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Tim Harcourt is a professional economist specialising in international trade and labour economic issues in the Asia Pacific region and in the emerging economies. Tim's passion is Australia's engagement with the global economy and the challenges and opportunities it offers business and the Australian community as a whole.

Tim has broad experience in public policy and in communicating international economic issues widely in the community. He has held senior roles in both the public sector and private sector in Australia and internationally and in the community and education sectors. In Australia he has worked for the Reserve Bank of Australia, Fair Work Australia, the Australian Council of Trade Unions (ACTU and the Australian Trade Commission (Austrade).

Publication

The Airport EconomistAustralian exporters conquering global markets
Beyond Our ShoresEssays on Australia and the Global Economy By Tim Harcourt, Chief Economist, Australian Trade Commission
Going The DistanceEssays on Australia and the Global Economy: 2004-2008 By Tim Harcourt, Chief Economist, Australian Trade Commission

Never mind the miners, here’s the bankers

Posted by on April 19th, 2012 · Publications

In Australia’s economic history, there always been tension between Labor and the Banks. My grandfather was an adviser to wartime Labor Treasurer and Prime Minister, Joseph Benedict Chifley, better known as ‘Ben’, in the 1940s. Grandpa thought Chifley was a magnificent Prime Minister until he went too far with Bank nationalization, which together with petrol rationing being retained too long after the War, led to Chifley’s defeat at the 1949 election.

But even before that there was tension. My other grandfather was put off by a Labor politician called Frank Anstey at the turn of the century who wrote a pamphlet called ‘The Kingdom of Shylock’ (which had anti-semitic overtones). But racism aside, suspicion of the private banks, led to Labor’s establishment of the Commonwealth Bank, in their early years. The Great Depression, also led to more anti-Bank sentiment (especially from a young Ben Chifley) and the Labor’s post-war establishment of the central banking system had its roots in those formative years. Even the great reforming Treasurer and Prime Minister Paul Keating, had his clashes with the private banks, but from a pro-market perspective. Keating’s entrepreneurial father, Matt a boiler maker turned small business man from Bankstown in Sydney’s West was turned down for a loan from one of the established banks, when wanting to expand his export business to what is now Malaysia. Keating Senior had great business flair, but being Irish Catholic, self made and from working class Bankstown, he clearly in the view of his bank manager didn’t ‘belong to the right club’.

Now in modern times it’s Treasurer Wayne Swan’s turn. The latest unilateral move by ANZ has prompted the latest round of Government-Banker tension. Whilst the Banks are claiming that in the post GFC environment, funding issues have changed sharply and in the short term they have to recover costs, others claim they are price gouging after receiving a guarantee from the same Government at the height of the Lehman Brothers Crisis.

However despite all the noise and claims of ‘price gouging’ on one hand and ‘bank bashing’ on the other, what are the key issues at stake?

Firstly, there is the issue of whether the banks unilateral decisions are justified or even wise. They probably have a case about short term funding cost increases but is it a smart strategy to pass all these costs on? Especially if it’s a short term issue? If the ‘big 4’ (Westpac, ANZ, NAB and the Commonwealth) can do it, what does it mean for smaller players and the impact on competition?

Secondly, to what extent do Bank’s have a social obligation to Australia? After all, at the height of the GFC, the Labor Government gave them a guarantee. So can they justify earning super normal profits. Some critics have claimed the Banks are socialist in a crisis and what government backing, but return to capitalism when good times return.

Thirdly, what does unilateral action by ANZ and the others mean for the Reserve Bank’s potency in terms of monetary policy? Can the private banks ignore the RBA? In many ways the RBA has already answered this question, with one of its leading lights, Assistant Governor, Guy Debelle saying in a recent speech, that the RBA did take into account the funding pressures the banks are experiencing.

Fourthly, if the Banks are facing funding costs, is international expansion a way out? The Big 4 might act similarly at home, but overseas their strategies could not be more different. ANZ has its aggressive Pan Asian strategy and ambition to be a regional Bank with Australasian origins, the Commonwealth too is big in emerging Asia, especially Vietnam and Indonesia, whilst Westpac has focussed its efforts on the Pacific. The NAB after some bad experiences in Ireland, the USA and the UK is the least globally ambitious of the big 4.

The famous economist and moral philosopher Adam Smith, once warned about butchers, bakers and candlestick makers conspiring together to deceive the public, Hence the need for checks and balances – whether it be in terms of competition policy and regulation. Paul Keating’s decision to open up banking to competition was part of this sentiment. The present tension between the current Treasurer and the banks is not surprising given our history and the view more recently that in the GFC the Labor Government did the Banks a favour (and we hope, the nation) with the government guarantee.

Interestingly, on the other side of politics, there’s tension too. It took Finance spokesman Andrew Robb only a few hours to come out squarely defending the Banks in world record Olympic time in response to Swan. However, the Opposition Treasurer Joe Hockey, the man who would be Treasurer in a Coalition Government, took a big swing at the Banks earlier in this parliamentary term. And what is Joe’s full name? Yes you guessed it. Joseph Benedict Hockey. Yes he named was by his Labor voting father after his hero, Joseph Benedict Chifley. Yes we really can learn from history, especially economic and financial history!

