Export
Issue No. 15 - February/March 2004
Get Out of Here!
why SA needs exports
Why does South Australia need to export? For the same reasons as it is important for Australia to export. There are both macroeconomic reasons and microeconomic reasons. In macroeconomic terms, increased exports help us pay for our imports as our economy grows. Exports also grow prospects for the state and for the nation and creating export industries helps assist the workers by providing high quality jobs with good career prospects. Australia is a small country with a limited domestic market, so exporting is the only way in which we can grow and take advantage of economies of scale. And this is especially important for a state like South Australia that has a relatively low population
There are also microeconomic reasons why SA needs to export. By exporting overseas we compete with the best companies in the world and are therefore driven to be innovative and use the most modern technology and management practices. It is like playing ‘away games’ in sport. Only the very best teams win on the road as well as when they have the security of their home ground. This enables firms to increase productivity and therefore raise living standards for Australians overall. Like SA’s great sporting teams winning grand finals, SA exporters strive for excellence in international markets.
Home ground advantage
The main rationale for trade is what economists call ‘comparative advantage’. It is argued that if we specialise in what we are good at and trade with another nation for what they are good at then both nations will ultimately benefit. These mutual benefits are termed ‘gains from trade’ by economists.
There are also competitiveness reasons for exporting. As we have to compete with more firms in the global market we are likely to strive for the best business practices, most innovative techniques, best use of technology and so on. It’s a bit like the Adelaide Crows and Port Adelaide joining the AFL. Competition helps raise skill levels a...
