OPENNESS

Openness can be measured by the relative level of overseas trade and investment flows into the national economy. It can also be assessed from the negotiation of free trade agreements or the barriers that a country places on trade and investment flows across its borders. Ideally an indicator of openness would measure both the size of, and barriers to, flows of trade and investment. However, there is currently no single indicator that measures barriers to investment.

The goods and services that other countries trade with Australians are indicators of openness. For example, Australia's openness to imports provides Australians with wider choices of goods and services. In this section openness is measured by the ratio of imports to GDP. Between the period 1989 to 2009 the ratio generally increased, ranging from a low of 16% in 1991 to a peak of 22% in 2009.

The increased openness of Australia's economy over this period was influenced by the lowering of barriers to the imports of goods and services and capital inflows, for example the decrease in the average tariff rates applied by Australia and an increase in multilateral, regional and bilateral trade negotiations. However, the ratio of imports to GDP is also affected by factors aside from the openness of the economy, for instance, fluctuations in the exchange rate of the Australian dollar and changes in world commodity prices.