*Tim Harcourt is the JW Nevile Fellow in Economics at the Australian School of Business at the University of New South Wales (UNSW) and the author of The Airport Economist www.timharcourt.com

This article first appeared on The Conversation, 19 April 2012.

 

 

 

 

 

 

 

 

 

 

 

 

Australian unis pulse with a samba beat

Posted by on April 15th, 2012 · Publications

When I went to the University of Adelaide, I received a stroke of luck. Under the Colombo plan, which enabled south-east Asian students get scholarships to Australian universities, the grand old man of Singapore,Lee Kuan Yew, sent a number of very bright Singaporean students, who were meant to go to Oxford to study nuclear physics, to Adelaide to do economics with me. As a result, through having very smart classmates, I got good grades in mathematical economics and econometrics, I helped them with their honours essays, and we had noodles every night.

Of course, we know how well students from south-east Asia and the rest of the region do at university and how much life and vitality they have added to our campuses. But we have a new wave of overseas students from a new frontier, South America, with Brazil at the forefront.

This is one reason I was recently recruited to the University of NSW to teach international business strategy in the Australian School of Business. As part of the MBA programs, I will develop an international business strategy course for South America. This follows on from the book on Brazil and Australia I am co-authoring with Mark Thirlwell from the Lowy Institute and a distinguished Brazilian economist and past adviser to the government in Brasilia, Fernando Carvalho, from the Federal University of Rio de Janeiro. The book will focus on Brazilian-Australian economic opportunity and will be published to take advantage of Brazil’s “double header” hosting of the FIFA World Cup and the Olympics in Rio.

So why all the interest in Brazil and South America from Australian universities in general?

Firstly, the numbers are growing. Brazil’s growing middle-class are hungry for education. For Australia, Latin America now makes up just over 5 per cent of total enrolments, with Brazil ahead of the pack with just over 16,000 enrolments (followed by Colombia at 10,000, Peru at 2200, Chile 1700 and Mexico 1500).

Secondly, South America is coming of age economically, and Brazil is leading the pack. In 2002, on my first trip to Brazil, times were tough. Neighbouring Argentina was in the midst of economic crisis, and Brazil was concerned about contagion. It was also facing a presidential election, with the perennial candidate, Lula (Luiz Inacio Lula de Silva) from the Workers’ Party, running for the fourth time.

Lula won in 2002, was re-elected in 2006 and left office at the end of 2010 with a huge 80 per cent-plus approval rating, which is an amazing result for a democratically elected politician at the end of their term anywhere. Even his successor, Dilma Rouseff, has an equally healthy approval rate of 73 per cent.

Education is a key reason for Lula’s success in Brazil. The success of the macroeconomic and fiscal performance of his administration has been accompanied by a commitment to improving social conditions and human capital – mainly through education. According to Carvalho, there has been “a once in a generation increase in education participation – particularly among the lower classes. Around 32 million people have been added to the middle-class, and education is a key reason”.

To be fair, Carvalho adds, these education measures were part of an expansion of social programs, essentially an extension of the comunidade solidaria started by Lula’s predecessor, President Fernando Cardoso. Carvalho says: “Lula extended the program and made it effective. He also bypassed local and state government and made more use of community organisations and churches for delivery. This policy effectively has doubled the income of the very poor and at the same time has expanded the Brazilian middle-class, adding to the power of Brazilian consumers at the same time. As a result, education retention levels are higher, and the overall standard of living of the average Brazilian has increased.”

Thirdly, education is a key foundation for building stronger economic ties between Brazil and Australia. People ties matter as today’s students are tomorrow’s political, business and community leaders and will be important as Australia forges stronger relationships with Brazil and South America. For example, in Singapore, many of my classmates from the University of Adelaide are now cabinet ministers (even the new President of Singapore, Tony Tan, went to Adelaide), and this pattern has been extensive across south-east Asia as trade and investment ties have followed business and political relationships built at university. Hopefully, we will see similar patterns with South America as more Brazilians and their neighbours study in Australia or participate in MBA courses across Asia, Australia and South America. But there’s work to be done at the Australian end. For as Brazil plays a stronger role in the world economy, and the 2014-2016 World Cup-Olympics double approaches, we will have to do more than just woo the girl from Ipanema; we’ll have to woo the hearts and minds of a globally very strong and popular Brazil.

I am sure many Australian students will now get the positive experience of studying with many students from South America, just as I did from south-east Asia. And with all due respect, there is better dancing in Rio than there is in Singapore but I am sure the intellectual and social benefits will be on par.

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

This article first appeared in the Australian Financial Review, 16th April 2012.

 

 

 

 

 

 

 

 

 

 

 

From Rio to Freo – The Airport Economists hits the samba trail in Brazil

Posted by on April 11th, 2012 · Publications

 

 

 

 

 

 

 

 

 

 

 

Out of Africa…..and back in.

Posted by on April 1st, 2012 · Publications

Reporting from Cape Town, South Africa

When South Africa emerged from the apartheid era in the mid-1990s it was a common plea for the world not to forget Africa simply because the apartheid battle had been seen to be won.

Back then, “not forgetting Africa” had an international aid connotation, strongly associated with events such as Sir Bob Geldof’s Live Aid concerts of 1985.

The inference was that these type of events, and aid programs, were the main way in which the west might interact with the African continent.

Fortunately, this post-colonial and slightly patronizing view is proving completely outmoded.

