Reflection

This course has helped to understand how world markets work.  I will have the chance to directly apply the knowledge I gained through study abroad to Australia from July to December.  Most importantly, this class has made me consider the effect of the culture of a country on my interactions within and with people from that country.  It is natural to assume that everybody you come in contact with will be a reflection of those who you have already come in contact with.  Largely, this assumption holds, provided you stay immersed within one culture.  This assumption falls greatly when traversing between cultures.

I do not have a specific topic that I'd really like to learn more about after this class. Rather, I'd like to learn by experiencing, letting the situations I encounter guide what I learn.  This class has prepared me to learn from those situations, considering the varying perspectives, and their effect on my interactions.

Adjusting to the entirely new lifestyle in Australia will be quite difficult.  But I think the most difficult thing over the next year for me will be going away from my friends and family.  I am from 20 minutes away from campus, and have not really been truly separated from my family and other people I care about.  I have built up close relationships here at Kalamazoo College, and I will need to find a way to maintain them through thousands of miles and 12 hour time difference.  It will be challenging, but I believe it will also be worthwhile.

Current Event: Reserve Bank leaves interest rates on hold

http://www.abc.net.au/news/2014-06-03/reserve-bank-leaves-interest-rates-on-hold/5497408?section=business

The Reserve Bank of Australia held interest rates at 2.5% for the tenth straight month.  The bank expressed concerns that the value of the Australian dollar has remained high, even though prices of commodities have significantly dropped.  In particular the price of iron ore has fallen dramatically.  Historically, the Australian dollar has been worth less than it has recently.  The Reserve Bank wants a lower exchange rate to assist in balanced economic growth.  The bank hopes to resolve this issue by keeping steady interest rates, but may look to adjust their inflation rate to bring the value of the Australian dollar down.

Perth City Analysis

Perth has a population of about 1.9 million.  On a U.S. scale, this would place it above Philadelphia, but below Houston.  Within Australia, Perth is larger than Adelaide, but smaller than Brisbane.  This makes Perth a rather large city.  It is the capital of, and only major city in, Western Australia.  This isolation makes it the largest gathering place in the western half of Australia.

Being a higher order city, Perth offers quite a bit that smaller cities would not have.  Perth has sporting teams in the major Australian sports leagues.  Perth offers museums, concerts, and other arts which are not offered in any smaller city around.  Perth is missing out on the highly specialized offerings of an even larger city, such as Sydney.  Sydney has an even wider selection, and is the more popular tourist attraction.

Junkyard Planet by Adam Minter

China has an advantage over India to receive US scrap metal because the scrap is shipped on the backhaul to China.  There is a larger demand for goods exported from China compared to India.  Additionally, it costs less to transport the metal from the US to China, since it is geographically closer.

The chapter discusses the great difference in imported versus exported containers in China: 90% of containers are for exports.  This is a stark illustration of how globalization can lead to huge trade imbalances.  Goods are produced where production costs are low.  This concentrates the production.

Jared Diamond's article (reviewed earlier) examined how human history unfolded.  His themes centralized around the ability to adapt and innovate to exploit the resources available.  Modern transportation is a huge adaptation by society to enable further spread and easier exploitation of resources.

The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

1)  I found the quote " 'It is better to assume that moving goods is essentially costless than to assume that moving goods is an important component of the production process.' Before the container, such a statement was unimaginable" quite interesting.  This quote really demonstrates to potency of the shipping container to bring the world together.

2) The author states that the shipping containers contributed to globalization by greatly reducing the time and money spent transporting and transferring goods around the world.  The containers make large scale shipments easy and fast, and support a wide variety of goods.  They also reduce terminal costs by allowing containers to be moved between modes of transportation quickly and easily without unpacking and repacking the supplies.

3)  Smaller businesses who do not have the manufacturing capacity to ship internationally are the largest losers in the shipping container revolution.  Specialty shops which only produce small quantities have no opportunity to fill a shipping container, and thus do not gain from cheap mass shipments.  Large companies that can fill large orders to all corners of the globe benefit the most.  Consumers also gain because prices are driven down since manufacturers can take advantage of the cheapest production costs without sacrificing much for additional transportation costs.  Workers lose for the same reason, since jobs can be shifted away from the demand.

Current Event: Trade Surplus Falls

Trade surplus falls but still bodes well for economic growth

Australia saw an unexpected monthly drop in exports, with imports remaining steady.  Actual exports fell 2% from expected value, corresponding to a 42% drop in trade surplus.  This change was largely caused by drops in prices of common goods, making it less profitable to export.


GDP = C + G + I + (Ex - Im)

Since exports fell, and imports stayed the same, monthly GDP fell as well.  However, Australia only recently has a trade surplus at all, so the GDP is still growing compared to previous years.

Since international prices of goods exported by Australia fell, demand for goods from Australia fell.  This made Australian exporters less likely to export goods.  Australia recently signed free trade agreements, which reduces the cost of international transactions.  This makes it more profitable to export, even if prices dip slightly.

Transportation

Water Transportation:

Inland waterways are unreliable and do not compete with land and air travel.  However, being an island, there are major ports for external water transportation scattered all around the country.  This provides great opportunities for international exchange of goods, as well as transporting goods within Australia.  Most major cities lie on the coast, providing easy access to water transportation.  There are also ferries running between the mainland and Tasmania.

Land Transportation:

Australia is amongst the leaders in per capita car ownership and usage.  There is an extensive network of highways at a federal and state level which facilitate high volume traffic between major cities.  Roads, both paved and unpaved, are the most common way to transport goods within Australia.  Railroads are available, but more commonly goods are shipped using road trains. Road trains are semi tractors towing two or more trailers.

Map of Major Interstate Highways

Railroads are also commonly used to move goods such as ore and sugar cane, in addition to transporting people.  

Within cities, extensive public transit systems of busses, trains, and watercraft provide transportation to locals and visitors.

Air Transportation:

There are over 300 airports with paved runways in Australia, and more than 100 additional with unpaved runways.  The largest of the airports serve the largest cities: Sydney, Melbourne, Brisbane, Perth, and Adelaide.  Australia is home to several airlines including Quantas, Virgin Australia, and Tiger Airways Australia.