Foreign investment vs Local content

Essay by corithians February 2004

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Foreign investment vs Local content:effects on growth indicator

Australian business must strive to improve the production of goods and services in the local economy to increase the economic growth. In doing so, they need a lot of help from the current Government and also from foreign investor. The consequences is that some local ownership of business, especially those small companies, are subject to a higher risk of being taken over by larger foreign companies. However, this can be seen as a relatively small price to pay, in comparison with the amount of the foreign companies will invest into the Australian economy.

The options available to preserve local ownership

Recognizing that increased of capital and technology would benefit Australia, the Australian government should encourages investment by non-Australian companies that contributes to economic growth and employment opportunities and to provide for the review of significant investments in Australian by non- Australians in order to ensure such benefit to Australia.

The population of Australia is approximately 19.5 million and the percentage of men and women participating in the workforce is 72.5% and 55.2% respectively . This is a relatively low population in global standards. A higher population is often seen as more attractive by foreign investors. This is largely due to the promise of a large market and a large demand for their goods and services. In other words, foreign investors "see bigger markets as being good for immediate profits ¡K population growth is strongly correlated with economic growth" .

In order to preserve local ownership, the Australian government should consider excluding foreign ownership from some sectors of the business community. Such areas could include ownership of:

1) Media and publishing;

2) Utilities and Transport; and

3) Mining and Energy.

This will have the key effect of maintaining public ownership of key sectors...