Globalisation and the global financial crisis

The interconnection of national and international economies raises fundamental questions: How important is the international economy in creating the conditions for Australia’s economic success or failure? What has been Australia’s response to the growing integration of economic activities worldwide? This chapter looks at the 1980s and 1990s, when the foundations of Australia&s;s contemporary economic enmeshment with the rest of the world were laid. The essence of the postwar international economic order was that trade would be liberalised while finance came under stricter international supervision. These arrangements, which lasted until the early 1970s, are often known as the Bretton Woods system. Australia in these years employed just such techniques to keep economic growth high and unemployment low, and shared its long boom with all other Western industrialised economies. During the early 1980s, Australia’s net payment to foreigners for goods and services was considerably greater than the income received by Australian companies and residents from abroad.