Question

World trade has grown substantially in both nominal and real terms since the end of World War II. The portion of international trade in GDP in Australia was approximately 40% in 2016. The trade has contributed to improve people’s well-being. For example, all the cars on the roads in Australia are imported from overseas as there is no domestic production. Australia also exports iron-ores to other countries to earn foreign currencies. Doing business globally means enhanced competition which often leads to development of technologies and production efficiencies. Global business and exports of commodity from mining industries in Australia have also led to a rapid change in landscape and Australia first people (i.e. Aboriginal) habitants and lives.

Australian government sometimes restricts foreign investment in Australia. For example, the rapidly increased Chinese foreign investments in property markets such as housing and farm has become social issues. Explain positive and negative sides of the government restrictions of prohibiting Chinese investments in the housing market in Australia.

Answer 1

Answer) Globalization though has become a necessity for some time,but still has positive and negative aspects associated with it,as asked in the given case,we will see positive and negative sides of the Government restrictions of prohibiting Chinese investments in the housing markets in Australia as follows

• Positives of Government restriction

1. Basic needs are protected-When foreign investments happen in areas such as housing or farm,they don't care much about feelings of people associated with those lands or farms,they acquire lands with force if it is required.
2. Culture is safeguarded-Houses represents culture and traditions which can be sacred to communities and when someone from a foreign country designs houses or invest in it,it causes a significant harm to that culture.
3. Chances of more safety-Foreign investment may not comply that well with Government guidelines or may look to access loopholes for more profit which might not be the case with local builders.
4. Less damage to environment-Similar to previous point foreign investment may look to damage environment by taking up more green area and can significantly hurt country's long term future

• Negatives of Government restriction

1. Costly-Such restriction can affect efficiency in creating better houses,everthing becomes costly,burden which has to be borne out by final consumer
2. Affecting everything-Such a restriction on one markethas potential to threaten whole relation with the country and can lead to a trade war which could be negative for a country 's economy
3. Monopoly amongst locals-When local contractors know that Government has put such restrictions and they can command any price,they can form a monopoly or worse a cartel or one player absorbing others making market extremely costly and housing a distant dream for many.

So,above are some of the positives and negatives of Government restriction in such cases.

Answer is complete.Thank you!