Summary
Discuss About The An Evolutionary Macroeconomic Explanation.
Australia is one of the mixed developed nation that has been facing going through its 27th consecutive growth year, which makes it stand out from the crowd (Foster 2015). Owing to the large natural resource, Australia is accounted for the most of the coal and iron export in the world till the days, when the Asian countries like China were silent (Giles et al. 2015). Once the international market being captured by the Chinese mining product producers, then the economic condition of the Australian mining industry started to deteriorate (Wright et al. 2016). Under this situation this report is meant to provide in-depth details regarding the Australian mining industry through utilising the various models sourced from the different source
Considering the selected article it can be seen that the Australia has been falling apart from its desired position of becoming the market leader in the mining product export due to the fact that Australiana mining industry has ran out of the boom in the present date (Duke 2018). The economy has been now focusing on the energy export as the substitute product of the mining industry, which is aimed to provide the economy much amount of boost towards prosperity.
Australia has potential to become the largest power exporter of the world with the presence of LNG resources in the country. Considering the figure 1, it can be seen that, if the economy moves from mining goods to export service, then the opportunity cost will be lower compared to sticking with the core mining product.
Figure 1: PPF of Australian mining industry
Source: (Olav, Gael and Fuvya 2015)
The reduced amount of the opportunity cost serviced tom the Production Possibility frontier is certainly impressing, however it does not indicated the ideal time or optimal production amount of the natural resource trade off. Thus according to the selected article, it would be ideal to shift to the LNG export as soon as possible because the iron and coal export market has been evaporated for the Australia for the present time being (Duke 2018).
Considering the second resource of this research it can be seen that, it has been argued by the reporter, that the next mining boom in Australia will be driven by the tech metals. as the demand of the Australian mining resources are failing in the international market due to the presence of the suppliers like china, who can provide more goods at smaller price as compared to Australia (McHugh 2018). Demand of the Australian mining good has been falling for the coal and the iron ore, however, if the tech metals can be considered, then it is on rise.
Analysis
From the selected article, it can be seen that the demand of the Australian mining product has been falling however, if it focuses on the production of the tech metals, then it can move towards a better situation.
Figure 2: supply and demand framework of the Australian mining industry
Source: (Created by Author)
Considering the figure 2, it can be seen that, as the supply of the tech metals increases, it will provide the Australian mining industry much needed boom. With the shift of the supply curve from S1 to S2 and to S3 further will reduce the price, enhance the demand of the same and lead to rise in the overall surplus of the economy, in addition it will enhance the producer surplus too, with the enhanced market share (Azevedo and Leshno 2016).
Selected article highlights that incoming price of all the Australian mining product will be falling as the economy has been producing more mining goods compared to before which will lead the price to fall.
Considering the report from the newspaper report it can be seen that in coming years coal price as well as the price of iron and gold will fall substantially leading the economy towards equilibrium, where the price of the Australian mining products will be lower (Long 2018). With the presence of strong governmental hold on the mining industry, and the investment from the private parties will help the economy to face higher demand along with higher supply, which will form the new market equilibrium.
Figure 3: market equilibrium
Source: (Wang, Ge and Han 2017)
From the chosen figure it can be seen that the market equilibrium can occur at the point where supply (s) and demand (d) intercept with each other. With the rising demand and the falling price of the Australian mining goods, equilibrium will take place soon, because it will crowd out the recent demand-supply gap in the economy (Mikesell and Whitney 2017).
According to the selected article it can be seen that the Australian mining jobs are gaining momentum again with the rise in the demand of the Australian minerals in the world market. Considering the market strategy of China, Australia has started to label their products as premium quality output, which can compete with the Chinese superior quality steels (McHugh 2018). It has enhanced the sale of the same and through the inelastic demand of the premium product market Australian mining industry has been enjoying the profit too.
Market Equilibrium
considering the selected article it can be seen that the demand of the Australian mining product is not falling as before owing to the inelastic demand of the same, where the price change cause little amount of change in the demand of the output.
Figure 4: inelastic demand
Source: (Nkomo and Goldstein 2017)
As it can be seen from the figure 4, demand for the Australian mining product has fallen pretty less compared to the change in price, and on the other hand revenue for the firm has been rising, that can be shown from the rising share prices (McHugh 2018).