In 2012, sub-Saharan Africa is rapidly coming of age as an economic region and as an investment destination. The so-called “frontier” markets of today’s Africa will be the emerging markets of tomorrow.
According to the IMF, over the next five years seven economies in Sub-Saharan Africa are expected to be among the top ten economies measured by economic growth. In 2011 the Democratic Republic of the Congo grew by 6.5%, Zambia by 6.8%, Nigeria by 6.8%, Mozambique by 7.5%, Ethiopia by 8.5%, and Ghana by 13.7%.
In Australia, we are already understanding what this means, and the opportunity this presents. Perth is full of mining companies – around 20 or so – which are listed on the Australian Securities Exchange but have the majority of their operations in Africa.
There are around 200 Australian mining companies with operations in Africa, and they’re involved in projects worth in excess of A$45 billion.
Outside of mining, there are 4000 or more Australian companies exporting to Africa.
There has been an estimated doubling of Australian companies doing business in Africa over the last five years. Australia has a strong presence in infrastructure professional services and education.
Australia’s involvement in Africa even extends to event management: the screens and associated attractions on the Cape Town waterfront during the 2010 FIFA World Cup were managed by an Australian entrepreneur.
As a young ACTU official working for our South African counterpart, COSATU, I remember attending a summit on Indian Ocean economic co-operation back in 1995, just after South Africa was welcomed back into the international fold.
It seemed all very idealistic, but not particularly real back then, to imagine the Indian Ocean as something that could unite, rather than divide, the people and economies of Africa and Australia.
But more than 15 years on, so much has happened and changed. There has been a strong flow of information, people, and money across the Indian Ocean. It’s no longer a barrier, it’s a connection. Two-way trade is nudging A$5 million, and has been on an upward trajectory for some years.
At the heart of all this are people, and Australia has a particular affinity with South African people, from all races. As immigrant societies, many South Africans and Australia share family ties and South Africans are becoming an influential immigrant group in Australia. Both countries are small open economies, geographically isolated from major world markets, with large export-oriented resource sectors.
Both also love their sport, and the cricket and rugby rivalry between the two nations is famous, and has created some epic encounters. Less well known, perhaps, are the inroads the Australian Football League – the AFL – is making in Africa. This year, a Sudanese born player, Majak Daw, despite some off field dramas, could potentially make his debut with the North Melbourne.
Meanwhile, on the other side of the continent, the Fremantle Dockers have a fostered a development zone for young players North West of Pretoria. The number of AFL players in South Africa has gone from 2500 in 2006 to around 7000 today. And it’s a two way street: a number of South African companies have even been Fremantle Docker corporate sponsors.
It all augurs well for the future, both for Africa and Australia. Austrade, the Federal Government’s trade agency, has recently expanded its African network by opening offices in Ghana and Kenya.
Sub-Saharan Africa has a number of key competitive advantages. It is predicted to have the youngest population in the world by 2050, the most arable land, and enjoy the world’s richest mineral and energy deposits. Africa is forecast to emerge as the fastest-growing region in the world over the next twenty years.
Australia’s current prosperity is due largely to its resources boom. By mid-century, that boom may well have extended to Africa, and be driving a huge wave of supplementary development, raising living and education standards throughout the continent.
Far from “forgetting Africa,” the continent will be looming large on the global investment radar in the coming decades. And if we can keep economies open for multi-lateral investment, this presents an opportunity for everyone.
Tim Harcourt is the J.W.Nevile Fellow in Economics at the Australian School of Business, UNSW and author of The Airport Economist www.timharcourt.com

 

 

 

 

 

 

 

 

 

 

 

The Airport Economist goes to Rio

Posted by on March 25th, 2012 · Other Posts

Reporting from Rio de Janeiro, Brazil

Brazilian Airports at the moment are jam packed. Why is this so? To an airport economist the underlying reasons must always be economic and in this case thankfully they are. Basically, in the new Brazil, the upper class more wealthy Brazilians are flying north to Miami to shop (even factoring in the cost of flights  it’s cheaper to buy in the USA than to pay ‘Brazilian’ prices ) whilst their maids are flying south to Buenos Aires (where at current exchange rates, Argentina is even cheaper).

And all this retail arbitrage is putting pressure on Brazil’s airport infrastructure. Brazil has the excitement (and responsibility) of hosting both the FIFA Football World Cup in 2014 and the Rio Olympics in 2016 and that means Brazil needs a first class airport infrastructure particularly for the World Cup where there are 10 host cities. Airports need to be upgraded and stadiums need to be built. In fact, infrastructure and education few storm clouds in Brazil’s otherwise sunny economic big picture. During the Global Financial Crisis (GFC) Brazil, like Australia, was largely untouched and in 2010 Brazil achieved an especially strong 7.5 per cent economic growth rate. According to Banco Santander economist Adriana Dupita this dropped to 2.7 per cent in 2011, but overall “Brazilian economic growth rates in the 2000s averaged 3.6 per cent which compares favorably to 2.5 per cent in the 1990s and 1.7 per cent in the crisis ridden 1980s.”

