globalisations impact on external stability (1 Viewer)

[hanjoc]

when u look at the indicators of globalisation - has this affected external stability? if so, how. volatility of the $A? increased terms of trade? - ive got no idea but have a feeling this could be asked as an essay...any help would be much appreciated

 

[sub]

not reallt sure...but u also get trade deficits and shit more cos of more trading...also there's the volatilty of the $A, eg Asian financial crisis 97...can screw up economies.
the role of the internaitonal business cycle, if one eco is doing well it spills over into other eco's through higher demand for OUR imports (assuming the other country is doing better...vice versa if we do better than them.)
thats all i can think of now... hope that helps

 

[overthaedge]

In relation to how globalisation has had an impact on Aust. External stability, high global protection in agricultural markets, increased competion on global markets and fluctuations in the int. business cycle have all had negative impacts on Aus BOGS with only 2 small surpluses in the past decade. Furthermore, financial market deregulation allowed aust investors access to foreign capital leading to an explosion in foreign liabilities and ensuring a large net income deficit on the current account. Lastly, speculation on forex markets has resulted in considerable excange rate volatility with the $A the 7th most traded currency.

I hope that helped. Good luck.

 

[Acid]

Three main areas of external stability are:

CAD
Net foreign debt
Exchange rates

Here's a very brief explanation of each:

CAD - Increased CAD as people are importing more.
Net foreign debt - Government/private sector borrowing from overseas to finance its own debt --> increased repayments out of Net Income account --> further blowout in the CAD.
Exchange Rates - Volatile exchange rates as we rely heavily on foreign investor confidence. Since floating of the currency its value has dropped by about 40%