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Economics Assignment: McCann's Country Analysis Upon Australia


The aim of this economics assignment is to use McCann’s style of country analysis and apply it to AUSTRALIA.

In general, the following aspects might be included in your report:

  • The political/economic structures and the historical basis for them
  • Culture(s) of the country and implications for business
  • Political and economic systems of the country and how they may affect business
  • Nature of business systems in the chosen country, focusing on business organization, leadership, human resource management and change management principles, and how each may affect business operations
  • Differences in finance and banking systems and how these may affect business
  • Any difference in legal systems and how these may affect business
  • Important ethical matters of that chosen country and how they may affect business


Economic and political environment analysis presented in this economics assignment is essential for a country as it helps tom identify the current standard of living, social development, and business performance of a nation. The study has focused on the economic and political environmental analysis, international as well as the domestic performance of Australia based on McCann's style analysis. The importance of regional and urban economic development of Australia has been discussed in the study considering a national crisis (recent bushfire issue) and COVID 19 Pandemic. In the entire analysis, the impact of recent bushfire in the economy, the business performance of Australia has been discussed.

The story of Australia's economic and political preminaces is considered to be remarkable and the country has been the leader in economic freedom since the inception of the index in 1995. The nation is considered to be one of the best countries in the world to live in as compared to the other international countries as per its education standard, economic level and wealth, health and quality of life. As opined by Savage and O’Connor (2019), it is the sixth largest nation in the world as per its mass and its population is comparatively small. Australia incurs the enviable record regarding the steady growth of its economic standards that proves its robustness along with the reliability as the low risk and the safe environment that helps the business to flourish. The country has a strong regulatory institution along with the ability of responding to the global changes with being diversified and its service-based economy has underpinned its steady growth. Thus, the present study focuses upon McCann's country analysis regarding Australia's political and economic structure and the system. In the entire analysis, two key issues including recent bushfire in Australia and COVID 19 pandemic both have been analysed in terms of Australian political and economic situations. The culture of the country, the nature of its business system, the finance and the banking system, the legal system and ethical matters have also been discussed in the study.

1. Political and Economic Structures including historical base in case of Australia

Based on the historical analysis of Australian Economy it can be stated that British established Bridgehead Economy, during year 1788 and after that human activities in the economy are developed. Based on the view of Howden and Zammit (2018), it has been identified that the Australian economy can be considered as a highly developed market economy. This is because Australia is a country, which has largest median wealth per adult and GDP amount for the year 2019 was 1.89 trillion USD. Considering the view of Yan Chen & Chen (2019), Australia is 13th largest economy throughout the globe in terms of nominal GDP as industrial and agricultural development both are gradually increasing in that nation. The market economic structure in Australia reveals that demand and supply in the economy are key regulators rather than policies of the government. McCann’s urban and regional economy analysis depicts that the regional concept focuses on agglomeration economies that accrue to a group of organizations within the identical industrial sector and these are situated in the same place. On the other hand, the urbanization concept considers business firms in different sectors and it ensures sustainable economic growth of a nation.

As mentioned by McCann (2013), industry specific economic growths as well as city specific economic growth both are essential within the economy of a nation. The reason is industry specific economic growth would increase employment opportunities in a particular sector and on the other side; the city specific development would reduce actual unemployment problem and sustainable growth can be ensured. According to McCann analysis, a country cannot face any problem in the national crisis if both industrial and overall economic developments are considered (McCann, 2013). Based on the growth statistics of 2017-18, the major growth has been identified in case of Melbourne and after that Brisbane, Queensland and so on (Wright, 2018). The Country has focused on the industry specific growth also for enhancing economic power in the international market. For instance, current major revenue in Australia comes from construction and financial service sectors and effective performance of these two sectors have enhanced GDP growth of the country Australia.

Political Structure
According to the view of Evans and Stoker (2016), Australia focuses on stable liberal democratic political system under the constitution since 1901. The federal structure of Australia has been established during 1901 and subsequently federal parliamentary constitutional monarchy has been developed (Gurran, Gallent & Chiu. 2016). The government of Australia can be classified into three categories including federal government, state & Territory government and local government. These three level governments focus on the rules and regulations of different areas regarding business, any incidents and revenue system. The commonwealth laws are framed for protecting any unlawful activities and environmental protection.

Bushfire and COVID 19 Incident and its impact on economy and political situation of Australia
The recent bushfire disaster in Australia (From January to March 2020 actually started November 2019) has damaged the industrial growth in the country and it has reduced growth of GDP after March 2020 (bushfire, 2020). The air pollution has been increased and tourism sector in the Australia has been affected significantly. The reason is bushfire has damaged tourist spots including Sydney, Melbourne and different seaside areas. Furthermore, it has destroyed around 5900 buildings in the country and the government has borne the cost for recovery of the economy again. In a nut shell, it can be firmly said that economic development has been decreased after the bushfire incident in the Australian economy after March 2020. On the other hand, political environment of the country has also been deteriorated as government cannot adopt sustainable policies to govern the entire country. However, the stability of the political and economic situation of the country is not damaged completely. In this context, it can also be stated that the new COVID 19 pandemic has damaged the economic situation of the Australia and this is why the government has faced a difficult situation regarding resource allocation process. Furthermore, social interaction process has been stopped and it has created problem in the economic activities (Wenham, Smith & Morgan, 2020). Different industries have been shut down for indefinite time within the country to protect life of human beings. The GDP of the country has been progressively going down and the business relations with China have also suffered a setback, thus, inviting a tumultuous situation in the economy of the country.