In fact, despite Brazil’s emerging status as one of the world’s new economic superpowers (the BRICs – Brazil, Russia, India and China – dubbed famously by Goldman Sachs), Brazil is more of an income distribution story more than a purely economic growth story like China and India. Under the metal worker turned President Lula, Brazil managed to combine fiscal and monetary responsibility with progressive social policies (measures begun by his predecessor Fernando Henrique Cardoso, a social democrat and sociologist, and continued by his handpicked successor President Dilma). The proportion of the population who are very poor ranged to just under 24 per cent of the population in 2002, when Lula was elected but this had shrunk to just over 15 per cent by the end of Lula’s term in office. Importantly, Lula added 31 million people to the middle class which now makes up the bulk of the Brazilian population. A strong emphasis on direct cash payments to the poor (the ‘Bolsa Familia’ programme), an increase in education attainment and anti-crime measures have made Brazil a fairer and more upwardly mobile society. This has boosted demand, creating an aspirational consumer culture, and in good economic policy has been combined with strong social policy with a strong political dividend (Lula left office with a respectable economic record and an 80 per cent approval rating which is the envy of other political leaders in democracies). Lula, thanks to the strength of Brazil’s external position (like Australia, Brazil has surfed China’s economic wave as a key exporter of resources and agricultural products and services), and his own internal policies managed to give to the poor, without having to take from the rich.

Brazil’s income distribution story has brought opportunities for many international companies including those from Australia.

For example, in the retail sector, the growing consumer culture and sheer size of the new Brazilian middle class, has attracted Australia’s retail giant Westfield into the Brazilian market, with a joint venture with Almeida Junior in Brazil’s south around Porto Alegre.

In education, the growth of Brazil’s aspirational classes has attracted Australia’s universities. Whilst I was in Sao Paulo, the Australia Group of 8 universities were there to forge partnerships with their Brazilian counterparts and to join the Scientists with borders programme to add to the stock of Brazilian science and technical training. Australian universities that are strong in Asia and now looking to South America with Brazil at the forefront (there are over 16,000 Brazilian students studying in Australia) together with Chile and Colombia.

And finally in the clean energy sector, Brazil has a high degree of environmental consciousness with is growing as it becomes more affluent and middle class. The Rio plus 20 summit reminds us of how the climate change debate began in earnest with the original high profile Rio Summit in 1992. In Australia’s case, Pacific Hydro is making an important contribution to clean energy, particularly in wind power, with their Australia CEO Rob Grant, describing Brazil as “one of the most exciting prospects in their global business with strong local and regional support.”

In fact, in Sao Paulo, Australian Consul General and Trade Commissioner Greg Wallis, nominates “clean energy along with education, mining and infrastructure related to the World Cup and Olympics are the key sectors where Australia carries a strong reputation and can make a real difference.”

But in closing let’s get back to the Airport. Normally, airport security is usually a nightmare or at least a hassle for the world weary traveler but not in Rio. As I went through security I said to the young woman security guard, “do I have to remove my belt here.” She replied: “Yes you do! And your pants!” Then there was a pause and thankfully she said “I am just kidding!” And then she let out an enormous laugh and gave me a friendly farewell smile as I went to catch my plane back home. Well it seems, given their current economic success and social justice improvements, Brazil sure has a lot to be smiling and laughing about now and it looks like that will continue through to 2014 and 2016 as it hosts the FIFA World Cup and the Rio Olympics.

*Tim Harcourt is the JW Nevile in Economics at the Australian School of Business, UNSW and author of The Airport Economist: www.timharcourt.com

 

 

 

 

 

 

 

 

 

 

 

Japan goes gaga for Gillard as Australia shows solidarity one year on.

Posted by on March 13th, 2012 · Other Posts

A year on from the after the earth quake and tsunami natural disasters that engulfed Japan it is important to recall that two prominent foreigners went to Japan soon after to show solidarity.

Global pop sensation Lady gaga went to Japan for 10 days. Say what you like about Lady gaga and the current mass culture of celebrity, in Japanese eyes ‘ Gagamania’ was  great for morale after such a torrid time in Japan which has experienced the biggest  devastation in 60 years.

However, another foreign figure was also went to Japan in a gesture that was appreciated by the Japanese people. Australian Prime Minister Julia Gillard, also visited Japan and spent a lot of time visiting the affected areas and comforting the victims who have had their lives shattered. Julia Gillard was the first foreign Prime Minister to set foot on Japanese soil post-earthquake and her decision to come so quickly after the disaster was considered to be a great gesture to the Japanese people by a friend.

As Chris Rees, Senior Trade Commissioner in Osaka said: “We put together a function for Prime Minister Gillard and the Japanese government. It wasn’t a usual diplomatic function. It wasn’t about trade or education, or announcing a n iron ore or a gas deal. It was simply to show Japan that they are not alone at their hour of need and that Australia cared. It was also important for Australia’s diplomatic troops led by Ambassador Murray McLean in Tokyo, to have something to work towards after counselling trauma victims amongst the expatriate and local community. Julia Gillard’s initiative to come to Japan brought us together and enabled us to help Japan cope with the crisis. It was an important gesture and served an important practical purpose.”

In fact, the Japanese mourning period is important culturally. As a local observer Tomoko Ichikawa noted: “The Japanese are a very spiritual people. It’s part of our Buddhist philosophy. There’s 49 days of mourning, then memorial services on the 100th day, 3rd year, 7th, 13th and even the 39th year.” But what are the economic implications of these important rituals. According to Tomoko Ichikawa, this is causing some confusion. “It’s important to mourn and to care, but for the victims but should you save or should you spend? There is sort of a view in Japan now that ‘life is more precious than shopping’ but if we don’t spend that could hurt Japan even more.”

