual number
- When we adjust gdp for inflation, it is called real GDP
- In Australia, the average growth rate in the last 30 years or so has been approx. 3% but covid recessions have seen a recent
decline
- Real GDP is then divided by the population to work out real GDP per capita (per person)
- Alternatively, Gross National Income (GNI) per capita assists in measuring standard of living and quality of life
- Economic development is a broad economic concept that looks beyond the real GDP figure
- Development refers to structural changes in an economy which are longer term changes in the economy
- It is about the economy’s progress
- Development includes looking at things such as whether an economy is an agricultural based society, a manufacturing based
society, or a service based society.
- Quality of life is a broad ranging concept and can include:
- Income level
- Health, life expectancy and medical facilities
- Access to fresh water
- Education levels, including standards of literacy
- Psychological state, happiness of people
- Crime rates and levels of security
 - Social and family relationships
- Quality of environment
- Future expectations of the population
- Climate change
- Balance between leisure and work
- The human development index (HDI) was developed by the UN to measure development
- It takes into account life expectancy, education levels, literacy levels, and real GDP per capita - the HDI is measured out of one
- 0.9 is a fully developed economy and a 0.6 is a developing economy

Wide reading
- The fairfax-lateral economics index, published the SMH every three months, looks at national disposable income, human capital,
depletion of natural resources, inequality of income, healthcare, and work satisfaction
- This is another measure of ‘quality

DIstribution of income and wealth

- The main argument is generally that the rich are getting richer, and the poor are getting poorer
- The rewards of globalisation are not shared equally between countries and within countries
- The global distribution of wealth refers to the comparison of asset ownership between countries, whereas the distribution of
income focuses on people’ annual income.
- North America, Europe, and parts of Asia, including Australia and NZ, are the wealthiest areas of the world

Wide reading
- The world bank measures the poverty line at $1.90 -per-day and then at two more levels $3.20 and $5.50 in other countries to
reflect on national poverty line in lower middle income countries
- The world bank's poverty measure is also multidimensional and includes access to education and basic infrastructure
- About 10% of the world's population lives on less than $1.90 a day, and about 25% below $3.20 and about 40% below $5.50

Developing, emerging, and advanced economies

- Developing economies are characterised by:
- Relatively low income per person compared to developed economies
- Fairly large percentage population still living in poor conditions
- High dependence on agriculture or manufacturing for employment
- Poor infrastructure such as roads, water supply, electricity, and other public goods
- An education system that may not cater for all
- Emerging economies are countries such as:
- Malaysia
- Thailand
- Vietnam
- Indonesia
- China
- India
- Brazil
- Chile
- Russia
- Polan
- Bulgaria
- Romania
- Egypt
- Morocco
- South Africa
- These economies have experienced rapid economic growth in certain sectors and they generally progressed from an agricultural
based economy to an economy that attracts foreign investment
- They generally focus on manufacturing or other industries such as IT
- There is a great degree of convergence (coming together) between economies as the emerging economies catch up
- They are growing at a much faster rate than the advanced economies because of where they started from
- The needs of emerging economies (energy, steel, good quality food) have produced a massive change in the structure of world
trade
- Australia, like other developed countries will continually shift away from manufacturing into areas such as services which are
more characteristic of a rich, well-educated and highly paid economy
- The emerging economies are still known as the ‘manufacturing economies’ while the advanced economies are becoming the
‘knowledge economies’
- Advanced (developed) economies are wealthy economies in the world such as:
- Japan
- Germany
- Australia
- Most of the population is in the ‘middle class’ - individuals with close to or above the average income
General story of progress:
- Underemployed rural workers move to the cities to take up jobs in factories as the economy makes progress
- There may be an oversupply of cheaper labour
- There economy makes simple, low-cost and labour intensive products such as clothing and footwear
- The focus is on exporting these products which are then bought by the richer economies
- The export income goes back into the economy and into sectors such as education
- Manufacturing can now make more elaborate goods, the economy starts to provide services and workers receive higher wages
- The economy transition from developing to emerging and then eventually to advanced

Wide reading
- The IMF in its world economic outlook published in OCT 2021 said it expects global GDP to grow by 6% approx. in 2021 an 5% in
2022
- Beyond 2022 the imf forecast the growth level to be 3%
- The IMF said it was particularly concerned about the different paces of recovery in advanced and emerging economies post covid
- It estimates that advanced economies could exceed their pre-pandemic levels in 2024 but developing countries, excluding China,
could remain 5.5% below their pre-pandemic forecast

