Foreign Direct Investment in Australia

Paper Info
Page count 5
Word count 1415
Read time 5 min
Subject Economics
Type Essay
Language 🇺🇸 US


According to the Australian Trade Commission (2010), Australia is regarded as a very attractive FDI destination. In the course of the last five years, there has been an increase in the inward foreign direct investment stock each year by a percentage of 9.1. At the present time, this country attracts a great level of foreign direct investment in comparison of other countries that are developed. The foreign direction investment to gross domestic product ratio is close to 35 percent and this percentage is above the average that is comparable for the economies of the developed countries which stands at twenty seven percent (Australian Trade Commission, 2010).

Basing on the statistics given, the level of the country in regard to foreign investment as at December 31st the year 2008, the inward FDI stock was 392.9 billion Australian dollars. The source countries that held the four included the United Kingdom, the United States of America, the Netherlands, and Japan. There was a significant rise in the FDI stock that came from Hong Kong, Japan, China, Belgium, and Switzerland.

The EU still stands to the largest bloc source of direct foreign investment of Australia. It accounts for about thirty four percent of the overall stock in as per the year 2008 (Australian Trade Commission, 2010).

Foreign Direct Investment in Australia and the Government Influence

According to Kirchner (2008), in the year 1984, there were lamentations by Kaper’s policy Monograph that were published in regard to Australia abandoning its usual open-door policy to direct foreign investment which took place beginning from the 1960s. This work that was published brought in a contribution that was quite influential to the debate that was held in regard to foreign investment at a point Australia had just engaged in major economy’s liberalization. The liberalization had included advancing liberalization of controls over foreign investment. This pattern went on well in to the twenty first century, with the Australian federal government in the recent times doing away with statutory restrictions on foreign possession of the media assets of Australia.

In spite of this advancing liberalization, the framework of the legislation that controlled FDI in Australia remains unchanged to a large extent from the one setup in the course of the mid 1970s by the government of Whitlam. Even in the current day, the government of Australia still puts restrictions on the foreign ownership in the main major firms and some particular assets. More so, FDI in Australia is subjected to great discretion (ministerial and bureaucratic), bringing about uncertainty for the investors (foreign) to a considerable level. Australia remains to be the most restrictive FDI regimes all over the world despite more than twenty years of liberalization.

According to Kirchner (2008), the trends that have been witnessed in the recent times in capital inflows give an indication that this ongoing capital xenophobia is greatly affecting FDI in Australia. FDI as a portion of the overall foreign investment in Australia has constantly gone down beginning from the 1980s and this country is not performing well in terms of carrying out the attraction of its share of the world foreign direct investment flows. There is likelihood that Australia is losing the gains that go with FDI. However, it is not losing in other forms of foreign investment like portfolio investment.

Benefits of FDI in Australia

According to Fischer (1997), the government of Australia gives strong encouragement for productive foreign investment which makes a contribution to the development of the industries in this country as well as resources and this is in line with the needs of the country. The government of Australia realizes that foreign direct investment makes a contribution to a higher level of economic as well as employment growth and most especially in regard to capital which is directed in to adding value to manufacturing and processing of the resources.

More so, Fischer (1997) indicates that foreign investment is a representation of a way to widen the bilateral relationships that are there with other countries with which they trade. The government of Australia has shown a willingness to welcome foreign investors through welcoming investors from such countries as China that makes stronger the trading relationship among countries as well complimenting these relationships.

On a wider economic stage, the focus of the Australian government is on having strong growth, low inflation and also having growth in employment. At the present time, the Chinese companies have already taken advantage of the favorable Australian economic conditions and have established operations in this country. The major investments are carried out in mining and mineral processing, manufacturing, leather processing, among others.

In the current times, the considerable interests of the foreign firms especially those from China lies in the opportunities that are coming up especially in such sectors as agribusiness, the decreased direct iron production of the western part of Australia and also in the non-ferrous metal processing. On an increasing level, Australia is being looked at as an overseas food base for China that is logical in the sector of agribusiness.

