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Australia's economic integration with Asia: Government policy 1983-1996

Cloney, Mark (1998) Australia's economic integration with Asia: Government policy 1983-1996. Masters by Research thesis, Murdoch University.

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Abstract

This thesis identifies and evaluates the policies of the Hawke/Keating Governments that were intended to accelerate Australia's economic integration with Asia (1983-96). A series of influential reports were produced during this period indicating Australia's increasing economic linkages with Asia were guided by an orthodox neo-classical economics view which emphasises the positive effects of market competition and cautions against government 'intervention'. Moreover, these reports were informed by understandings of how the emerging economies of Asia achieved rapid economic growth and offer domestic policy prescriptions derived from such understandings. The Garnaut Report (1989), the most influential of these. concluded that Labor policy-makers would best serve their cause by removing high levels of tariff protection and adopting policies to 'liberalise' the Australian economy.

Labor policy between 1983-96, which reflected this thinking, included the deregulation of the Australian financial system, the privatisation agenda, tariff reduction and aii emphasis on multilateral trade negotiations. This, according to Garnaut and others. was the only policy approach to ensure a more internationally competitive, outward-looking economy best able to capture the markets of Asia in an era of increased globalisation/internationalisation. Central to Garnaut's argument is that once protection is removed from the domestic economy, exports would increase as local firms, subject to greater international competition, are forced to compete in the global market. Liberalisation of the Australian economy is offered by Garnaut et al. as the cure to Australia's perennial balance of payments (BoPs) problems.

An important political point is that such policy prescriptions appeal to various audiences, not all of which are principally interested in Australia's economic relations with Asia.

The thesis critically evaluates this dominant view at three levels, firstly by demonstrating that the assumption of Garnaut et al. of a causal link between domestic policies of 'liberalisation' and increased exports, and therefore an improved BoP, remains highly problematic. Second, it challenges the prevailing 'liberal' conception of Asian development. and the portrayal of the state in that process. Third, arid this is the greater emphasis of the study, it points to the various structural and political factors complicating Australian policymakers' attempts to increase economic links with Asia that are down-played or not even recognised because of the theoretical limitations underlying the neo-classical policy approach.

For example, Chapter 5 presents a case study of Australia's agri-food sector that demonstrates that Australia's high value-added food industry, and its exports to the Asia- Pacific region, are being shaped by factors such as regional tariff and non-tariff barriers. increasing competition from intra-Asian food trade, and by constraints imposed on the structure of the Australian industry by the production and investment decisions of powerful transnational food companies (TFCs), to mention a few. These factors also have a significant impact on Australia's BoPs performance, particularly through their impact on the current account deficit (CAD), and are not easily accounted for by neo-classical free-trade theory argued by Gamaut et al.

As the current Asian financial crisis highlights, Australia's economic integration with Asia, and its economic performance in general, continues to be shaped by political and structural issues far more complex than the simple polar view of tariffs versus free trade led industrialisation that was the cornerstone of economic policy for much of the Hawke/Keating era.

Item Type: Thesis (Masters by Research)
Murdoch Affiliation: Division of Business, Information Technology and Law
Notes: Note to the author: If you would like to make your thesis openly available on Murdoch University Library's Research Repository, please contact: repository@murdoch.edu.au. Thank you.
Supervisor(s): Rodan, Garry
URI: http://researchrepository.murdoch.edu.au/id/eprint/51197
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