After China's become a member of WTO, China's will need more raw materials specifically agricultural products and the Philippines is the best country that has a good production of foods and feed grains, sugar, vegetables, fruits, cottons, and many other agricultural raw materials. With or without china's accession, the Philippines are expected to grow faster in food grain export and output of light manufactures. And the Philippines as well have the same advantages in many areas in which china is good and strong. China's in joining WTO will increase competition in the Philippines. As of now, many products of China like toys, cooking utensils, glassware, ready to wear goods, shoes, bags, accessories and even pirated CD's and DVD's are available in all parts of the Philippines.

Little by little without being notice by the Filipinos those products will eventually affect the Philippine economy. Many people are patronizing those products from China because of its low and reasonable price, but if you will compare it to the native products, China has poor quality products and cannot be use for a quite long time. Of course, this cannot be stop due to the agreement. In particular the area of competition between two countries is focused in apparel produced for North America and Western Europe. But the overall impact is negative because the Philippines already established certain niches within the export market. The impact on the Philippines will also depend on the investments progress. As compared to Indonesia and Thailand, Philippines grow more fast when it comes to apparel, textile, processing, light manufacturing, and assembly operations.

The Philippines is stable to join in global production networks, in machinery and electronics because Filipinos are known to its finest work around the world, either in skilled and unskilled work. That is why FDI are planning to expand in both countries, Philippines and China simultaneously. Many sectors will affected from China's WTO accessions due to the use of unskilled labor, while those that have a tendency to grow are giving more emphasis in land or skilled labor. The salary of unskilled workers may deprive. The impact on urban discrimination and criticism should be monitored and give more importance to process the changes in the labor market.

By joining WTO, China benefits itself and its own trade liberalization.

The liberalisation of economic activities has an impact upon the nature of work of an organisation, employment, labour markets and employee. It is evident that MNCs has opened production sites at various locations around the world and these production sites can be relocated easily according to the company's objectives. This relocation of production sites of multinational companies affects the employee and HR practices.

The multinational companies are thought agents of change. They bring new information's and thinking for the local organisations and the latter follow these ideas and standard in the field of HR.

Traditionally, retailing even wholesaling is considered as a localized sector, which means composed of small-scale operations. The introduction of various laws that encourage free

trade or lessen trade barriers through international treaties has made commerce vital to attain economic growth resulting in lesser barriers in worldwide employment.

Huge multinational or national retail chains are considered among the largest businesses in many developed countries, and accounted for a huge share of the approximately US$6.5 trillion in international commercial transactions in 1997.

There are various contributing factor for this phenomenon. Leading among them are the technological advancements (including electronic commerce for instance) introduced, the international movement of enterprises and quickly spreading competition-driven changes such as just-in-time production and sales. Ironically, these are considered both the cause and result of an increasingly integrated and highly competitive global market that deeply affect the organization and human resource strategy of commercial organizations. Despite its development and dynamism, deterioration of employment and working conditions are also getting prevalent causing concern among business organizations.

The trends of regionalization and the effects of global operations have heightened the need to set up HRD strategies to acquire and retain competent workforce for them to maintain competitive market positions. The skill shortages often pertain to managerial and professional skills, clerical and production workers and an overall shortage of IT skills for all economies.

It is important to keep the capabilities of both managers and workers presently working for the business at the same time introduce structural changes to allow a smooth transition to higher value-added industries. The solution for the multi-national companies as well as local companies in production sites and strategic regional centers could be in better forecasting of HRD needs, a cost-benefit training framework, better labor market policy-making, and quality vocational and training programs that are jointly conducted by the government and the private sector.

To increase your chance for success, take the time up front to explore and evaluate your business and personal goals. Then use this information to build a comprehensive and well-thought-out business plan that will help you reach these goals.

The process of developing a business plan will help you think through some important issues that you may not have considered yet. Your plan will become a valuable tool as you set out to raise money for your business. It should also provide milestones to gauge your success.

