Tim Harcourt

There’s no doubt that the modern Australian economy was built on immigration. And this has been good for Australia’s trade ties as well. There are clear links between immigration and trade. New migrants are likely to have strong links to business communities back home, in terms of friends, family and business contacts. There are no language barriers, nor any cultural adjustments to make. And as more ‘home’ countries embrace the market economy (such as former communist countries like China, Vietnam and Eastern Europe) there will be many more opportunities.

As part of the mission to grow the exporter community, my former employer Austrade has developed the ‘new exporter development program’ (NEDP) focused on new exporters – mainly small and medium-sized businesses – who need encouragement and assistance to get overseas. Austrade has put a lot of emphasis on export training in this program – as many businesses have the ‘right stuff’ to be an exporter (productivity, skills, product etc.) but don’t quite know how to go about it.

Why target ethnic communities to look for exporters? According to new research by Austrade and Sensis, 50 per cent of all small and medium sized enterprises that export are run by an overseas proprietor. You just have to take a roll call of great Australian business leaders who have were born overseas. The names Abeles, Lowy and Parbo come to mind. Many of these business leaders came to Australia from war torn Europe with no assets (and often with no English) but with a range of business contacts in their home market. Much of Australia’s success as an exporting nation in the late twentieth century was due to the efforts of the post-war immigrant business leaders. It is always important to replenish your stock of entrepreneurial human capital and immigration is part of that process. The influx of migrants also changes consumer tastes in the new country (like new Thai restaurants replacing ‘meat and two veg’ places) and ultimately increases demand for both exports and imports.

There is also economic evidence about the links between cultural diversity and exports. According to a recent study, whilst overall growth in trading partners was the most important determinant of export growth export opportunities may be exploited faster as a result of the rapid growth of ethnic groups in Australia for these countries. The study found that the main effect of cultural diversity was to reduce transaction costs in trade (through the tacit knowledge held by migrant workers). It was also found that the attitude to exporting of Australian businesses could be enhanced by the presence of cultural diversity in senior management.

This is not surprising as most of all export success is about networks. New research shows that 50 per cent of all new exporters are ‘accidental’, that is they get a sale by an accidental or random act. Therefore spreading networks internationally is very important to increasing the opportunities that may come to potential new exporters. Accordingly, Austrade works very closely with Australia’s diverse ethnic communities to seek out trade opportunities and entrepreneurial talent.

So throw another shrimp, satay stick, dim sim or kebab on the barbie and celebrate the benefits that immigration brings to our society and indeed to our balance of payments!

Tim Harcourt is the JW Nevile Fellow in Economics at the Australian School of Business, UNSW and the author of The Airport Economist.