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A6010 International Relations

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A6010 International Relations

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Course Code: A6010
University: Monash University

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Country: Australia

Question:

With the emergence of new players such as India and Indonesia in the region, do you still expect Australia to remain a middle power in the Asia-Pacific/ Indo-Pacific region? Give reasons for your answer.

Answer:

With the emergence of new players such as India and Indonesia in the region, do you still expect Australia to remain a middle power in the Asia-Pacific/ Indo-Pacific region?
Asia pacific region has been the area of economic capital from centuries. Australia has remained the centre of power in the Asia pacific or indo pacific region for over decades. They have been enjoying the power with its financial and military strengths. They are a developed nation among the various developing nations in this region. Australia had great economic ties with all the countries in the region. They had a strong bond with all their allies in this region. With minimum of conflict with any other country they have been the leader in the region. Apart from this Australia has been the manufacturing hub of many companies at international level and hence acts as a source from where most of the suppliers were gaining raw commodities. Australia has been the major raw commodity exporter over the years. Almost all the big companies had their manufacturing centres in Australia and the hence the demand of the Asia pacific region has been fulfilled from this country while they were dependent on the ASEAN countries for availing workers at lower cost. Many students from this region preferred Australia for studying. This is the region why companies were also finding young new talents in this nation (Connors, Davison and Dosch, 2017). Australia was a manufacturing hub for this region and acted as a source for employment.
In the present global world, the country which is having more control on the resources and economy is understood to be as a power in that region. Higher power to affect the balance of global trade is one of metrics on which dominance of any country depends. Australia has been the economic powers over the years but in the last two decades some other power centres have emerged in this region. The first basic reason for the shift of power centres in the region has been the fact that Australia is a developed nation with limited opportunities to grow (Beeson and Higgott, 2014). On the other hand countries like India and Indonesia is a developing nation with huge future growth potential. The socio-economic change in the environment of both the nations has instigated the companies to look for a better option among these countries. Since market drives the dominance of any country over the others hence the rate with which any country is developing showcases its dominance in any region.
Things started to change after the introduction of IT in the business processes. This has empowered new nations to build their strength. After 1990’s, the world started getting connected in a networks and hence it was possible for the companies to expand into the new regions. Nations like India and Indonesia came up in the region with new opportunities for the companies. It was possible because of the fact that they had a bigger market with both the countries having large population (Brook and McGREW, 2013). Technology became cheaper hence it was easier for companies to work in any part of the world with the same capabilities as they could have worked in Australia. This has opened the gates for the firms to look into the lesser developed nations.
The biggest reason for emergence of new countries as a centre of power is that they had large population which attracted investments. Countries like India and Indonesia opened their gates for Foreign Direct Investment which was one of the major boosts for their development. In a very short period of time large numbers of players in different industries started to sell their commodities in these nations (Roca, 2018). Many companies have adopted the process of internationalisation and in this process they have expanded their reach to many new nations in this region also.  Due to highly dense population, this region attracted new companies and hence countries like India and Indonesia became their first priority. Along with this, these countries were having lower operational cost. With the cheap availability of skilled labourers, it became further easier for the companies to establish their manufacturing units in this region. The governmental policies and support from the low cost suppliers in the region would have helped the firms to establish their units in these nations (Medcalf, 2014).
India has now become the IT capital and is supporting the business of many global firms. Digitalisation of the work process has helped the firms to manage their operations sitting in any part of the world and they do not have to be present in these nations. Along with this, India and Indonesia have become the leaders in the service industry as large numbers of young and talented employees are present in these countries (Varma and Budhwar, 2013). They acted as a low cost labourer for the Multi-National firms. At the same time, when new opportunities were emerging in these new nations, the cost of operations became very high for the companies that are operational in Australia. Employees of Australia demand for higher income which increases the operational cost of the firm. When the companies started to make job cuts the employees were frequently conducting strikeouts and lockouts. In order to make cost cuts and achieve higher profits, many companies came out of Australia and established their units in these countries. Technology brought transparency in the work process which was necessary for new investments. Previously many big companies were not reluctant to come in these countries as they had higher corruption and there was lack of proper system to establish the business units within the country. It was also seen that companies had to spend a lot of money on the bureaucracy which was an additional cost to the company’s expansion policy. Poor support from the authorities made the process to become lengthy hence wasted huge amount of time of the firms.
India and Indonesia had expanded their trade relations with various countries in the world. It has become easier for the firms to open their manufacturing units in these countries and sell their products in other parts of the world. The lowering down of the import and export taxes in this region has shifted the focus of the companies towards these countries. India was more preferable than Indonesia for the companies as the population in the Indian Sub-Continent was very high. By expanding in India companies could easily extend their reach to these other countries of Indian Sub-continent. This can be easily done with the help of their distributors.
