Thursday 22nd Nov, 2018

Advanced manufacturing and professional services the future of Aussie exports: report

Image: Shutterstock
Image: Shutterstock

AUSTRALIA’S new export opportunities lie in building advanced manufacturing capability and capitalising on Australia’s professional services industries, according to a new report from the Department of Industry Innovation and Science.

The Industry Insights – Globalising Australia report, released by the department’s Office of the Chief Economist, shows that future growth opportunities will come from Australia’s manufacturing industry moving towards higher-value processes such as research and development and product design and marketing.

The report also reveals that Australia’s professional and finance industry services, often embedded in our commodities and advanced manufacturing exports, make up almost half the value of all Australian exports.

This is because conventional statistics often understate the economic contribution of services such as value chain logistics and co-ordination, accounting advice to exporters or other business services.

Acting chief economist David Turvey said the report confirmed the importance of supporting industry transition, removing trade barriers, and encouraging innovation to ensuring Australia’s place in the global trade environment.

“Australia is an outlier amongst developed nations when it comes to global trade, mainly supplying raw materials with limited participation in the production of final goods,” Mr Turvey said.

“This is partly due to geography. Australia is on the periphery of trading blocs, while an economy like Taiwan is in the middle of a manufacturing hub surrounded by China, Japan and Korea. But it also reflects our competitive advantages and resource endowments.”

Mr Turvey continued, saying the report shows the Australian economy is adapting to global trade patterns to its benefit.

“Australian manufacturing is restructuring to focus on the high value-add processes like R&D, design and marketing, while lower value-add production activities are offshored to lower wage countries,” he said.

“In addition, the conventional trade statistics understate the importance of services to Australian exports. The statistics show that products exported across Australia’s border are mostly commodities like iron ore or manufacturing products. Yet services make up nearly half of value added in all Australian exports. Put another way, the contributions of Australia’s highly-skilled professional services and finance industries are embedded in the lumps of rock that we export.”

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