Considering the selected newspaper article published in the Sydney Morning Herald, it can be seen that Australian mining industry has went through various turmoil over the time. However, presently it has been increasing at a sustainable rate with the growth of the confidence among the coal miners.
Figure 5: Rising share price of Australian mining products
Source: (Long 2018)
As the article has highlighted in the figure 5, rising share price of the mining industry share price has germinated hope among the stakeholders as well as among the miners that the Australian mining industry is going to revive in the coming days soon.:
As it can be seen from the published report that the share price of the coal mining industry in Australia has been rising at a sustainable rate in recent quarter of the 2018. Which highlights the positive flow of the demand for their Australian mining products both in the domestic as well as in the foreign market (Latimer 2018). With the rise in the share price, utility level of the workers has been enhanced to a large extent, which according to the article is crucial for the success from this planet.
Conclusion:
The report has found that the Australian mining resource has high potential to grow in future, however, presently it has been suffering from the vast amount of international competition that has been mainly sourced from the Chinese economy. Though the economy has been trying its best to hold its control over the international coal market, it has failed to do so, in presence of the superior Chinese products at lower cost. Considering the inherent economic theories, it can be found that the economy has been suffering from fall in demand as well as the lack of labour has been raising the price of the Australian mining product. Thus the opportunity cost of producing mining output is loss and in future the issue is going to be large if not addressed properly.
Reference:
Azevedo, E.M. and Leshno, J.D., 2016. A supply and demand framework for two-sided matching markets. Journal of Political Economy, 124(5), pp.1235-1268.
Duke, J. (2018). 2018 ‘the end’ of resources boom as commodity price drops bite. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/the-economy/2018-the-end-of-the-resources-boom-as-falling-commodity-prices-bite-20180107-p4yyaa.html [Accessed 25 Apr. 2018].
Foster, J., 2015. The Australian growth miracle: an evolutionary macroeconomic explanation. Cambridge Journal of Economics, 40(3), pp.871-894.
Giles, L.C., Whitrow, M.J., Davies, M.J., Davies, C.E., Rumbold, A.R. and Moore, V.M., 2015. Growth trajectories in early childhood, their relationship with antenatal and postnatal factors, and development of obesity by age 9 years: results from an Australian birth cohort study. International Journal of Obesity, 39(7), p.1049.
Latimer, C. (2018). Confidence returns for Australian coal miners. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/the-economy/confidence-returns-for-australian-coal-miners-20180116-p4yyj7.html [Accessed 25 Apr. 2018].
Long, S. (2018). Adani’s Carmichael mine will cause global coal price drop: report. [online] ABC News. Available at: https://www.abc.net.au/news/2017-05-09/adanis-carmichael-mine-will-cause-global-coal-price-drop-report/8505564 [Accessed 25 Apr. 2018].
McHugh, B. (2018). Number of mining job vacancies up 70 per cent on last year. [online] ABC Rural. Available at: https://www.abc.net.au/news/rural/2017-07-05/mining-oil-gas-job-numbers-rising-commodity-prices/8676116 [Accessed 25 Apr. 2018].
McHugh, B. (2018). Why the next mining boom will be driven by tech metals. [online] ABC Rural. Available at: https://www.abc.net.au/news/rural/2017-04-17/next-mining-boom-in-australia-is-tech-metals/8443172 [Accessed 25 Apr. 2018].
Mikesell, R.F. and Whitney, J.W., 2017. The world mining industry: Investment strategy and public policy. Routledge.
Nkomo, J.C. and Goldstein, H.E., 2017. Energy price responsiveness in Zimbabwean mining and manufacturing: a disaggregated demand analysis. Journal of Energy in Southern Africa, 17(3), pp.49-57.
Olav, L., Gaël, R. and Fuvya, N., 2015. Low Government Revenue from the Mining Sector in Zambia and Tanzania: Fiscal Design, Technical Capacity or Political Will?.
Wang, X., Ge, J., Li, J. and Han, A., 2017. Market impacts of environmental regulations on the production of rare earths: A computable general equilibrium analysis for China. Journal of Cleaner Production, 154, pp.614-620.
Wright, M.H., Matthews, B., Arnold, M.S.J., Greene, A.C. and Cock, I.E., 2016. The prevention of fish spoilage by high antioxidant Australian culinary plants: Shewanella putrefaciens growth inhibition. International journal of food science & technology, 51(3), pp.801-813.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
