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Case | HBS Case Collection | August 2012 (Revised June 2017)

Australia: Commodities and Competitiveness

by Laura Alfaro, Richard H.K. Vietor, Bill Russell, Hilary White and Haviland Sheldahl-Thomason

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Abstract

For the past few decades, Australia has dealt with the benefits and costs of repeated mining booms—inflation, a housing bubble, a current account deficit and growing dependence on China. Between 1996 and 2007, however, Australia had most of these issues under control and grew at impressive rates, becoming one of the richest of developed countries. Yet competitiveness in its non-mining sectors declined. Since the financial crisis, additional challenges associated with climate change, minerals taxes, migration, fiscal deficits and currency fluctuations have complicated the issues facing both Labor and Liberal administrations, with a very thin majority. Meanwhile, Australia's non-mineral competitiveness continues to recede.

Keywords: commodities; competitiveness; carbon tax; environment; capital flows; current account; mining; Economy; Problems and Challenges; Australia;

Language: English Format: Print 33 pages EducatorsPurchase

Citation:

Alfaro, Laura, Richard H.K. Vietor, Bill Russell, Hilary White, and Haviland Sheldahl-Thomason. "Australia: Commodities and Competitiveness." Harvard Business School Case 713-015, August 2012. (Revised June 2017.)

Related Work

  1. Teaching Note | HBS Case Collection | February 2013

    Australia: Commodities and Competitiveness (TN)

    Laura Alfaro, Richard H.K. Vietor and Hilary White

    For the past few decades, Australia has dealt with the benefits and costs of repeated mining booms—inflation, a housing bubble, a current account deficit and growing dependence on China. Between 1996 and 2007, however, Australia had most of these issues under control and grew at impressive rates, becoming one of the richest of developed countries. Yet competitiveness in its non-mining sectors declined. Since the financial crisis, additional challenges associated with climate change, minerals taxes, migration and an overvalued currency have complicated the issues facing Julia Gillard and her Labor Party, with a very thin majority.

    Keywords: competitiveness; inflation; mining; current account; Exchange rates; trade; capital flows; commodities; environment; carbon tax; Goods and Commodities; Australia;

    Citation:

    Alfaro, Laura, Richard H.K. Vietor, and Hilary White. "Australia: Commodities and Competitiveness (TN)." Harvard Business School Teaching Note 713-063, February 2013.  View Details
    CiteView DetailsPurchase Related
  2. Case | HBS Case Collection | August 2012 (Revised June 2017)

    Australia: Commodities and Competitiveness

    Laura Alfaro, Richard H.K. Vietor, Bill Russell, Hilary White and Haviland Sheldahl-Thomason

    For the past few decades, Australia has dealt with the benefits and costs of repeated mining booms—inflation, a housing bubble, a current account deficit and growing dependence on China. Between 1996 and 2007, however, Australia had most of these issues under control and grew at impressive rates, becoming one of the richest of developed countries. Yet competitiveness in its non-mining sectors declined. Since the financial crisis, additional challenges associated with climate change, minerals taxes, migration, fiscal deficits and currency fluctuations have complicated the issues facing both Labor and Liberal administrations, with a very thin majority. Meanwhile, Australia's non-mineral competitiveness continues to recede.

    Keywords: commodities; competitiveness; carbon tax; environment; capital flows; current account; mining; Economy; Problems and Challenges; Australia;

    Citation:

    Alfaro, Laura, Richard H.K. Vietor, Bill Russell, Hilary White, and Haviland Sheldahl-Thomason. "Australia: Commodities and Competitiveness." Harvard Business School Case 713-015, August 2012. (Revised June 2017.)  View Details
    CiteView DetailsEducatorsPurchase Related

About the Authors

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Laura Alfaro
Warren Alpert Professor of Business Administration
General Management

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Richard H.K. Vietor
Baker Foundation Professor, Paul Whiton Cherington Professor of Business Administration, Emeritus
Business, Government and the International Economy

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View Publications »

 

More from these Authors

  • Teaching Note | HBS Case Collection | May 2006 (Revised November 2019)

    To Float or Not to Float? In Pursuit of the Chinese Dream

    Laura Alfaro, Rafael M. Di Tella and Ingrid Vogel

    Keywords: China;

    Citation:

    Alfaro, Laura, Rafael M. Di Tella, and Ingrid Vogel. "To Float or Not to Float? In Pursuit of the Chinese Dream." Harvard Business School Teaching Note 706-060, May 2006. (Revised November 2019.)  View Details
    CiteView DetailsPurchase Related
  • Case | HBS Case Collection | June 2019 (Revised November 2019)

    Malaysia: An 'Asian Tiger' Reawakens

    Richard H. K. Vietor

    On May 9, 2018, in an extraordinary upset, Mahathir Mohamad again became Malaysia’s Prime Minister. Najib Razak, who had headed the government since 2009, had been swept up in the 1MDB scandal—perhaps the biggest state-corruption incident in history. Although Malaysia’s growth had remained solid since the financial crisis, the scandal undermined the budget, the country’s debt position, and foreigners’ willingness to invest. What was it in the history, culture, and institutional structure of the country that had allowed 1MDB to happen. And could the 93-year-old Mahathir get the country back on track?

    Keywords: Government and Politics; Crime and Corruption; Financial Crisis; Business and Government Relations; Economy; Leading Change; Malaysia;

    Citation:

    Vietor, Richard H. K. "Malaysia: An 'Asian Tiger' Reawakens." Harvard Business School Case 719-073, June 2019. (Revised November 2019.)  View Details
    CiteView DetailsEducatorsPurchase Related
  • Case | HBS Case Collection | November 2019

    Floating the Exchange Rate: In Pursuit of the Chinese Dream

    Laura Alfaro and Sarah Jeong

    In the decades following 2005, China faced significant financial challenges. Inflation spiraled upwards and China’s economy stagnated in the wake of the Global Financial Crisis. The country’s leaders took an interventionist approach to weather the storm, controlling capital and exchange rates. These actions raised criticism from other nations, and in 2017 the U.S. initiated the U.S.-China Trade Wars, which enforced tariffs and requirements for increased transparency. As implications of the trade wars remained uncertain, many wondered whether the central bank would introduce further discreet steps to change the yuan. Would China’s currency appreciate as substantially against the U.S. dollar as predicted by economists? And when would further change occur? The stakes were high; a freer yuan float would impact groups within and outside of China very differently. Would China’s currency then be allowed to depreciate or appreciate if fundamentals required it?

    Keywords: exchange rate; inflation; debt; Currency Exchange Rate; Inflation and Deflation; Borrowing and Debt; China;

    Citation:

    Alfaro, Laura, and Sarah Jeong. "Floating the Exchange Rate: In Pursuit of the Chinese Dream." Harvard Business School Case 320-039, November 2019.  View Details
    CiteView DetailsEducators Related
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