1. Getting started: Before starting out, list your reasons for wanting to go into business. Some of the most common reasons for starting a business are:
   • You want to be your own boss.
     • You want financial independence.
     • You want creative freedom.
     • You want to fully use your skills and knowledge.
2. Next you need to determine what business is "right for you." Ask yourself these questions:
   • What do I like to do with my time?
     • What technical skills have I learned or developed?
     • What do others say I am good at?
     • Will I have the support of my family?
     • How much time do I have to run a successful business?
     • Do I have any hobbies or interests that are marketable?
3. Then you should identify the niche your business will fill. Conduct the necessary research to answer these questions:
   • What business am I interested in starting?
     • What services or products will I sell?
     • Is my idea practical, and will it fill a need?
     • What is my competition?
     • What is my business's advantage over existing firms?
     • Can I deliver a better quality service?
     • Can I create a demand for my business?
4. The final step before developing your plan is the pre-business checklist. You should answer these questions:
   • What skills and experience do I bring to the business?
     • What will be my legal structure?
     • How will my company's business records be maintained?
     • What insurance coverage will be needed?
     • What equipment or supplies will I need?
     • How will I compensate myself?
     • What are my resources?
     • What financing will I need?
     • Where will my business be located?
     • What will I name my business?

Your answers will help you create a focused, well-researched business plan. That should serve as a blueprint. It should detail how the business will be operated, managed and capitalized.

One of the most important cornerstones of starting a business is the business plan. The Small Business Association offers you a tutorial on preparing a solid plan with all its essential ingredients. Be sure to review and peruse this website.

Once you have completed your business plan, review it with a friend or business associate. When you feel comfortable with the content and structure, make an appointment to review and discuss it with your banker. The business plan is a flexible document that should change as your business grows.

• Exposing local industries to imported goods ? more competitiveness.
• Focus resource on areas of economy where Australia has a comparative adv.
• Benefiting from Globalization ? consumer and business has access to goods and services on global market at lowest price.
• Aim of encouraging efficient firms to produce what the world economy demands ? structural changes in the economy ? economies of scale in production.

Policies:

• Historically one of the most highly protected country in the world, because manufacturer found it hard to compete because of small population + ?cost
• 1970-1980: Program to phase out all tariffs
• 1974: Whitlam Government, 25% cut on all tariffs.
• 1988: Hawke Government, reduces most tariffs to 5% by 1996 & abolish quotas + tariffs to 15% on cars, and tariff on textile, clothing and footwear (TCF) to 25% in 2000.
• Howard Government slowed the schedule of Hawke Government in 2000 because of concern for job losses in Passenger motor vehicle (PMV) and TCF.
• 1999: several hundred “nuisance tariffs” we abolished.
• Australia's reductions on protection have gone beyond the requirement of WTO and APEC.
• Australia now tends to reduce trade barrier in exchange for greater access to markets in other countries.

Implication of Australia's Policies

Firms:

• Forced to compete in world stage ? more efficiencies and economies of scale.
• Firms will restructure and reallocate resources to areas where Australia have a comparative advantage and also find new export market as the domestic market ?
• Some firms benefit because of cheaper capital goods and commodities in the world economy.
• More diverse export base.

Individuals:

• Dislocation of jobs as firms restructure ? unemployment.
• Import competing industries will close (mostly labor based), workers will need to retrain and find new jobs. This could be especially hard as most are non English speaking.
• This is short term, workers from manufacturing industry move to service industry.
• Consumers will be able to have access to more variety of goods at cheaper prices.
• Increased living standards, because of higher comp between firms.

Government

• ?tariffs ? ?revenue
• Government need to assist structural changes ? ?Govt spending.
• Policy is unpopular as the costs are visible, like structural unemployment, but the benefits are not as visible.

Impact of International Protection Levels on Australia

• Protection policies and Government subsidies in other countries cause hardship for Australia exporters. For example USA subsidies 21% of US farmer's income, causing our agricultural goods to have ?demand.
• Australia largely affected by protection of Agricultural products, ie. India tariff at 30%.
• WTO though made an agreement of 36% tariff cut on agricultural products, some country find loopholes in the agreement, causing hardship for our agricultural exporting country.
• Service sectors in many countries are closed to outside entrants, for example banking, telecommunication.
• In the WTO meeting (Doha round) Australia is pushing for agricultural trade liberation and arguing against the loopholes that countries exploit in the agreement to reduce agricultural tariffs.