Tomoko Ichikawa is right. There is a fear that Japan could create what the famous British economist John Maynard Keynes called “the paradox of thrift”, where a decision by one individual to not spend, if done collectively could reduce demand and harm the whole economy.

Chris Rees agrees that there has been a variety of reactions across the country. “Some mayors cancelled concerts and fireworks in solidarity with the affected areas of the country, whilst others thought it was their public duty to spend to help rebuild the country.”

Tomoko Ichikawa who works in creative industries in Tokyo,  now thinks this is changing, at least in the Japanese capital. At first, people stopped going to concerts, and felt they couldn’t celebrate whilst other suffered. Whilst now they think getting life back to normal may be more of a help than a hindrance.”

Other implications affecting the domestic economy concern energy and infrastructure. As Tomoko Ichikawa explains: “Public transport is the life line of Japan and everyone expected reduced capacity and anticipated energy shortages. But they haven’t happened in Tokyo, at least so far.”

Another response to the disaster has been a change in mindset about Japan’s global engagement. According to Chris Rees, “the disaster has forced Japanese corporates to re-think their long term strategies to partially de-couple from the domestic economy, especially when major companies like Panasonic only manage 25 per cent of their total sales off shore. This is providing potential opportunities for Australia, particularly in developing global human capital capability.” Rees points to a number of Australian education institutions such as the University of New South Wales (UNSW) and the University of Southern Queensland (USQ)  who have been help re-tool Japanese workforces to adjust to a more globally orientated business environment.

As Rees explains: “Building discrete critical functions out of Tokyo and out of Japan is an important strategic realignment for Japan after the impact of the disasters on domestic capability.”

So in short, the incidents last year, as tragic as they are in human terms, could bring a new wave of globalisation for Japan in which Australia will have an important role to play. We’ve already seen that in terms of Japanese investment with the new PwC report showing Japanese households increasing foreign holdings, with Australia being the second most popular foreign destination after the US. And embracing Lady Gaga is ok if it is symbolic of Japan’s willingness to go global to spread risk and build solidarity at home after the worst disaster to impact its economy and society in 60 years. And that’s why it was so significant that Julia Gillard went quickly to Japan to show that Australia is not just an important economic  partner but is also a true friend of Japan.

*Tim Harcourt is the J.W.Nevile Fellow in Economics at the Australian School of Business, UNSW, Sydney and author of The Airport Economist: www.timharcourt.com

 

 

 

 

 

 

 

 

 

 

 

At the chalk face – Brazil and Australia united in education

Posted by on March 8th, 2012 · Other Posts

When I went to the University of Adelaide, I received a stroke of luck. Under the Colombo plan which enabled South East Asian students to get scholarships to Australian Universities, the grand old man of Singapore, Lee Kuan Yew, sent a number of very bright Singaporean students, who were meant to go to Oxford to study nuclear physics, to Adelaide to do economics with me! As a result, through having very smart class mates I got good grades in Mathematical Economics and Econometrics, I helped them with their Honours essays, and we had noodles every night (this was before Poh of Master chef fame had come to fame in Adelaide).

Of course, we know how well students from South East Asia and the rest of the region have done at University and how much life and vitality they have added to our campuses in Australia. But now we have a new wave of overseas students from a new frontier, South America with Brazil at the forefront.

This is one reason I was recently recruited to the University of New South Wales to teach international business strategy in the Australian School of Business. As part of the UNSW’s Australian Graduate School of Management’s MBA programmes, I will develop an international business strategy course for South America similar to the one designed for China and India. This follows on from the book on Brazil and Australia I am co-authoring with Mark Thirlwell from the Lowy Institute and a distinguished Brazilian economist and past adviser to the government in Brasilia, Professor Fernando Carvalho from the Federal University of Rio de Janeiro (UFRJ) that was foreshadowed in the inaugural edition of Brazil Talk. The book will focus on Brazilian – Australian economic opportunity and will be published to take advantage of Brazil’s ‘double header’ hosting of the FIFA World Cup and the Rio Olympics. So Brazil can expect to see a lot more of me over the next 5 years or whether Brazil likes it or not! This will also provide great research for my future book The Airport Economist Goes to Rio.

So why all the interest in Brazil and South America from the UNSW and all Australia universities in general?

Firstly, the numbers are growing. Brazil’s growing middle class and its citizens who are being pulled out of poverty are hungry for education. Brazil’s human capital needs are Australia’s opportunity. Accordingly, our universities are doing more together particularly as many Brazilians now study in Australia. For Australia, Latin America now makes up just over 5 per cent of total enrolments, with Brazil ahead of the pack with just over 16,000 enrolments (followed by Colombia on 10,000, Peru on 2,200, Chile 1700 and Mexico 1500). And with Brazil leading the pack much vitality is added to our universities particularly in the schools of economics and business, the environment (e.g. marine biology), architecture and design which makes the typical Australian campus a much more attractive place to be nowadays.

