“Thanks to The Global Financial Crisis, the Concept of Global Business has Past. Businesses in Our Country Should Now Focus on Regional Opportunities."

Thanks to the global financial crisis, the concept of global business is past. Businesses in our country should now focus on regional opportunities. Given the current economic environment, this essay aims to disseminate the arguments both for and against this statement. Since the day, liberalization and globalization came into being, doing business as in more than just the local country has been the trend. Local businesses have been fascinated of opening operations across the globe to benefit from the globalization. However, as the recent recession crept into one region, it spread to all the parts of the world due to this globalization only. Now, when the world has come out of the recession it is facing a tough challenge of growth momentum and it is here that this topic plays an important role.

It does not always happen that a business flourishes just on the basis of regional opportunities (Hill, 2004). A balanced dependency on exports should also be there so as to finance the current account deficit. A situation where economy is closed as that of North Korea is also not desirable. Australia being a mixed economy deals in both imports and exports. The major exports of Australia are wool, commodities, services and mineral resources.  Total Exports in the year 2009 was $245 billion i.e. 9 percent lower than 2008. The major cause of this downfall was the recession which affected the nations globally. The exports for the year 2009 constituted of Agriculture (5 %), Mining (38%), Manufacturing (33%) and Services (24%) (innovation.gov.au, 2010). Many of its main markets like China, Japan and USA were reeling under recession. The lower demand of goods from these countries resulted in the loss for the nation’s exporters. So a total dependence on exports will lead to a higher loss if country’s earnings are fully arising from exports. If we look from the other prospective wherein a nation believes in only imports, it carries a risk of getting uncoupled from the world economy. It makes it almost impossible for its current account to be financed. Export led economies tend to gain the most in times of boom where businesses flourish round the world (Malkin, 2009).

  Learning a lesson from the year 2008 and 2009, the local people and the government itself has emphasized on exploring unexplored areas like the regional business opportunities. The huge Demography of Australia and around 75% of Australian land being unexplored opens a huge path for success of Australian economy in the future. The strength of Australia’s economy has been highlighted in last couple of years by its ability to withstand a number of internal and external events, including a major drought and the Asian financial and economic crisis (Rudd, 2010). As a result of the continuous governmental policy reforms being implemented since the 1970s, Australia today has a sound, stable and modern institutional and regulatory structure that provides certainty to business and offers a welcoming destination for investment. According to the World Bank, Australia ranks higher than many countries for the investors to start a business, with regulatory procedures taking just two days. Even the regional opportunities are huge. The country possesses huge mineral resources. Large number of MNC’s like BHP Billiton etc have formed base in Australia because of this. In spite of having all this, the regional opportunities still remains very high for local businesses. The business environment in the country is very congenial for its growth because of the simplified regulatory issues. But the economy is still suffering from capacity constraints such as adequate infrastructure and required skills. The ports are not fully developed which leads to queuing of ships at the time of export. This acts as opportunities for businesses to grow by investing locally rather than by exporting where the risk of default is still very high. According to the International Monetary Fund, in developed countries like Australia, an increase in the public infrastructure stock by 1 percentage points will lead to an increase in output by around 0.2 percent. The government has embarked on the biggest nation building infrastructure program in the country's history (Stafford, 2010):

- A $36 billion transport infrastructure plan including doubling investment in roads, quadrupling investment in rail and investing in the nation’s ports

- A $43 billion investment in a National Broadband Network – the infrastructure of the 21st century that will deliver super-fast broadband ,turbo-charging businesses and transforming their classrooms and their hospital (dfat.gov.au, 2010). 

Because of tremendous government spending the opportunities within the country for the local business is growing. The Australian government policy of maintaining macroeconomic stability through countercyclical fiscal policy is also helping the economy to grow.

Critical analysis of arguments presented for and against the face that businesses should focus on local regional opportunities has unveiled that governments face a difficult decision in times of boom. Nations, who have only imports and no exports at that time, earn a surplus in their current account. In times of recession the underlying statement is true where government and exporters benefit and is decoupled from external default risk. So the best policy for any government who have learnt a lesson from the recent global crisis is to form a balanced policy and a flexible regime of regulations changing as per the economic conditions (psdglobal.com, 2010). So, just saying that when we are in recession we need not focus all attention towards regional operations but have a more balanced approach that can be tweaked a bit based on the scenario existent therein.

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