Top 100 CEO Interviews
Issue No. 18 - August/September 2004
Why South Australia Needs Exports
by Tim Harcourt
Why does South Australia need to export? In macroeconomic terms, increased exports help us pay for our imports as our economy grows. In microeconomic terms, by exporting, 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’s 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. Like SA’s great sporting teams, SA exporters strive for excellence in international markets, increasing productivity and raising living standards for all South Australians.
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.
Competition in a bigger marketplace helps raise skill levels and intensity. By playing in the AFL, South Australian footballers compete with the best and our standards improve. Similarly, the Victorian teams benefit from our entry and are also forced to lift their game. Like the AFL, competing more widely through exporting ultimately raises skills, standards and innovation.
Another economic reason for exporting is knowledge transfer. Economists argue that the development of knowledge drives modern economies. If SA firms are exporting, they are more likely to be exposed to international trends in technology, product design, and consumer behaviour. Their knowledge and access to technology will potentially spill over to the rest of the economy. This will lift the competitive performance of all firms and improve the efficiency of the South Australian micro economy.
International evidence also shows that exporters enjoy faster sales and employment growth than non-exporters, enabling a higher rate of survival and...