Reasons for differences between Nations

- Australia’s commodity (mining) boom from 2003 to 2011 came about because of a shift in the structure of the global economy
where China experienced the ‘new industrial revolution’ as an emerging country.
- China and India are rapidly industrialising and will continue to change over the next few decades. India started growing in the late
1990s and is now the world’s third biggest economy, thanks to software and ICT, and they have virtually bypassed manufacturing
on the road to development.
- In the 19th Century most people in Europe and North America worked on the land or in mines. Then about 100 years ago, more
and more people began moving to the city to work in factories.
- 1.4 million people in Australia worked in factories in 1971 (based on a smaller population). However, it has declined ever since.
- It is important to note that while mining and agriculture are declining in employment numbers, production of food, energy and
minerals is actually increasing because of automation and advances in technology which has made production cheaper.
- The differences in wealth and development in the world are referred to as the ‘development gap’. They occur because every
country has different resources of land, labour, capital and enterprise – the factors of production.
- Advanced economies are characterised by high per capita income, high levels of investment, continuous economic growth etc.
- High population growth rates in developing and emerging economies can lead to more demand for education, health, housing,
employment and transport.
- If population growth is greater than economic growth, then living standards per capita will fall and poverty will increase because
the benefits of growth are spread over a larger number of people e.g. population growth is 10% and economic growth is 2%. The
benefits are spread more thinly.
- High levels of foreign debt may contribute to problems. It leads to higher debt-servicing costs (paying back loans with interest)
which then diverts money away from other essential services.
- Loans may need to be paid to the IMF and this impacts on their ability to spend in other areas.
- Sometimes too an inefficient government can lead to political instability which may cause the rest of the world to lose confidence
in that economy and not invest there.

Effects of Globalisation
- The global economy refers to the increased integration (connection) between economies of the world. The world’s economies are
becoming ‘closer and closer’. Globalisation impacts on all aspects of life and economic activity.
- International convergence (the integration of economies) is an effect of globalisation. Some features of globalisation: increased
trade between nations, easier transfer of finance, increased technology, source cheaper materials overseas and specialisation of
labour.
- Economic growth is another effect of globalisation. While economic growth, economic development and higher living standards
are clearly benefits of globalisation, there is also a greater risk of international financial contagion during times of crisis such as the
GFC or Covid.
- A number of world cities have actively engaged with the globalisation process by specialising in finance, professional and business
services, media and communication industries.
- Globalisation may also provide an opportunity for large-scale operations and for economies of scale to take place especially in
manufacturing.
- However, not everyone has benefited equally from globalisation and the gap between the world’s rich and world’s poor remains
significant.

Trade, Investment and TNCs

- There has been a rapid increase in trade, investment and in the number of TNCs (multinational companies) as a result of
globalisation.
- Trade has created a global web of production facilities which connects many TNCs and countries. Multinational companies
operate across borders and may produce component A in country X and component B in country Y.
- It has led to the rising middle class in many emerging economies such as Brazil, Russia, Indonesia, India, China and South Africa
(BRIICS). They are high growth, emerging economies; this term was originally used by the merchant bank Goldman Sachs.
 - TNCs are having a bigger role to play in society and are therefore having more influence over governments and their policies.
- They are often criticised for taking advantage of poorer countries e.g. taking advantage of lower labour costs and the extensive
natural resources on offer.
- TNCs also take advantage of tax laws because they can choose where to locate their businesses to get the best tax ‘deal’.
Company taxation in Australia is currently at a 30% flat rate for big companies.
- The Australian government has cut this rate to improve Australia’s international competitiveness to 25% for small to medium
companies.
- However, there are some companies that shift income overseas and pay tax in countries where the rate is much lower –
therefore, they earn a lot of income in Australia yet pay very little tax here.
- At the G7 meeting in 2021 advanced economies agreed to implement a minimum company tax rate of 15%.
- How important are Apple, Amazon, Facebook, Google and Microsoft to the world economy? These companies are drivers of
economic integration i.e. bringing the world together. The New York Times in 2017 called them the “Frightful Five”.

Wide Reading
- A study by the US Congress (Dec 2017) showed that Australia’s effective company tax rate was only 10.4% because of exemptions,
loopholes and incentives i.e. the ‘headline’ rate was 30% but the ‘effective’ (real) rate was much lower at 10.4%. The study also
showed that the effective company tax rate in Japan was 21.7%, UK 18.7% and USA 18.6%.
- The political debate focuses on the headline rate, but the economic focus is on the effective rate.

Environmental Sustainability
- Australia exports a lot of primary industry products such as coal and iron ore. The dilemma is always about achieving a balance
between making a profit and acting sustainably.
- Globalisation is indirectly contributing to environmental degradation. As the world moves towards higher and higher living
standards, it is also necessary to consider the environmental impact of all of this economic growth. The key question is: ‘Can we
sustain our living standards?’
- The environmental practices in one country often affect other neighbouring countries. Environmental issues are global and not
isolated to individual countries.
- Big emerging economies will become bigger users of fossil fuels. Agricultural land will need to increase to feed the population and
greenhouse gases will also increase.
- All ecosystems have ‘tipping points’ where, beyond this point, change becomes irreversible. Issues at risk include: species loss,
groundwater depletion and land degradation.