China is located in the continent of Asia with the highest population in the world of 1.3 billion people. They are the fastest growing economy due mainly to foreign direct investment in which occur because of cheap labor rates and manufacturing costs. With the tremendous progress in the last decade China has reduced poverty dramatically thanks to an economic system increasingly open to trade and foreign investment.

Their political system is run by the communist party in which according to the corruption index rated from 0-10 with 0 being absolute corruption in the political system. China ranks 71 out of 145 nations with the index at 3.4. Although China is a communist country they are taking a very western approach to how they are run with trying to become a much bigger player in globalization and using strategies in order to promote economic growth and development.

On the 17th of September 2001 China was admitted membership into the World Trade Organization after 15 years of lobbying for the position. They were then able and were participants of the Doha round on the 10th of November 2001. “International economic cooperation has brought about this defining moment in the history of multilateral trading system,” said Mike Moore, WTO Director-General, at the conclusion of the meeting of the Working Party on China's Accession.

Under the chairmanship of Ambassador Pierre-Louis Girard of Switzerland, the Working Party agreed to forward some 900 pages of legal text for formal acceptance by the 142 member governments of the WTO.

As a result of these negotiations China has agreed to undertake a series of important commitments and rules it must follow by, some of these include:

China will provide non-discriminatory treatment to all WTO members. All foreign individuals and enterprises, including those not invested or registered in China, will be accorded treatment no less favorable than that accorded to enterprises in China with respect to the right to trade.

Price controls will not be used for purposes of affording protection to domestic industries or service providers.

The WTO will be implemented by China in an effective and uniform manner by revising its existing domestic laws and enacting new legislation fully in compliance with the WTO agreement.

China will not maintain or introduce any export subsidies on agricultural products.

“Now this economy will be subjected to the rules-based system of the WTO, something which is bound to enhance global economic cooperation “, said Mr. Moore.

As a result of this negotiation, China has agreed to undertake a series of important commitments to open and liberalize its regime in order to better integrate in the world economy and offer a more predictable environment for trade and foreign investment in accordance with WTO rules. This more stable environment with hopefully then lead to a decrease the level of corruption in the political system which will lift its index and ranking as so then will become more attractive for foreign investors, to China's benefit and to the traders.

ECONOMIC GROWTH

The 2003 statistic provided by the Market Economy textbook displays China Producing their Gross National Income of $1417 [US Billion] with a ranking of sixth.

This indicates that a lot of output comes out of China, but one must encounter the population when calculating the real output of a nation and which China has a GNI per capita of only $US4980 with a rank of 119.

Between 1965 and 1979 the gross domestic product grew at a rate of 6.4 per cent a year, and between 1980 and 1988 the increase was 10.3 per cent annually. The growth rate dipped below 4 per cent in 1989, but returned to well above 10 per cent annually in the early and mid-1990s.

The 2005 growth rate started at strong at 9.5% and flattened out to average to 9.4% for the 2005 year. Since 2002 the Industrial production has increased by 15% along with the Consumer demand, which increased by 10.1%.

With reference with the agriculture sector as a % of GDP, has decreased from 29% in 1997 to just 13% in 2003, this is a result of more industrialization, more infrastructure and investments into China, and so some farms have been converted into cities and factories. Another factor due to the decrease into agriculture is the fact that this is a percentage of the GDP and expresses the fact that all other industries are producing a lot more and growing more than the agriculture industry itself.

Much of the growth as stated before is attributed to the Foreign Direct Investment increase, this is a very attractive market for western expansion. This is the result of a more market-based economy with globalization and deregulation by the Chinese government. These recent trends of growth that averages 9.4% growth rate over the past decade is 1.7 % higher than the Asia region which stands at an average growth rate of 7.7%, while the average growth rate of the rest of the world is at approximately 2.65%.

With China being a major economy in the world, they are usually only influenced by another major economy which now is the USA.

ECONOMIC DEVELOPMENT

While economic growth has resulted in improvements in the general quality of life in China, these gains have not been shared equally within the economy.

According to the Human Development Index China is ranked in the middle Human Development with a GDP per capita of $US 4580.

