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Foreign Direct Investment in Australia - Essay Example
China's demand for iron ore has driven the growth of Rio Tinto. BHP Billiton, Vale and Rio Tinto, control about 70% of the world's trade in iron ore. Each year they negotiate annual supply contracts with their main customers, and as demand has surged, so has the price…
Demand for goods and services in the Pilbara's state, Western Australia, grew by 11% in 2007. Studies have touted the benefits of foreign direct investment. (China Elections and Governance, May 8, 2008). Chinese investment in Australia's iron-ore business is increasing. Gindalbie, an Australian iron-ore miner, and Ansteel, a Chinese steelmaker, agreed to invest A$1.8 billion in a joint venture to develop a mine in Western Australia in 2007. This new investment translates to5,000 new jobs. (China Elections and Governance, May 8, 2008) Foreign direct investment (FDI) should be free from the strict controls which are implemented by host governments. (Main Idea Statement).
Foreign direct investment has speeded up the economic development of Australia. If the foreign direct investment in the iron ore and coal mining sector continues, Western Australia will need an extra 400,000 workers within 10 years ding to the Australian Chamber of Commerce. Australia has entered its 17th year of uninterrupted growth. The pace of domestic demand that monetary authorities have pushed interest rates to their highest in close to 12 years in order to combat inflation. Inflation has been identified as the country's chief economic ill. Skills shortage and infrastructure bottlenecks at congested ports continue to hound the growing economy. ...