Secondly, economically, South America is coming of age, with Brazil leading the pack. In 2002, on my first trip to Brazil, times were tough (see my previous article Blame it on Rio). Neighbouring Argentina was in the midst of economic crisis, (see the article Don’t buy from me, Argentina) and Brazil was concerned about contagion from her neighbour. In fact, Brazil had just got over a significant crisis in 1998 and didn’t want a repeat of those events. In 2002, Brazil was also facing a presidential election, with the perennial candidate, Lula from the Workers Party (PT) running for the fourth time. Whilst I noticed Lula had great support in Porto Alegre at the World Social Forum where I was a guest speaker, the business people and journalists I spoke to in Sao Paulo were apprehensive, and in any case, pessimistic about his chances of winning.

What a difference eight years makes. Lula did win in 2002, won re-election in 2006 and left office at the end of 2010 with a massive 80 plus percent plus approval rating which is an amazing result for a democratically elected politician at the end of their term anywhere. Even his successor, Dilma Rouseff, who has just entered the Presidential palace in Brasilia, has an equally healthy approval rate of 73 per cent.

So why the popularity of Lula and now Dilma? To use the old Clinton campaign line: It’s the economy stupid. Brazil avoided a major recession during the global financial crisis (GFC) and chalked up an impressive 7.5 per cent economic growth rate in 2010, which is expected to be followed by a solid 4.5 per cent in 2011 which should continue this year should inflation risks be contained. In short, the Brazil of 2012 is a different place to the Brazil of 2002. The country is more confident, it is playing a significant role on the world stage, (Lula opened 53 new Brazilian embassies in his term including 30 in Africa) its economy is now talked about as an emerging economic superpower along with China and India (now it is part of both the BRICs (Brazil, Russia, India and China) and the big emerging economies, the BEEs). Historically we used to think of Brazil and other South American countries as causing a crisis themselves or being a victim of one. It’s very rare for them therefore to get through a major global economic crisis unscathed. And whilst they say Brazil is emerging, by the time of the Rio Olympics in 2016, will we be able to say that it has emerged? After all, it is the world’s 7th largest economy and after Rio 2016 it could well be in the Top 5. It’s no surprise that on my most recent trip to Brazil, one of my hostess’s in Rio de Janeiro commented that “even her maid took her holidays in Buenos Aires because it was now so cheap!”

In fact, education is a key reason for Lula’s success in Brazil. The success of the macroeconomic and fiscal performance of the Lula administration has been accompanied by a commitment to improving social conditions and human capital – mainly through education. According to Professor Fernando Carvalho, there has been “ a once in a generation increase in education participation – particularly amongst the lower classes. Around 32 million people have been added to the middle class, and education is a key reason.”

To be fair, Carvalho adds, these education measures were part of an expansion of social programmes , essentially an extension of the comunidade solidaria, started by Lula’s predecessor President Fernando Cardoso a famous Brazilian sociologist who later entered politics. According to Professor Carvalho: “Lula extended the programme and made it effective. Also by-passed local and state government and made more use community organizations and churches for delivery. This policy effectively has doubled the income of the very poor and at the same time has expanded the Brazilian middle class adding to the power of Brazilian consumers at the same time. As a result, education retention levels are higher, and the overall standard of living of the average Brazilian has increased.”

Thirdly, education is a key foundation for building stronger economic ties between Brazil and Australia in the future. People ties matter as today’s students are tomorrow political, business and community leaders and will be important as Australia forges stronger relationships with Brazil and South America. For example, in Singapore many of my classmates from the University of Adelaide are now cabinet Ministers (even the new President of Singapore Tony Tan went to Adelaide), and this pattern has been extensive across South East Asia as trade and investment ties have followed business and political relationships built at University. Hopefully, we will similar patterns with South America as more Brazilians and their neighbours study in Australia or participate in MBA courses across Asia, Australia and South America. But there’s work to be done at the Australian end. For as Brazil plays a stronger role in the world economy, and the 2014-2016 World Cup-Olympics double approaches, we will have to do more than just woo the girl from Ipanema, we’ll have to woo the hearts and minds of a globally very strong and popular Brazil.

In conclusion, I am sure many Australian students will now get the positive experience of studying with many students from South America, just as I did from South East Asia. And with all due respect, there is better dancing in Rio and Sao Paulo than there is in Singapore but I am sure the intellectual and social benefits will be on par!

Tim Harcourt is the JW Nevile Fellow in Economics at the Australian School of Business and the author of The Airport Economist and The Airport Economist goes to Rio!

 

 

 

 

 

 

 

 

 

 

 

The Airport Economist

Posted by on March 8th, 2012 · Publications

Australian exporters conquering global markets

The Airport Economist

Did you know that Australia is helping Singapore ‘be creative’ to address its imbalance of ballet dancers to engineers and that there is a Transylvanian Cricket Club full of Aussies in Romania? Or that Israeli youngsters are crazy for Tim Tams and the French are buying Billabong board shorts in Bordeaux on Bastille Day? Well if you didn’t, The Airport Economist is just for you.
Join Tim Harcourt — the airport economist — as he travels the globe in chase of Australian international business success and unravels the economic life of the many countries he visits. He talks to business leaders, entrepreneurs, workers, government officials, academics, farmers and even a celebrity or two to uncover the world of export beyond economic text books and financial spreadsheets. He even manages to interview Megan Gale in Milan, watch Sachin Tendulkar build an innings in Mumbai and dodge swarms of motorcycles in Asia’s newest tiger, Vietnam, all for the sake of research, of course.
With a clever turn of phrase, witty observations, and links to a wealth of supporting data, The Airport Economist proves that there is an export dimension to almost everything and that not all economics writing has to leave you high and dry.