This shows that over the past two decades or so that the Human Development Index has increased by more than a third in the past twenty-three years as shown below. The current situation in China now only sees 16.6 % of the population in absolute poverty.

• 1980 HDI = 0.554
• 1990 HDI = 0.625
• 2005 HDI= 0.745 [ranked 94th currently]

These inequalities that exist in China are divided into certain sections in which you would find that especially qualities of life differ to these factors of rural/urban areas, east/west provinces and whether you are a male or female.

Examples of this are seen in these statistics provided by “The Corporate Classroom”.

• Urban incomes are an average of $US828: up 8.5% from 2002.
• Rural incomes $US211: up 5.7% from 2002.
• These growing income gaps between the rich and poor causing economic and social imbalance.

Positive factors that have occurred with the help of globalization is due to the rise in the HDI level and the statistics that contribute to the factors used in determining the HDI are as follows:

• Life expectancy at birth improved from 63.2 in 1970 to 71 in 2005.
• Infant mortality rate decreased from 35 in 1997 to 32 in 2003 [per 1000 live births]
• Adult literacy [% aged 15+] from 78.3 in 1990 to 90.9 in 2005.

Although you can argue that the income inequality rising is a negative effect, you cannot dispute the fact that even though this occurs, the rise in income for everyone is a major positive effect with the astounding amount of Chinese people coming out of absolute poverty and even with the HDI index rising. China is in a rapid transition from the once third world nation into one that is almost first class.

In 1997, savings deposits of urban and rural residents reached US$560 billion, over 218 times that of 1978 with an average annual increase rate of 32.8 %. Plus foreign currency savings, debentures and stocks, the amount of financial assets owned by rural and urban residents had exceeded US$725 billion.

The pattern of consumption underwent positive changes- the Engel Coefficient of both urban and rural population lowered by 11 and 12.6 percentage points. In conclusion of the economic development I would have to say that China has experienced positives from Globalization, even though I have en-taken that they now have a higher Gini index, but the fact is that it has increased peoples living conditions, HDI levels and income to the poorer people.

UNEMPLOYMENT

The increased exposure to the global economy has resulted in millions of jobs being cut from state owned enterprises. The statistic shows that in 2001, 5.15 million workers were retrenched from state owned enterprises; it was mainly due to that the restructuring in many inefficient industries.

Although China used to have really good employment in the past, today the unemployment is increasing as in 1997 the unemployment rate was 3.1% and in 2003 the unemployment rate had risen to 7.8%. This is not a very good sign to the government and some reorganizing needs to be made by the communist party for the China's welfare and the budget because by the end of 2003 almost 3.13 million people were receiving unemployment benefits.

TRADE

Prior to 1978, China's trade was conducted under a strict system of state trading where approximately a dozen foreign trade corporations monopolized all foreign trade. Under the central planning regime, imports were minimized and exports authorized only to the extent needed to pay for imports. Over the last twenty years, the system has changed dramatically and China's trade has expanded enormously. Its share of world trade has risen from 1% to 3% over the last quarter century and the World Bank projects that it will triple again by 2020, making it the world's second largest trader.

According to the statistics made in 2003 by “The corporate Classroom 2004” China is currently the 10th largest trading nation. 2004 forecasts may increase this ranking to 4th.

The accession into the WTO since the 17th of September 2001 encourages trade liberalization and opened more accessible markets to China. The total net volume of trade in 2003 increased by 7.5% on the previous year.

In 2003 China's exports were up by 32.3%

Imports were up 40.5%

Tourism is an increasing industry, which is up 9.7%

In the last decade globalization and the entry into the WTO has made China a more attractive country to invest and travel to, along with this and also their quick response to the rest of the worlds interest in China they have managed to turn around in less than ten years a CAD into a CAS.

These trade flows are very positive in relation to China with the second biggest trading nation in the world.

DISTRIBUTION OF INCOME

A main indicator to measure the income inequality is to use the Gini coefficient method as in 1990 the level was as 0.25 and then calculated in 2005 the level has risen to a level of 0.447. This is the comparison to Australia's Gini co-efficient index that now stands at the rate of 0.294 [2003-2004]. This increasing gap of income inequality is becoming more one of the extremes-causing economic and social imbalances.

