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Analysis of Mining Industry from Bust to Boom by Connolly, Orsond - Article Example

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The paper 'Analysis of Mining Industry from Bust to Boom by Connolly, Orsond" is a good example of a finance and accounting article. The article on the mining industry from bust to boom by Connolly, E. & Orsond, D shows the manner in which the Australian economy has seen widespread growth in the 2000s due to increase in marketing activities…
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The article on the mining industry from bust to boom by Connolly, E. & Orsond, D shows the manner in which the Australian economy has seen widespread growth in the 2000’s due to increase in marketing activities. The paper clearly highlights the manner in which the mining industry has grown due to a sudden spurt in the demand for goods and services from all around the world especially China. The increased demand resulted in economy to look towards increased activities which had an implication for the whole economy and the different sectors performing there. It presents an opportunity for all the business units to identify the manner in which the growth impetus will help them to achieve high growth rates and can look towards using it to ensure better returns. The article demonstrates beautifully the manner in which growth in the mining sector has helped the Australian economy to grow and shows the effect of growth rate on all the sectors. The article shows that the growth in the mining sector is mainly due to increased demand for goods and services from China as the infrastructure growth has increased the demand for minerals (Connolly & Orsmond, 2011). This has helped the Australian economy in different ways and has provided the economy with an opportunity to ensure that the economy performs better. The manner in which the infrastructure demand is growing in developing countries the demand for minerals will increase which will further provide an opportunity for economies have rich minerals to use it wisely. One of the major help being witnessed by the growth in the mining sector is the increased demand for goods and services which has helped the economy to grow at a faster rate. This has led towards increasing the purchasing power as more and more people are being hired for mining purpose which has brought about wide changes in the working strategy. This has helped the intermediaries through increase in demand for the different inputs which are required to carry out the mining activities. This has thereby helped the other sector as well to gain some momentum through increased sale. This has also impacted certain regions more than others and has resulted in the growth rate of certain regions to be more than other regions. The overall development has been such that the demand for investments has increased which has made the banking and other financial sector gains the push they were looking at. This has helped to increase the income of the different equities and directly or indirectly contributed towards the growth of the economy. The overall spread has been such that it will continue to act as a major stone which will determine the success of the economy. It will help to determine the various factors and areas based on which an economy will be able to project better growth rates and will provide an opportunity through which economies are able to ensure better disposable income. The article also predicts that the manner in which the industry is witnessing growth and increased demand will make the local economy to look towards other economy so that more and more labor can be supplied. This will result in a contagion effect and will also help other economies who have a good supply of minerals. The domestic activity of Australia as a result has seen widespread changes and is looking towards projecting high growth rates. On the other hand the adverse effect of the same situation is being also felt. Increase in the mining activities has resulted in the mineral wealth of Australia to deplete faster than expected. This will make the comparative advantage which Australia has at this moment to pass over to other commodities and will have an effect on the future growth potential of the economy. In addition to it the increased demand for minerals has affected the exchange rate tremendously. This has affected the export and import of other activities due to continuous rising exchange rate which is making it difficult for both the exporters and the importers to carry out their normal duties. This will thereby lead to a situation where inflations rates grow and controlling it will become difficult. This will then have an effect on the business non trade-ables as increase in the exchange rate will make it difficult for the economy to carry out their normal business. This will thereby impact the investment pattern and will increase the difficulty level for the economy to carry out its operations in a smooth manner that it has been able to do uptill now. The article thereby shows the manner in which the growth of economy due to the mining sector will have an effect on the long term growth potential where both the benefits and the long term problems of the economy has been highligthted. This presents an example through which the economy will be able to transform the changes and ensure that the economy is able to identify a manner in which growth can be permitted. This article also brings forward an important fact that having high growth rate from a particular sector of an economy can contribute towards the growth rate of the entire economy as that sector provides the momentum and the contagion effect results it to pass on to the other sectors due to which the overall economy is able to witness high growth rates. The article is very educative as it helps to understand the manner in which an economy grows and the different sectors and factors which can contribute towards its growth. It teaches the contagion effect as it highlights the manner in which growth in a particular sector gets replicated by the other sector and results in a change in mindset of people which ultimately leads towards a change in the growth rate of the economy and helps the overall economy to prosper. Further, the article also shows the manner in which over dependence on a particular sector has long term effects as over reliance on the mining sector is resulting in a decrease in minerals which will make Australia loose their comparative advantage. This will thereby have an effect on the long term future business potential and is an area of concern which the policy makers need to look into so that long term sustainable actions can be developed for the Australian economy. This clearly brings forward an important understanding that economies are able to project a long term growth rate only when the different sectors are able to contribute and the business doesn’t have to rely on a particular sector for it. This results in proper use of all the resources which is a must for the economy to be able to project higher growth rates. In addition to it the paper also shows that being able to handle the different areas ensures better growth rate and being unable to control the manner in which the money supply is managed results in inflation. This thereby helps to ensure that the actual learning are put in practice and shows the manner in which economy grows when the fundamentals which are essential for the growth of the economy is put in correct perspective. The article when considered from the perspective of an environmentalist highlights the long term effects which will lead towards a loss of comparative advantage and will make the economy rely on the other sectors for their growth. This thereby brings an area of concern for the economies and shows that all economies have to be better prepared to manage the changes that the environment is undergoing. This creates a concern for the environment because over dependence on minerals and extracting more minerals than they should will result in making the future of the country bleak. This will create a situation where the future generations will be unable to find the minerals and has been shown in the article by stating the manner in which using minerals and over depending on it is affecting the business potential. This is an area of concern and presents the manner in which the economy will be affected in the long period as doing business through the same mechanism will be difficult. The author of the article has also taken special care by showing though this article the manner in which the growth rate of an economy is affected by different sectors and has helped to clearly identify the process through which the money in the economy is revolved and the different factors which have a relevance in contributing towards the growth of the economy. This thereby helps to clearly identify the manner in which the long term potential will be affected helps to deal with the basic fundamentals through which the economy will be able to grow. Thus, the overall presentation of the work looks towards providing valuable learning inputs which will help to increase the role and understanding in the manner the economy works and the importance different sectors have on the contribution towards the economy. References Connolly, E. & Orsmond, D. 2011. The mining Industry: From Bust to Boom. Research Discussion Paper, Reserve Bank of Australia. Read More
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