It is also to be noted that Australia is having an ageing society while India is the youngest country in terms of Demographic age. Large numbers of youngsters present in these countries hence companies find a huge target market for them (Pan, 2014). Internal market condition is one of the major reasons citing which any company makes any kind of investment. Support from the local players helped MNCs to expand in these countries as local companies having a better market understanding. Indonesia and India also supported public private partnership in the business which further supported the companies.
Right now, India had become the 6th largest economy in the world which provides a support to the companies operational in this country (The Indian Express, 2018). On the other hand Indonesia is largest economy in the South East Asia. They have also become the military power in the Asian region which further promised stable environment for business (Morley, 2015). Indian military strength is superior to Australia which again does not support Australia’s dominance in the Asia pacific region. With India and Indonesia becoming a bigger global political power, there was a shift in the centre of power like Australia. This made the image of the country better and hence attracted new investors.
The rate of inflation in Australia is also higher as compared to other countries in this region hence there would be less numbers of firms coming to Australia as compared to other countries in the region. It is difficult for the companies that are operational in Australia to reduce their cost of operations in the environment of increasing inflation (Brook and McGREW, 2013). On the other hand the inflation in the developing nations in the ASEAN region is still under control hence helping the firms to do operations at lower cost.
Apart from this, countries like India and Indonesia also started to become educational hub where many new universities and colleges are coming up. With the huge amount of talent pool coming up in these developing nations, companies can easily manage their operations. Apart from this India, Indonesia and many other countries are also acting as a centre for the multinational companies where they outsource their other support or additional activities (Stuart and Tow, 2013). This is possible because of low labour cost and higher skills of the employees.
Since India and Indonesia is a developing nation hence companies finds it a better place where they could actually invest and grow. In the time to come these countries are going to become further big powers which would shift the control from the hand of Australia to these countries (Ping, 2017). These countries have become quick in responding to changing global business environment and hence they are making policies at a very fast speed. This further strengthens their position as an economic power. For example the implementation of GST in India and Indonesia has further strengthened country’s position in terms of becoming economic power. It is same strategy using which once Australia has gained their power in the region. Now other countries are also doing the same.
India and Indonesia have made many military ties with powerful nations and hence they have strengthened their trade routes with these countries. They have become a global super power in the region as many countries are now dependent on these nations for their growth (Fletcher and Crawford, 2013). Australia on the other hand is facing a great political instability from the last five years. It can be checked from the fact that many governments have changed in between these five years. With the change of prime ministers, there is change in the policies made by the government. This has disturbed the political environment within the nation and hence has affected the growth of the companies in the region. On the other hand countries like India and Indonesia which is one of the biggest democratic nations in the world and has been able to provide a healthy political environment.
Australia has a healthy relationship with China, Japan as well as America. Till now, this has provided support to the country to remain in the centre of power. But now there is an increase in the intensity of rivalry among the China and America. In such an environment, it has become difficult for the players such as Australia to stand on anyone side as standing on any one side could be a loss to Australia. But the case is different with India and Indonesia as they are not actually on any one side. This puts them into inert atmosphere where they could focus on other things (Borthwick, 2018). With the increasing tension in the global political environment, it has become essential for the countries to ensure their dominance in this region. India is a nuclear power which is not the case with Australia hence their dominance is going to be on the higher side in the coming years. With India and Indonesia becoming the fastest developing nations of the world, it is going to challenge the dominance of not only Australia but is also going to influence the other power houses in the world. On the hand Japan is losing their grounds in terms of their economic strength and hence it is a loss to Australia also.
Australia needs to focus on the relationship building with other countries so that could act as a greater trade partner in the coming years. The isolation of Australia from other countries has reduced the chances of Australia making inland bonds with other partners in this region (Storey, 2013). The chance that there would be larger players developing in various parts of the world will be higher in the coming years. This is because the military tussle might increase in the future hence gaining control over this region could be a challenge for Australia. The decision like Brexit in other part of the world is also going to affect more to the countries like Australia as they are bigger trade partners with the European nations as compared to other countries. This is going to affect the bilateral trade among these nations and hence the position of Australia is going to further degrade (Ratner, 2013).
Another perspective about it is that there are some external powers that also want to increase their influence in this region. This is disturbing the geo-political situation of the region. Countries like America and China is increasing their dominance in this region. This is due to the huge availability of resources in the region. Australia does not have huge population that could support optimum utilisation of resources while Indonesia and other countries in the south pacific region have huge opportunities for other companies to invest. Social development programs run by the government increases the chances of India and Indonesia becoming a much larger powers in the Asia pacific region (Tseng, Tan and Siriban-Manalang, 2013). Both these countries have targeted to become the suppliers for the workforce in all around the world. International relations of the countries is also going to get affected by the emergence of new powers hence effective policies are need to be made by the governments of various countries (Patience, 2014).
