An Australia-Malaysia Free Trade Agreement: Australian Scoping Study a report coordinated by the Australian Department of Foreign Affairs and Trade February 2005
Chart 6.2.3 Macro-economic effects of MAFTA for Australia
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- Chart 6.2.4 Changes in employment and wage s in Australia
Chart 6.2.3 Macro-economic effects of MAFTA for Australia
Data source: APG–Cubed modelling simulation. Chart 6.2.3 provides some additional results for key variables for Australia over time. Real GDP and real consumption in Australia both rise with the introduction of the FTA. The rise in real GDP peaks around a decade out at 0.03 per cent above the baseline (that is above the levels which the model predicts if an FTA is not introduced). Real consumption also peaks about a decade out at around 0.04 per cent above the baseline. Real investment rises as production adjusts to the changed pattern of demand and incentives which flow from an FTA. Real exports (to all destinations) rise quickly to about 0.37 per cent above the baseline by 2007; they are about 0.33 per cent up two decades out. Real imports also rise with the increase in Australian economic activity and lower barriers to Malaysian exports. The increases in production under an FTA generate higher demand for labour. Although real wages increase initially, this is not sufficient to depress the higher labour demand, resulting in increased employment. The rise in employment peaks at around 0.02 per cent deviation from the baseline in 2007 (equivalent to around 2000 jobs). Over time, as real wages adjust further to the increase in demand for labour, the increase in employment falls back to the baseline level. Real wages remain higher, at about 0.03 per cent above the baseline level around 2020. These trends are illustrated in Chart 6.2.4. Chart 6.2.4 Changes in employment and wages in Australia Data source: APG–Cubed modelling simulation. The results are sensitive to the timing of liberalisation. Chart 6.2.5 illustrates this by comparing the results from APG-Cubed for immediate liberalisation with simulations where liberalisation is phased in over five and ten years. For Australia, real GDP is relatively unaffected by the change in phasing, but real consumption with phasing over 10 years is around 9 per cent lower than for immediate liberalisation. By comparison, for Malaysia longer phasing results in very significant reductions to the gains. With phasing over ten years, Malaysia’s gains in GDP are almost 25 per cent lower than when liberalisation has immediate effect, and gains in real consumption are over 25 per cent lower. Although APG-Cubed is preferred to GTAP in estimating the macroeconomic impact of the FTA, the Centre for International Economics also used GTAP to explore the economy-wide implications of the agreement. The results confirm significant gains from a free trade agreement. For Australia, GTAP shows the increase in economic welfare as a result of an agreement as $186.3 million annually. For Malaysia, it shows an increase of RM719.2 million ($244.1 million) annually. Sensitivity analysis undertaken with the GTAP model confirms that the finding of significant gains still holds, even when the modelling assumptions are varied widely. The variations considered as part of this analysis include scaling key assumptions about services trade liberalisation, dynamic productivity and key parameters in the model up and down by a factor of two. These changes did not affect the conclusion that both Australia and Malaysia would gain from a bilateral free trade agreement. For Australia, the gain in economic welfare ranged from $99.4 million to $383.2 million annually. For Malaysia, it ranged from RM410.4 million ($139.3 million) to RM1,584.6 million ($537.9 million) annually. Directory: trade trade -> Trade-off da – gdi 2011 1 Earth Science D/A 2 trade -> Endi 2011 / Daniel/Jason/Kevin/Marc/MiHe/Parth/Simrun trade -> Please note the following trade -> Option 1: Two community residents outside the store trade -> Alliance atlantis communications trade -> U. S. Proposal on negotiating ntbs related to the automobile sector trade -> Cargo arrival deadlines trade -> Economic commission for europe committee for trade, industry and enterprise development trade -> Is the Mark Inherently Distinctive? 4 Download 1.7 Mb. Share with your friends:
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