The Airport Economist, published by Allen & Unwin is available at all book stores around the country, especially airport bookstores.

 

 

“I officially declare The Airport Economist airborne!” Prime Minister Julia Gillard at the book launch.

 

 

 

 

 

Come fly with me: Tim Harcourt, author, Prime Minister Julia Gillard, and Allen & Unwin Executive Chairman, Patrick Gallagher at the launch of The Airport Economist.

 

 

 

The Airport Economist with Nobel Prize winner for Economics Joseph Stiglitz

 

 

 

 

 

 

 

 

 

 

 

Going The Distance

Posted by on March 8th, 2012 · Publications

Essays on Australia and the Global Economy: 2004-2008
By Tim Harcourt, Chief Economist, Australian Trade Commission

Going the Distance

In 2005 I published a book titled Beyond Our Shores: Essays on Australia and the Global Economy: 1999-2004. Beyond Our Shores covered all the major economic issues affecting Australian trade from the Dot.com craze and crash to September 11, SARS and the Battle for Seattle in the WTO. The book also covered several essays on the economics of sporting events and entertainment with a major focus on the widely acclaimed Sydney Olympics in 2000 (rated by the then International Olympic Committee President as the ‘greatest games ever’!). Beyond Our Shores covered my first period as Chief Economist of Austrade and looking back on that amazing period in international events, it was one of the most exciting times of my life.
Beyond Our Shores proved to be a popular book, and when asked to write this sequel many readers commented on how much they had enjoyed The Economics of Special Events chapter at the back of the book. Accordingly, with the Beijing Olympics approaching this year, I thought it fitting that I began this new volume of essays with sport on the front page instead of the back page (where it should be!) In fact, Laurie Smith, Austrade’s Regional Director for North East Asia had suggested that I write a book on the economics of the Olympics for Beijing so I thought it was a good idea to focus the sequel on both the Beijing Olympics and the rise of China and its economic importance to both Australia and the world.
Hence, Going the Distance was born as the follow-up volume to Beyond Our Shores. It picks up in Athens in 2004 and finishes in Beijing in 2008 and covers the whole gamut of economic and trade issues that have affected both the Australian and global economies in between.
I hope you enjoy Going the Distance and regard it as a worthy successor to Beyond Our Shores. And at Beijing and beyond the 2008 Olympics, I hope you find the world of international economics, trade and commerce and in the context of the ever-changing relations between nation states, regions and cultures as exciting as I do.

Photos

 “Kevin-07 at Beijing-08 : Prime Minister Kevin Rudd with Austrade Chief Economist Tim Harcourt at the launch of Going the Distance, at Business Club Australia, Beijing, 8th August 2008”
 “So you think you can write! A rogue meets a former roguetrader.” Tim Harcourt, author of Going the Distance with Natalie Bassingthwaighte in Beijing

Chapters

Chapter 1: It’s more than a game… the export of sport

In order to celebrate the Beijing Olympics, this opening chapter focuses on the economics of special events. It include essays on the Athens Olympics, the Commonwealth Games, the FIFA World Cup, Cricket, Exporting Aussie Rules, the Rugby World Cup in France, the role of women in sport, and the trade and investment benefits of doing business around special events like the Beijing Olympics.

Chapter 2: Trading up

This chapter will focuses on global trade issues including the WTO, APEC, the trade implications on climate change and the new research on why and how Australian businesses go global (the so-called ‘beyond exporting’ literature).

Chapter 3: North East Asia

This chapter focuses on Australia’s key trading partners especially China (the PRC and ‘Greater China’ including Taiwan and Hong Kong), but also Japan and Korea. There are also essays on Asian Demographics, Urbanisation and new trends in society and culture in North East Asia.

Chapter 4: South Asia, South East Asia and the Pacific.

This chapter focuses on the mighty rise of the Indian economy, the economies of the ASEAN region and the often ignored (by vitally important) Pacific markets.

Chapter 5: Europe, the Middle East and Africa

This chapter tackles the big themes of ‘Europhobia’, EU expansion, Turkey and the New Europe, the Middle East beyond oil and the new developments in the resources sector of Africa.

Chapter 6: The Americas

This chapter looks to the new Latin America including the emerging Andean markets such as Peru, established players such as Chile, and the industrial giants of Brazil and Mexico. There are also some new essays on United States and Canada.

Chapter 7: That’s Entertainment… exporting popular culture

Finally, the penultimate chapter of the book looks at the economics of popular culture, demographics, and the interactions between the economy and society in Australia. The essays will include the popular title on the economics of Kath and Kim, The Wiggles, Steve Irwin as well as articles on Australia Day, Anzac Day, Generation Y, the role of women, immigration, indigenous culture and assorted topics. This chapter shows that economics can be fun and that globalisation is more a part of our lives that we think.