FOREIGN DIRECT INVESTMENTS AND TRANSNATIONAL CORPORATIONS

FDI and TNC's have increased rapidly since globalization and the opening of markets and deregulation by the Chinese economy. The FDI has increased by 19% since 2002. Some statistics and developments concerning the development in TNCs and FDI include:

In 2003 some 34 000 new FDI projects and enterprises were approves.

FDI and TNCs encouraged in modern agriculture, in high tech industries, infrastructure and construction.

Focus is on the development of the western regions, and the re-engineering of State Owned Enterprises.

Foreign investment capital became a major factor in growth, with US$30 million of investment in 1994. This rapid growth has caused some problems, such as high inflation rates in urban areas and increasing economic inequalities between regions and social groups.

ENVIRONMENTAL ISSUES

There is concern that China may pursue unsustainable practices in an attempt to maximize opportunities of globalization. China perhaps has become too absorbed in becoming the fastest growing economy with such high growth, development, and HDI levels that environmental issues are not seen as being so important and the issue is just being ignored.

The air pollution in South East Asia is a particular problem with almost five times more pollution in the air than some parts of Sydney's pollution. These environmental problems occur due to the increasing industrial production contributing to poor environmental quality and increasingly frequent blackouts. With their increased use of oil used in production of such industries the rest of the world can feel the impact on the increase on a barrel of oil due to the demand created by China's increased consumption.

STRATEGIES USED TO PROMOTE GROWTH AND DEVELOPMENT:

OPEN TO THE WORLD POLICY

In general China has adopted a more open policy that is in keeping with the WTO stance on trade liberalization. China continues to actively seek FDI and develop links with the international economy.

FDI AND TRADE POLICY

• Sustained economic growth rests with continued investment and trade.
• China actively seeks FDI and will continue to do so.
• Removal of some 120 regulations that limit private capital inflow
• China's export base is being broadened.
• Businesses are being encouraged to invest and compete for foreign contracts
• Key equipment and technologies are being imported to develop domestic industries.
• The liberalization had a fairly significant impact with the removal of government controls over prices, reduction of trade protection and also with the liberalization of investment and financial flows.

MICROECONOMIC REFORM

• China is committed to the reduction of administrative intervention
• The financial system is being reformed and to some extent deregulated.
• Consumer credit developing.
• Continued reform of SOE's.

FISCAL POLICY

• Much of the government expenditure is directed towards infrastructure economic redevelopment and job creation.
• Spending on education and health is increasing.
• State is committed to an active role in stimulated the economy through fiscal policy.
• In 2005 the fiscal revenue soared 18.2 % or more than 50 billion US$ for the first 10 months.

WELFARE POLICIES

The immature welfare system must be developed to address rising unemployment. Income protection insurance schemes being proposed for rural areas.

Job creation is important to addressing welfare problems of the economically disadvantages regions. As stated before, China is paying out welfare payments to over 1.3 million unemployment benefits. Will careful and accurate restructuring of the Chinese economy not so much payouts would be required thus a high budget to spend on other things.

The current position that China is in [as quoted by the “Gittins on Saturday” article by Ross Gittens in the Sydney Morning Herald, weekend edition on the 3rd of December 2005.] is a transition from industrial to knowledge-based development. “Since 1949, rural China has for the most part broken free from economic isolation thanks to investments in basic infrastructure, development of a road system, basic disease control, lower fertility rates, increasing literacy and so on.” He also mentions how China has moved to a more market based economy due to the globalization and China being more opened up to the world market.

Deflation Looms: These extracts come from William Pesek Jr.

Officials in Beijing have used administrative measures to reduce over investment. Doing it slowly to achieve a soft landing means capacity growth remains high, causing an oversupply even when China's annual growth of more than 9 per cent slows.

Cutting the interest rates may even worsen deflationary pressure by encouraging capacity growth regardless of corporate profitability; the plentiful liquidity keeps interest rates low and, hence sustains the on-going investment projects and funds new investments in bottleneck areas.

Pushing China toward deflation is a high savings rate. While Americans save too little, Chinese save too much.

