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The OECD countries remain the main markets for Australia’s non-containerisedexports. In 2002-03, Australia exported 343 million tonnes of non-containerisedcommodities (or 67 per cent of Australia’s total non-containerised exports) to the OECDcountries. In other words, the economy of the OECD has a significant influence onAustralia’s overall non-containerised exports. However, this may or may not be true atthe port level. This is because main export commodities and destination countries arelikely to differ by port.In the case of Melbourne and Adelaide ports, the OECD countries are found to be themain destinations. Hence, the real GDP of the OECD countries is used as proxy for theincome variable in the model of Melbourne and Adelaide ports. On the other hand,Japan is observed to be the main destination for non-containerised exports fromBrisbane and Fremantle ports. Nearly 65.8 per cent of Brisbane’s total noncontainerisedexports and 21.4 per cent of Fremantle’s total non-containerised exportswent to Japan in 2002-03. Hence, the real GDP of Japan is used as proxy for the incomevariable in the model of Brisbane and Fremantle ports.The volume of non-containerised exports from Sydney Ports is relatively small and hasbeen declining since 1997-98. As a result, a positive relationship between real incomelevel and the volume of Sydney’s non-containerised exports could not be observedthrough the estimated model parameters. Therefore, the income variable is dropped inthe model of Sydney Ports.The non-containerised export model is estimated using eleven years of historical data,from 1993-94 to 2003-04. The estimated regression results are presented in Table I.5(Appendix I) and the estimated demand elasticities are summarised in Table 2.6. Theresults indicate that the model is a relatively good fit with the adjusted-R-square valuevarying from 0.51 to 0.97. The income variable is observed to be significant in the caseof Melbourne, Adelaide, Fremantle and all ports; and the exchange rate variable isfound to be highly significant in the case of Brisbane, Melbourne and Adelaide ports.TABLE 2.6 ESTIMATED ELASTICITY OF NON-CONTAINERISED EXPORT DEMANDPortIncomeelasticityExchange rateelasticityTime trendelasticityBrisbane 0.142 -0.152 NSSydney NS -0.216 -0.124Melbourne 0.581 -0.684 NSAdelaide 1.481 -0.752 NSFremantle 1.544 NS -0.015All ports 1.934 -0.068 NSNS = Not statistically significant.The estimated values of income elasticity imply that a one per cent increase (decrease)in per capita real income will result in a 0.1 per cent increase (decrease) in the volumeof non-containerised exports in Brisbane, 0.6 per cent in Melbourne, 1.5 per cent inAdelaide and Fremantle and 1.9 per cent in all ports. Similarly, a one per centdepreciation of the Australian dollar will lead to an increase in non-containerised16