 

 

 

 

 

 

 

 

 

 

 

Beyond Our Shores

Posted by on March 8th, 2012 · Publications

Essays on Australia and the Global Economy
By Tim Harcourt, Chief Economist, Australian Trade Commission

Beyond Our Shores

I have written a series of essays since 1999 on the amazing events witnessed, and in some cases experienced, and their effect on Australian exporters. The essays have been brought together in this book and arranged by topic – ‘Globalisation and Export Performance’, ‘The Information Age’ and by Australia’s trading regions. And for those, like me, who like the big occasion, there is also a chapter on special events like the Olympic Games, the Rugby World Cup 2003 and the Oscars.
Download a free, PDF version by clicking on the various sections below.
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Read the story behind ‘Beyond Our Shores’ and the OECD book review.

Section 1: Globalisation and Exports

1999 was the year I joined Austrade.  More significantly it was also the year of the ‘Battle for Seattle’ – the high water mark of the anti-globalisation protests. In Seattle, thousands of demonstrators converged on the World Trade Organisation (WTO) meetings in protest against ‘globalisation’. The Seattle protests were followed up by similar events – including one in Melbourne on the fateful date of September 11, 2000.
Whilst the protests raised the profile of globalisation as an issue and the WTO as an institution, one problem was a lack of clarity about what ‘globalisation’ actually meant. As a result, I started writing a number of essays explaining globalisation and the role that trade plays in particular. After all, one lesson of the protests is that economics is about persuasion, and it is better to explain than to dismiss or ridicule.
The essays have been the basis for presentations at both ‘pro’ and ‘anti’ globalisation events – namely the Australian chapter of the World Economic Forum based in Davos, Switzerland and the World Social Forum, based in Porto Alegre, Brazil. A main focus is how trade affects the Australian economy in particular in terms of firm performance, the labour market and community welfare as a whole.

Download Section 1: Globalisation and Exports

Section 2: The Information Age

During the latter half of the 1990s, the ‘dot.com’ revolution was all the rage. Newspaper reports were full of terms such as ‘the information age’, the ‘Internet revolution’ and ‘the new economy’ and many commentators claimed that the global economy was being changed in a fundamental way by the Internet, e-commerce and associated technologies. Economists too were grappling with the impact of the new economy with Nobel laureate Robert M. Solow famously saying: “You can see the information revolution everywhere except in the productivity statistics.” Of course, the dot.com ‘crash’ of 2001 brought a lot of the more outlandish claims about the information age to a halt, and analysts looked more carefully at the role that information technology was playing in economic activity and global trade. This chapter focuses on the role of technology in international trade and how Australia fared in the ‘new economy stakes’.

Download Section 2: The Information Age

Section 3: North East Asia

There is no doubt that North East Asia is the place to be for Australian exporters. The region accounts for over a third of Australia’s merchandise exports and over 10,500 exporters. And there’s a fair bit of consensus that Japan, South Korea and China will continue to play an important role in Australia’s export future. However, there was a time when few Australians thought we could be a significant exporter to that part of the world. In fact, it was only when Professor Ross Garnaut of the Australian National University wrote his seminal work “Australia and the North East Asia Ascendancy” in 1989, that many Australian business and policy makers started to take notice of the markets to our north.
This chapter covers the countries of the North East Asia region. It includes the themes of ageing in Japan, IT and creative exports to South Korea, and, of course, the amazing story of China’s rise and rise as an economic power and export destination for Australia.

Download Section 3: North East Asia

Section 4: South Asia, South East Asia and the Pacific

When it comes to trade potential, the neighbourhood you are in is said to make a big difference. This chapter covers Australia’s neighbourhood and our trading relationships with the ASEAN economies in South East Asia, New Zealand, Papua New Guinea, island nations in our immediate neighbourhood in the Pacific, and South Asia as well. The role of India as an economic superpower to rival China is a given a special focus. Asia’s rise means that Australia seems to be ‘at the right place at the right time.’

Download Section 4: South Asia, South East Asia and the Pacific

Section 5: Europe, the Middle East and Africa

The countries of Europe, the Middle East and Africa are a long way from Australia due to our ‘tyranny of distance’, and seem to be so diverse that they share little in common apart from a common time zone. This chapter covers the enlargement of the European Union (to include the former eastern bloc countries), the introduction of the common currency (‘the euro €’), and the export efforts of Australia in the Middle East region in both the Arab League states and with Israel. The chapter also includes an analysis of Australia’s trade relationship with South Africa – 10 years after the election of Nelson Mandela as South Africa’s first President of the post-apartheid era.

Download Section 5: Europe, the Middle East and Africa

Section 6: The Americas

When people think of The Americas they mainly focus on the United States. This has particularly been so with the Australia-United States Free Trade Agreement attracting the lion’s share of press coverage on trade issues generally. However, there is plenty of Australian export action in Latin America too. Accordingly, this chapter includes essays on South America – based on visits to Brazil and Argentina – as well as the countries of Central America.

Download Section 6: The Americas

Section 7: The Economics of Special Events

Who said exporting can’t be fun? Arts, sport and entertainment all have trade dimensions as well, particularly when special events like the Olympics put Australia on the radar screen. This chapter looks at the economics of special events including the Olympic Games, the Rugby World Cup, The Melbourne Cup, the Grand Prix, and, of course, Oscar night when Australia’s most famous and glamorous exports are on display for all the world to see and admire.

Download Section 7: The Economics of Special Events

Cover, Introduction and Further Reading

Download the cover and introduction, and further reading sections.