China needs to get consumers to spend more. To do that, the government should privatize state owned assets, shift fiscal expenditures away from investment and modernize pension, health-care and education systems.

The impact of globalization on the economic performance on China has proved to be a positive one as summarized throughout this essay. Globalization has created positives in the Human Development Index, there is more literacy and a longer life span as well as higher incomes and less and less people coming out of absolute poverty each year. China are not just benefiting themselves by becoming a more market based economy but they are also creating positives through the rest of the world by selling their comparative advantage of cheap labor to many transnational corporations and Foreign Direct Investors.

Although that they do have had an enormous positive out of globalization they also had negative in pollution levels and the income inequality. Although these are not what an economy is looking for the fact is that the positives that China has experienced outweighs the negatives a thousand to one.

As stated throughout the essay China has embraced globalization with open arms and uses many strategies to help the impacts that globalization has to offer which included their entry into the World Trade Organization, their active role in NAFTA, deregulation in many industries, privatization of many government owned organizations and the reduction of tariffs by almost 35% since 1980.

1. Unemployment
2. Inflation
3. External Stability
4. The Distribution of Income
5. The Environment

Unemployment

The demand for labour is a derived demand as it is determined from the demand of goods and services. During periods of low economic activity or downturns in the economy, the level of total demand in the economy is reduced, domestic consumption and investment spending decreases and therefore unemployment increases as workers are not needed and are therefore "fired".

The current level of unemployment, as of March 2005, is 5.1%, which is close to the government's aim of full employment. Full employment indicates a level at which the quantity of labor demanded is equal to the quantity of labor supplied. This doesn't mean zero unemployment as there is always going to be some unemployment due to frictional unemployment (workers changing jobs) or hidden unemployment (people doing unpaid work). The Howard government has been able to achieve this low level of unemployment through its concentration on policies to implement flexible workplace relations and expansion of enterprise bargaining between workers and employers.

Inflation

High levels of economic growth can result in price increases and larger wage claims contributing to a rise in the level of inflation. This occurs when spending is growing and the economy is close to its full capacity and growth in aggregated supply cannot keep up with demand for growth in aggregated demand. High levels of inflation is undesirable for an economy as it results in rising prices which in turn results in a decrease in the amount of disposable income of consumers. Consumers then seek higher wages, which further push up prices of goods and services. Inflation causes the countries currency to depreciate as investors lose confidence in the countries economic markets and results in a worsening of the balance of payments as exports become less desirable and imports become more desirable.

In 1992 the Reserve Bank of Australia (RBA) stated its aim to keep inflation between 2-3% by changing interest rates when inflation is too high or low in order to slow or speed up the economy. This was designed to reduce inflationary expectations and therefore reduce inflation. This has been why the RBA increased interest rates in March this year from 5.25% to 5.50%.

When this strategy is combined with increased competition and enterprise bargaining inflation can be kept too acceptable levels like was done in Australia during the 1990's and early 2000's. Inflation can also be kept low by ensuring that all factors of production are in sufficient supply and that there are enough markets for these goods and/or services to be supplied to.

External Stability

Australia's external stability is determined by a number of factors:

• Current Account Deficit (CAD)
• Australia's Foreign Debt
• Australia's Foreign Liabilities
• The size of the CAD as a proportion of GDP
• The size of Australia's net foreign debt as a proportion of GDP
• The value of the Australian dollar
• Australia's interest payments on its foreign debt

During periods of strong economic growth, individuals increase their spending as their wages increase. This leads to an increase in the amount of imports imported into the country, and therefore worsens our terms of trade. If the price of exports becomes unable to cover the increase in imports then the current account increases. In Australia this would lead to an increase in the Current Account Deficit (CAD), which would then mean that further repayments will be needed to be repaid to the loaning country resulting in the "debt trap". As of December 2004 the CAD is $53.8bn

Net foreign debt represents the total liabilities that we owe to overseas minus the foreign liabilities that are owed to Australians. Australia's net foreign debt has been increasing for some time as Australian borrow money for consumption of more goods rather than saving money as was done in the 1970's. In December 2004, our net foreign debt was $421.9bn up $15.7bn from September 2004's figure of $406.2bn. Economic growth increases the amount of money in which individuals can spend their money. This leads to further purchase of goods and therefore further debts as they spend too much money. In order to reduce the net foreign debt Australians would need to reduce their spending and start saving their money to reduce the massive debt before the debt become unserviceable and Australians go bankrupt.

