Can Australia get smart in India?
Trever Cook writes in Online Opinion about the possibilities of increasing Australian economic relations with India and expounds on why it is necessary for Australia to do so.
Without those big mineral resource deposits - particularly coal and iron ore - our per capita standard of living would be more like New Zealand’s. On the other hand, our over-reliance on commodities has been partly responsible for our average incomes falling behind those in many other developed countries in Europe and North America.
Given our strong historical ties and cultural affinities with it, India would seem to offer Australia its best chance yet to move beyond commodity supplier into a genuinely broad-based integration with an emerging economic powerhouse: Something that might finally break the pattern of our economic past.
Currently, China is Australia's No.3 trading partner, No.2 export market and No.3 source of imports. India is our 6th largest merchandise export market and 13th largest trading partner. To keep it all in perspective, Japan's imports from Australia are still worth double that bought annually by China.
India may not exceed the growth rates recorded by China in recent years but India is likely to experience higher growth in the next 20 years while China will struggle to maintain its high growth rates.
India's well-entrenched democratic institutions may also help it assimilate the aspirations of a growing middle-class far more readily than China, which is yet to show that it can make a successful transition from communism. An India Times editorial in February put it neatly: “It is almost certain that India's economic numbers will catch up with China's soon. It is far less certain whether China will ever catch up with our open society.” Finally, India is already a world leader in some knowledge-intensive industries like information technology and its pattern of development will be very different to China’s.
Australian exports to India grew by 62 per cent in 2004 (and over 400 per cent in the past decade), reaching A$5.42 billion. Much of this growth, however, has come from India's demand for raw materials, such as gold, coal, copper, wool, and more recently, fresh fruit and vegetables.
Education, now one of Australia's largest industries, would seem to be our best hope of developing a truly substantial non-commodity export sector. Trade in education services now earns Australia $5 billion annually, more than wool and close to wheat. In addition, Australia is the third-largest supplier of education services to the Indian market, and India is the second-largest market for Australian education. Over 13,000 Indians trained and received education in Australia last year - a 32 per cent increase on 2002. For post-graduate studies, students from India are the biggest group among foreign students in Australia.
As I mentioned before, Australia needs to start looking at India as a good option for growth in the coming years.