TITLE:
The Marginal Propensity to Import in China and the Composition of Australia’s Exports: Some Interesting Revelations
AUTHORS:
Andrew Marks
KEYWORDS:
Australia, China, Marginal Propensity to Import, Primary Exports, Manufacturing Exports, Industry Policy
JOURNAL NAME:
Modern Economy,
Vol.8 No.7,
July
21,
2017
ABSTRACT: The marginal propensity to
import manufacturing products is rising more rapidly than the marginal
propensity to import primary products in China, yet Australia’s exports to this
country are concentrated in primary products thereby leading to large export
revenue and hence output and employment losses. The over-reliance on primary
product exports to China has also led to fluctuations export revenue and hence
output and employment growth. These problems have been compounded due to these
products dominating the export base. Adopting industry policy to stimulate
manufacturing exports and thus broaden the export base has the potential to
alleviate the losses and fluctuations in export revenue and hence output and
employment growth when Australia trades with China and the rest of the world.