The size of the CAD as a percentage of GDP is the best measurement of external stability. If CAD as a percentage of GDP rises above 5% this is seen as externally unstable as it results in

• The net foreign debt rising quickly
• Increased capital inflow require to finance the CAD and
• Debt servicing becomes more difficult

As of the 2003-04 financial year the CAD was $46.7bn, which was 5.5% of GDP meaning that Australia's economy was becoming more externally unstable as foreign debt, and capital inflow are increasing and servicing the debt becoming harder to achieve.

The size of Australia's net foreign debt as a percentage of GDP is another way of measuring external stability. Economists usually consider net debt in excess of 40% of GDP as an indicator that net foreign debt is very high and may become unsustainable - in that the interest rate repayments on the debt are too large to sustain. As of December 2004, Australia's net foreign debt was $421.9bn or 51.1% of GDP meaning that interest repayments would be becoming unable to manage. However nearly all of that debt is private debt so the government is unable to reduce anything except for their $16.3bn part of the debt, which is only 1.9% of GDP.

The value of the Australian dollar compared to the country of which our repayments on debt are owed to can also determine our external stability. Since the debts accumulated by Australian are in foreign currencies (E.g. $US) the principle and interest owed to the foreign country has to be paid back in their currency. When our dollar appreciates this means that more of the debt can be repaid for the same amount of money than if the dollar was depreciating. Appreciation usually occurs when economic growth is strong and is accompanied by decrease in CAD, increase in net capital inflow or increased confidence in Australian dollar while depreciation occurs when economic growth is falling, CAD is increasing, and there is a decline in net capital inflow. Below in

Diagram 1

The Australian currency exchange rates for 27/05/05. This means that for every $1 owe to the US we have to pay $1.31182 Australian dollars.

• American Dollar: 0.7623, 1.31182
• Brazilian Real: 1.82647, 0.547504
• British Pound: 0.418226, 2.39105
• Canadian Dollar: 0.959354, 1.04237
• Chinese Yuan: 6.30917, 0.158499
• Danish Krone: 4.51304, 0.22158
• Euro: 0.606541, 1.64869
• Hong Kong Dollar: 5.92818, 0.168686
• Indian Rupee: 33.0914, 0.0302193
• Japanese Yen: 82.2369, 0.01216
• Malaysian Ringgit: 2.89674, 0.345216
• Mexican Peso: 8.29763, 0.120516
• New Zealand Dollar: 1.06735, 0.936901
• Norwegian Kroner: 4.84228, 0.206514
• Singapore Dollar: 1.26473, 0.790682
South African Rand: 5.0045, 0.19982
• South Korean Won: 762.3, 0.00131182
• Sri Lanka Rupee: 76.1919, 0.0131248
• Swedish Krona: 5.57576, 0.179348
• Swiss Franc: 0.939458, 1.06444
• Taiwan Dollar: 23.8524, 0.0419246
• Thai Baht: 30.7817, 0.0324869
• Venezuelan Bolivar: 1634.83, 0.000611685

The Distribution of Income

Economic growth raises living standards by providing more goods and services for consumption. However, not all people in the community benefit from economic growth. Sometimes the benefits of economic growth flow to one particular group in society. This inequality of income can result in many social and economic costs to the community in which it occurs. These social and economical costs include:

• Discouraging people who have little opportunity to improve their skill
• Employees working harder and longer
• Insistence on labor mobility
• Production of failed entrepreneurs
• Creation of unequal savings
• Higher levels of crime and therefore criminal judgment cost
• Health problems for those in the lowest percentile who can't afford medical supplies
• Increase social welfare costs for the government who have to support those who can't earn their own wage or are part of the working poor in which they don't earn enough cover their basic needs
• Higher costs for policing to control increases in crime

The Gini Co-efficient, which is a precise measuring the income distribution, has been used to measure inequality levels and compare changes over time or between countries and regions of the world. A measurement of 0 means that everyone in the economy shares the same amount of income while a measurement of 1 would mean that just one household holds the whole amount of income for the country.

