Industry-Innovation-and-Competitiveness-Agenda

In
Industry Innovation and Competitiveness Agenda
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Chart 3: Average years of formal schooling
and cheaper, disrupting some established
15
Years
15
patterns of trade and business activity
while also creating new opportunities.
Australia
Falling transport costs are facilitating
United
the movement of people and goods. For
10
States
Indonesia
example, air transport costs have fallen
10
around 90 per cent since the 1950s, while
global tourist arrivals have grown from
China
25 million in 1950 to more than 1 billion
5
5
in 2013 (World Trade Organization, 2008;
United Nations World Tourism Organisation,
India
2014). Improvements in communication
0
1970 1990 2010 2030
0
2050
technology have also made it possible to
share information and bring specialist skills
to bear at a distance, allowing services to
be internationally traded where once these
Data Source: IIASA and VID, 2008.
were available only locally (Elms & Low,
2013). For example, improved telecommunications has created a new market for remote medical
and telehealth services, such as the delivery of clinical services through videoconferencing and
remote monitoring of health conditions.
Co
Advances in technology have also made it possible to coordinate complex production processes
across borders (Elms & Low, 2013). This has facilitated the emergence and expansion of
sophisticated global value chains. Globally integrated companies source intermediate inputs
from many suppliers, across industries and geographic locations, for assembly and distribution
worldwide. This is enabling local producers to specialise in one element of a larger production
process and network, which might otherwise not have been viable in their own country or region.
The global economy is also becoming more integrated as governments negotiate free
trade agreements and unilaterally reduce trade and investment barriers. Effective tariffs in
OECD economies have halved in the past 30 years, falling from around 4 per cent in 1988
to below 2 per cent today (World Bank, 2014b). Effective tariffs in developing countries in
East Asia and the Pacific have fallen more markedly, from around 14 per cent in 1995 to around
4 per cent today (World Bank, 2014b). Barriers to foreign investment and skilled labour have also
been reduced, allowing these to move to where the commercial returns and wages are highest.
4 Industry Innovation and Competitiveness Agenda