The areas which are believed to be having great opportunities by the Australian government are such areas as agriculture as well as fisheries which consist of areas like aquaculture, wool processing, abattoirs and livestock rising. Another area that has a great potential when invested in is manufacturing and this consist of such areas as timber production, food processing, and mineral processing among other areas under manufacturing.

Another area in which to invest in Australia having a great opportunity is the area of high-technology and research and development. This area consists of such areas as pharmaceuticals, biotechnology, and computer software. The other main area in which there is an opportunity to invest is mining. The specific areas to invest in mining include coal mining, gas among other natural resources mining.

It is of great advantage to invest in Australia since the government has the commitment to bring about a business environment that is competitive so as to attract more productive investment from the local firms as well as foreign firms.

According to Drysdale (2009), foreign direct investment gives out a number of benefits to the host country. Among these advantages we have provision of technology, capital technical know-how and market access. In considering these benefits, it can be established that these benefits are substantial which characterize resources investment in Australia (Drysdale, 2009).

More so, foreign direct investment is normally a portion of a set of mining activities as well as industrial activities which form an integrated set. These connections offers a ground on which the marketing and distribution of the output is carried out of the mineral projects. There is sharing of risks in the chain of production. Many of the investors in Austrian mining industry come from China. The Chinese investors are much likely to engage in investing in those projects that offers a connection to the Chinese markets in China and as well provides an extra capital source, and have a willingness to carry out investment in partnership with the firms of Australia or those that are not of Australia that bring in the knowledge of management, capital and also technology to the projects in mining (Drysdale, 2009).


It can be recommended that Australia is among the best places to carry out foreign direct investment. Despite some of the government measures that offer some restrictions to foreign investment in this region, the government still has played a major in providing a favorable business environment. Opportunities are available especially in the mining industry. According to Anonymous (Australia, 2010), “An investment in Australia is an investment in growth, stability, competitiveness, innovation, and lifestyle (1). This place provides opportunities which are great for rapid business growth and expansion.

There are adequate resources on which an investor can capitalize and carry out direct investment and there is also a stable political and economic environment. More Australia does not just have specific areas to invest in but offers opportunities in various sectors.

The best areas to invest in Australia are those areas that are emerging and offering opportunity for foreign investment. The area such as the agribusiness sector can be among the best are in which to invest. This area looks much promising. On an increasing level, Australia is being looked at as an overseas food base for China that is logical in the sector of agribusiness. Given the increasing population in China, there is great need for more food and this can be produced in Australia and exported to China.

Reference List

Anonymous, (2010) Australia, 2010. Web.

Anonymous, (N.d) Trends in foreign direct investment inflows. Web.

Australian Trade Commission, (2010) Growing foreign investment. Web.

Drysdale, P., (2009) China as a new foreign investor in Australia’s resource sector. Web.

Fischer T. F., (1997) Australian Investment. Web.

Hill C. W. L., (2010) International Business. McGraw-Hill Higher Education. Web.

Kirchner, S., (2008) Capital Xenophobia: Foreign Direct Investment in Australia, Sovereign Direct Funds, and the Rise of state capitalism. CIS Policy Monograph. The Center for Independent Studies Ltd. Web.

Cite this paper


EduRaven. (2022, January 4). Foreign Direct Investment in Australia. Retrieved from


EduRaven. (2022, January 4). Foreign Direct Investment in Australia.

Work Cited

"Foreign Direct Investment in Australia." EduRaven, 4 Jan. 2022,


EduRaven. (2022) 'Foreign Direct Investment in Australia'. 4 January.


EduRaven. 2022. "Foreign Direct Investment in Australia." January 4, 2022.

1. EduRaven. "Foreign Direct Investment in Australia." January 4, 2022.


EduRaven. "Foreign Direct Investment in Australia." January 4, 2022.


EduRaven. 2022. "Foreign Direct Investment in Australia." January 4, 2022.

1. EduRaven. "Foreign Direct Investment in Australia." January 4, 2022.


EduRaven. "Foreign Direct Investment in Australia." January 4, 2022.