As shown in Diagram 3 below, Australia's Gini Co-efficient is 0.352 for 2004, which has increased from the levels in 1997-98 of 0.302 and 0.295 in 1989. This indicates that although economic growth is occurring at high rates over the 25-year period, the distribution of this income has gone towards the high-income earners and therefore has increased the gap between rich and poor. Also in Diagram 3, one can notice that although our Gini-coefficient is half the size of that of countries like Namibia there is still large improvements that can be made to get to the size of Denmark's or Hungary's Gini-coefficient.

Diagram 2 - Gini coefficient

• Hungary: 0.244
• Denmark: 0.247
• Japan: 0.249
• Sweden: 0.250
• Germany: 0.283
• India: 0.325
• France: 0.327
• Canada: 0.331
• Australia: 0.352
• UK: 0.360
• Italy: 0.360
• USA: 0.408
• China: 0.447
• Russia: 0.456
• Guatemala: 0.483
• Hong Kong: 0.500
• Mexico: 0.546
• Chile: 0.571
• Namibia: 0.707

Environment

Economic growth has the potential to create negative impacts onto the environment. When growth is pursued with little regard to its impact on the environment it results in:

• Pollution.
• Depletion of non-renewable energy sources .
• Damage to the local environment through externalities.

Pollution can come in any form; noise, untreated rubbish, chemical substances, toxic fumes and almost any other by products of goods or services. They all affects the atmosphere, water supplies, the land all human activity and we live on seems to contribute to the problem. Pollution is often felt quite a distance away from the original source and this can affect all people in the community and in communities all over the world.

One example is the amounts of CO2 being pumped into the air every year contributing to the global felt affects of global warming. Pollution can lead to costs being paid by the firm to help repair the environment affected. Firms can also be liable to pay for compensation to individuals who are found to have been injured or have become ill directly from externalities from a firm producing their product or service. These costs may include costs paid out to cancer patients who may have received radiation poisoning.

As firms produce goods they use up resources, whether they be steel, electricity, coal, wool or wheat. Some of these resources are not able to be reproduces very quickly, like coal and other non-renewable energy sources like oil and natural gas, or unable to be produced again indefinitely like steels and ores. This increases the rarity and value of these resources compare to other resources that can be reproduces quickly like wheat or wool. One major resource that Australians have been noticing recently is water. Due to the massive drought experienced by millions of people all over Australia, people are beginning to realize that we won't always have water on call if this continues.

Firms are able to lower production costs, as they don't have to take into consideration the effects their business has on the surrounding community. These costs or benefits that the community is left with are called externalities and may include damaged creeks or roads or something good like produce more business in the surrounding area. Land degradation can lead to a loss of potential production as problems, like salinity and mudslides, can leave the area unable to continue producing the good or service. E.g. Farmers are unable to continue growing grain crops if their lands experience salinity from ground level water tables. Land degradation can also reduce environmental biodiversity of an area, as bush land is cleared or farming purposes.

In conclusion it can be seen that there are many factors that contribute to and affect the outcome of economic growth of a countries economy. Economic growth usually results in lower levels of unemployment, higher levels in inflation, more external instability, more inequality in the distribution of income and higher levels of environmental degradation of the environment. However with correct intervention by governments and other organizations, like the Reserve Bank of Australia (RBA), these effects can be lessened to a point at which sustainable economic growth can occur.

While planning to implement E-commerce strategies, Managers must inherit strong leadership quality, which in turn require making analysis of E-commerce issues and company's pros and cons. Understanding the issues of E- Commerce will help managers to take wise decisions and they can demonstrate their company policy well. Managers must work out the Internet changes that will attract to customer and move company toward positive direction. Strategies must not be planned in such a way that it looses main Internet property.

Fundamental properties of Internet must be used to implement any strategy and according to customer response, Internet changes should be done to increase profitability. Sometimes customers are attracted to traditional Commerce so CEO must not reject traditional system of E-commerce while planning to implement in strategies due to technological advancement. Outright rejection of traditional system may lead to failure.