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Discuss the factors that have led to the growth in demand for services in developed nations such as Australia. What factors will impact this growth over the next 5 years and why are services so important to world economies?

Differentiation between goods and services:

Goods and services are the backbone of trade in any country, it also differentiates the economic stability of the country. The difference between both the goods and services helps in distinguishing the amount of money which being spent as part of the flow of economic cycle. The majority of money by any country is spent on goods and services sectors. Goods are the products which can be seen or touched and consumed by the customer who is spending money on it. Whereas, the services, on the other hand, are not something tangible but the tasks which are done by one person to another person. The other most significant difference between both the good and service is that goods are purchased first in order to consume where the services mostly being consumed first and then paid. Furthermore, in the light of the services nature, the economic growth of Australia is analyzed through the importance of consumption and importance is assumed for the world overall (Williams & Martinez-Perez, 2014; Tietenberg & Lewis, 2018).

  • The value of services to the Australian and world economy:

The clear example of services needed in order to under nature for which the Australian economy will be understandable. The goods are food or books where the books are in the nature of consumed anytime and food have the nature to be consumed only one time. Whereas, the services are in nature of being consumed first then, later on, get paid. The repair of the car by one person to the other person who is the owner is considered to be served. The nature of services here will be paid later on. The conceptual and practical difference among both the services and goods is cleared. The significance here of the services sector has been emphasized by the researchers is that the presence of both service provider and customer is required. The services are important for the developing nation and the goods are important for the developed nations (Keiningham et al., 2015). The economic condition of the country limited the resources of production whereas, the production of the goods are easily done in the developed country as per their economic condition provides sufficient means to produce. The feedback from the customer identified differently for both the goods and services. The goods quality is seen when identified the level of good or bad. And for the services, the level of satisfaction is analyzed by meeting the expectation of the customer (Chavan & Agarwal, 2016).

The Globalization have benefited both the world economy and the Australian services sector. Currently, Australia is dominating the whole world when it comes to the services sector. Despite the fact that Australia has the abundance of natural resources which they sell to the whole world but still their focus on the services have made them strongest economy. The change of the priority of the government was solely based on the success of the long run. They have allocated the resources on the services sector in order to boost the economic growth (Bryson et al., 2017). The other reason for changing priority regarding the fiscal policy is to provide the equal opportunity which leads to the distribution of wealth and income equally among the citizen of the country. The third most significant reason for the intervention in the fiscal policy to avoid the market failure which mostly happens to the production sector of services. The information gap has been filled through their service providing the edge in the market. The supply of goods takes away the independence and the nation starts to depend on the world economy. Now, the Australian economy is not dependent on the world economy. The main services sectors of Australia is financial services, tourism, media, education and logistics. For example, Commonwealth Bank and National Australian bank considered to be the 50 safest banks in the country. The 2.5% of the Australian economy depends on the tourism sector and their share on the GDP (Worthington et al., 1999). The agecare agency is the changing and growing industry of Australia in services sector. Australia is handling increase in the population by using this service. The other example is Rotary Club which another significant factor which had been provided services to business community in the Australia and considered to be leading service provider in the similar sector.

 

  • The factors that have led to the growth of services in Australia:

The history of Australia is comprised of the liberation of economy and reforms to make it more flexible. The factors which have increased the services industry and boost the economy through it. Some of them include deregulation of financial markets dollar floating, competition policy and tax base broadening. All these factors have boosted the economy of Australia. Not only the services factor but also these factors increased the wages and standard of the level. Apart from hollowing effect, Australia established the pillars to boost the services sector. They opened their borders for the people to come and do this they have increased skilled people in their country to provide the services. Providing the education services have made even more beneficial for the services sector which eventually became the factor of economy uplifting. The national competition policy reforms have stated that the flexible and efficient policies have been contributing in the uplifting of the services sector (Clulow, Gerstman & Barry, 2003).