The effect of the tussle in the South China Sea is also going to get reflected in the South Asia Pacific region. With the support of other super powers in the region, there might be the chance that some other small centres of powers may develop. Australia needs to concentrate on the bilateral ties with other countries so that they do not loose grounds in the region (Chen and Yang, 2013). First thing that Australia need to concentrate upon so as to regain the market share is to remove the trade barriers with their partner countries. This will ensure that more opportunities will be coming to the Australia.
Apart from this it is also crucial that Australia become independent in terms of resources they have and the way in which they utilise each of these. This is extremely necessary in the case of human resource management and human resource development (Graham, 2013). They will also have to invest a huge amount of money on the innovation practices as well as research and development projects (Amran,  Periasamy and Zulkafli, 2014). This must be done for the long term utilisation of resources.
With increasing stretch of Globalisation and improvement in economy of many countries, it is obvious that more such countries are going to originate in this region. In the increasing tension among different countries in the same region might affect the development of small regional powers. Development of countries such as Malaysia is a matter of concern for the already established nations such as Australia. The dominance of the country can also be understood in terms of the present state of country to influence the policies of others. Changes must be done in the welfare program run by the government of Australia so as to improve the internal environment of the country. This will enable the government to think about external parameters using which a company can increase their dominance in the region. Some crucial trade and military negotiations with big super powers in the region can increase their dominance again (Weatherbee, 2014). Apart from this it is also essential that Australia manages its international relations with other countries in the world so that they may not lose their smaller partners.
No country in any region of the world will enjoy the supreme power in the coming years. With strong nations pressurising small nations, it is essential that all the countries make their own plans for development which includes holistic development and countries are also doing the same (Hill, 2017). This increase the chance of more power centres to emerge in this region which will further increase the conflicts in order to have control over the region. The country which will have more support of their trade partners will easily be able to grab the market. In this regards the role of the smaller countries become more essential. Australia needs to work on the social development initiatives so as to enhance the chances of more people becoming the target market of the company. Australia could utilise its high per capita income as strength to attract new firms that plans for high capital growth. At the same time they will also have to think about reducing the operational cost within their country by working with intermediaries
References
Amran, A., Periasamy, V. and Zulkafli, A.H., 2014. Determinants of climate change disclosure by developed and emerging countries in Asia Pacific. Sustainable Development, 22(3), pp.188-204.
Beeson, M. and Higgott, R., 2014. The changing architecture of politics in the Asia-Pacific: Australia’s middle power moment?. International Relations of the Asia-Pacific, 14(2), pp.215-237.
Borthwick, M., 2018. Pacific century: The emergence of modern Pacific Asia. Routledge.
Brook, C. and McGREW, A., 2013. Asia-Pacific in the new world order. Routledge.
Brook, C. and McGREW, A., 2013. Asia-Pacific in the new world order. Routledge.
Chen, I.T.Y. and Yang, A.H., 2013. A harmonized Southeast Asia? Explanatory typologies of ASEAN countries’ strategies to the rise of China. The Pacific Review, 26(3), pp.265-288.
Connors, M.K., Davison, R. and Dosch, J., 2017. The New Global Politics of the Asia-Pacific: Conflict and Cooperation in the Asian Century. Routledge.
Fletcher, R. and Crawford, H., 2013. International marketing: an Asia-Pacific perspective. Pearson Higher Education AU.
Graham, E., 2013. Southeast Asia in the US rebalance: Perceptions from a divided region. Contemporary Southeast Asia, pp.305-332.
Hill, C. (2017) Australia is the leader in the Asia-Pacific region, not China or Japan. [Online]. Available at: https://chinadailymail.com/2017/02/24/australia-is-the-leader-in-the-asia-pacific-region-not-china-or-japan/. [Accessed on 25th September 2018].
Medcalf, R., 2014. In defence of the Indo-Pacific: Australia’s new strategic map. Australian Journal of International Affairs, 68(4), pp.470-483.
Morley, J.W., 2015. Driven by Growth: Political Change in the Asia-Pacific Region. Routledge.
Pan, C., 2014. The ‘Indo-Pacific’and geopolitical anxieties about China’s rise in the Asian regional order. Australian Journal of International Affairs, 68(4), pp.453-469.
Patience, A., 2014. Imagining middle powers. Australian Journal of International Affairs, 68(2), pp.210-224.
Ping, J.H., 2017. Middle Power Statecraft: Indonesia, Malaysia and the Asia-Pacific. Routledge.
Ratner, E., 2013. Rebalancing to Asia with an insecure China. The Washington Quarterly, 36(2), pp.21-38.
Roca, E.D., 2018. Price Interdependence Among Equity Markets in the Asia-Pacific Region: Focus on Australia and ASEAN: Focus on Australia and ASEAN. Routledge.
Storey, I., 2013. Southeast Asia and the rise of China: The search for security. Routledge.
Stuart, D.T. and Tow, W.T., 2013. A US strategy for the Asia-Pacific. Routledge.
The Indian Express, (2018) India becomes sixth largest economy in the world, overtakes France. Online. Available at: https://indianexpress.com/article/business/economy/india-becomes-sixth-largest-economy-in-the-world-overtakes-france-5256279/. [Accessed on 13th October 2018]
Tseng, M.L., Tan, R.R. and Siriban-Manalang, A.B., 2013. Sustainable consumption and production for Asia: sustainability through green design and practice. Journal of Cleaner Production, 40, pp.1-5.
Varma, A. and Budhwar, P.S., 2013. Managing human resources in Asia-Pacific. Routledge.
Weatherbee, D.E., 2014. International relations in Southeast Asia: the struggle for autonomy. Rowman & Littlefield.

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