  • The economic factors that will impact the growth of the sector over the coming years:

The economic growth through the services sector of Australia relies on upon strengthen their services sector. Specifically, if we talk about the educational services, many developed nations are now providing the educational services free which Australia haven’t considered yet. Considering this and changing the policy regarding this particular sector is needed for leading the market. The tourism industry of Australia is also been affected because of the security condition throughout the world. The interior ministry of Australia made the Visa Requirements strict which have directly caused the tourism industry of Australia. The assumption has been made on the basis of reports which were published on the news. The first impact on the economy happened due to the shutdown of the ford which caused the loss of 600 jobs (Wheelahan et al., 2012). The economy and the GDP was effected. The mining industry which was considered as the services and goods sector should not ne priority of Australia due to climate change. The resources which are being spent on mining industry should be spent using sustainability goals and the environmental friendly ways and sectors should be promoted. The other effect on the economy of Australia will be the growing market leader in China. China is capturing the market through both sectors goods and services. Australia will be affected by this growing economy. The other biggest risk is on the financial services which will soon cause the crisis of banking. The trump factor is also considered to be the threat to the economy because his policies and attitude are changed as compared to other US leaders and Australia should consider when making global economic policies (Hanna et al., 2011).

Conclusions

In conclusion, the overall understanding of goods and services is really important in order to gain the knowledge of the working of the economy. Goods are the products which can be seen or touched and consumed by the customer who is spending money on it. Whereas, the services, on the other hand, are not something tangible but the tasks which are done by one person to another person. The services are important for the developing nation and the goods are important for the developed nations. The economic condition of the country limited the resources of production whereas, the production of the goods are easily done in the developed country as per their economic condition provides sufficient means to produce. The feedback from the customer identified differently for services. Australia is dominating the whole world when it comes to the services sector. Despite the fact that Australia has the abundance of natural resources which they sell to the whole world but still their focus on the services have made them strongest economy. The change of the priority of the government was solely based on the success of the long run. They have allocated the resources on the services sector in order to boost the economic growth. The other reason for changing priority regarding the fiscal policy is to provide the equal opportunity which leads to the distribution of wealth and income equally among the citizen of the country. Commonwealth Bank and National Australian bank considered to be the 50 safest banks in the country. The 2.5% of the Australian economy depends on the tourism sector and their share on the GDP. They opened their borders for the people to come and do this they have increased skilled people in their country to provide the services. Providing the education services have made even more beneficial for the services sector which eventually became the factor of economy uplifting. The resources which are being spent on mining industry should be spent using sustainability goals and the environmental friendly ways and sectors should be promoted. The other effect on the economy of Australia will be the growing market leader in China. China is capturing the market through services. Australia will be affected by this growing economy. The other biggest risk is on the financial services which will soon cause the crisis of banking. The national competition policy reforms have stated that the flexible and efficient policies have been contributing to the uplifting of the services sector. The assumption which has been made on the basis of the reports and world condition should be considered as the adaptation of change is crucial for the continuous growth.

References

Baral, H., Keenan, R. J., Sharma, S. K., Stork, N. E., & Kasel, S. (2014). Economic evaluation of ecosystem goods and services under different landscape management scenarios. Land Use Policy39, 54-64.

Bryson, J., Sancino, A., Benington, J., & Sørensen, E. (2017). Towards a multi-actor theory of public value co-creation. Public Management Review19(5), 640-654.

Chavan, M., & Agarwal, R. (2016). The efficacy of linkages for relational capability building and internationalization-Indian and Australian mining firms. International Journal of Business and Economics15(1), 51.

Clulow, V., Gerstman, J., & Barry, C. (2003). The resource-based view and sustainable competitive advantage: the case of a financial services firm. Journal of European Industrial Training27(5), 220-232.

Hanna, E. G., Bell, E., King, D., & Woodruff, R. (2011). Climate change and Australian agriculture: A review of the threats facing rural communities and the health policy landscape. Asia Pacific Journal of Public Health23(2_suppl), 105S-118S.

Keiningham, T. L., Frennea, C. M., Aksoy, L., Buoye, A., & Mittal, V. (2015). A five-component customer commitment model: implications for repurchase intentions in goods and services industries. Journal of Service Research18(4), 433-450.

Tietenberg, T. H., & Lewis, L. (2018). Environmental and natural resource economics. Routledge.

Wheelahan, L., Arkoudis, S., Moodie, G., Fredman, N., & Bexley, E. (2012). Shaken Not Stirred? The Development of One Tertiary Education Sector in Australia. NCVER Monograph Series 08/2012. National Centre for Vocational Education Research Ltd. PO Box 8288, Stational Arcade, Adelaide, SA 5000, Australia.

Williams, C. C., & Martinez-Perez, A. (2014). Why do consumers purchase goods and services in the informal economy?. Journal of Business Research67(5), 802-806.

Worthington, A. C. (1999). Malmquist indices of productivity change in Australian financial services. Journal of international financial markets, institutions and money9(3), 303-320.

 

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