Based on the Philip McCann’s economic analysis, it can be stated that Australia has focused on both regional as well as urban economic development and it has helped to maintain stability under the national crisis in Australia. Hence, sustainable economic policy of the government has helped to protect the disaster to some extent. The Australian government has borne economic cost effectively for overcoming the situation. Based on McCann’s analysis, under the national crisis, the key economic activities are needed to be evaluated properly for protecting the total damage of an economy and it has been adopted by Australia Government (Hartwell, 2017). In this case the short term profit development concept of McCann is effective as the key motive under national crisis is to save the economy in best possible way.

2. Cultures of Australia and its application in Business
As depicted by Kohr, Corsi, Capitello & Szolnoki (2018), modesty is the key cultural factor in case of Australia and that has been applied in case of business also. This is because Australian people believe that aggressive nature cannot create good relationship with others. Hence, based on modesty they want to create effective domestic as well as international business relationship. Based on McCann’s returns to scale analysis, it can be stated that the government of Australia, for enhancing their cultural development through business performance, has focused the regional economic development process. In this case, high level of agglomeration has been found which increases transportation cost and decreases competition. Hence, it has been identified from the regional economic development concept it is found that development of specific firms in a location increases business performance. As mentioned by Rickard (2017), Australian culture focuses on creation of values to the people through business and social development process. Hence, here the concept of urban economic development is important as different city based economic development enhances economic power of a nation.

The bushfire disaster in Australia during 2020 is a severe national issue and it has created economic crisis in the country. This is because, the local economy in some specific areas are damaged including Victoria and New South Wales. Hence, the economy is going through the national crisis and under these circumstances McCann’s urban economic concept can provide fruitful result. This is because city specific economic development can help the government to tackle any national level crisis easily. However, the COVID 19 pandemic has created barriers in the economic development of Australia in addition to bushfire. At the preliminary stage of pandemic lock down situation has been faced by the economy and it has destroyed GDP growth completely and still it is going on. Based on the McCann’s country level analysis, it is found that agglomeration economies are essential for enhancing productivity of a country. Based on the view of McCann and Van Oort (2019), it is completely clear that in case of national crisis, situation-agglomeration economic concept can protect the economy as whole. Hence, the value can be created to the customers easily. In case of Australia, the application of agglomeration economic concept has been found and it has helped the government to deal with adverse economic situation.

The concept of agglomeration economies say that highly developed industries focus on localized external economies of scale and hence, the specific competitive advantage creates high demand of products. In case of national crisis situation, the disaster of one area can be easily tackled by the other cities and these can be applied in case of developed nations. The reason is in case of under developed nations’, city specific development cannot be identified and hence some cities are not developed and some cities are highly developed. It hampers sustainable economic development and national crisis cannot be controlled. As Australia is a developed nation, the McCann’s economic concepts are fully applied to overcome issues.

3. Political and economic system of Australia and the way it affects the business
Political system

The formal name of the country is Commonwealth of Australia and is the representative of both the democracy and the constitutional monarchy as the Queen of England is the Head of the State and the Prime Minister is the head of the government in Australia. As stated by Weller (2018), Canberra is the capital of the country and Sydney is the largest city and is the sixth largest country in the world. The country is a member of the commonwealth nations, G20, OECD and World Trade Organization. The nation maintains a high degree of close relationship with powerful countries like the USA, UK, China and much more. It is considered to have a stable and safe political environment. The government of Australia has imposed certain laws that ensure fair-trading for both the business and the customers such as the fair trading laws, consumer laws, and competition laws. The government has launched the Fair Work Act in 2009 that is the primary piece in the legislation governing employment within the country. Similarly, the privacy laws in the country deal with the ways in which the nation’s trade and business handle confidential information about their consumers (Neil & Peterie, 2018). The Australian government policies cover the priority issues of the country such as the economic and employment growth, the budgets, infrastructure, industry, agriculture, health, innovation, education and the environment.

Economic system
Australia is considered the 13th largest economy across the globe and its economic growth is growing from 2.4% to 3% every year. Thus, the country’s household incomes, investments and the inflation are also picking up its specs gradually. The current company tax rate of the country is 30% and the companies possessing a turnover of $25 million can also apply for the tax rate of 27.5%. The individual tax rate of the country with a person having an income of $18,200 (AUD) is zero and 19c for every $1 over the $18,200. As viewed by Kramer (2017), the key import of the nation consists of vehicles, mineral fuels, machinery, medical apparatus, pharmaceuticals, precious metals, furniture, electrical equipment, machinery and plastics. The country imported a worth of $221.4 (USD) billion goods from across the world. However, iron ore, natural gas, coal, financial services, educational services and some of the top exports of the country. The world class international education facilities of the country contribute $34 billion to its economy with an increase of 15.3%. The country’s enormous technological growth is 4% that is 65 billion in a year and foreign tourists have 47.5 billion AUD contributions to the national economic development of Australia.

The effect of bushfire in its economic and political system
As evidenced by Collins (2017), the Australian Bushfire has damaged the economy of the country in addition to the destruction of infrastructure and extending its impact to industries like tourism and farming. Some of the institutions and businesses have been forced to shut down or close their doors due to the excessive level of air pollution. In this context, the coronavirus issue is also responsible for the economic degradation. The pandemic is spreading all over the country day by day, it has created barriers in the interaction process, and economy has been destroyed. The government has faced oppositions and division of opinion regarding the ways to best contain the spread of the disease and mitigate the associated issues, thus causing jeopardy to some extent, in the political systems of the country. Thus, as witnessed the damage has exceeded the record of a $4.4 billion (AUD) and a projected budget surplus and fiscal for 2020 of $5 (AUD) billion is under threat for the cost of bushfire. Thus, Bushfire had curbed the first quarter of GDP by around 1% because of impact on the agricultural output and construction activity along with Tourism as well.

On the other hand, as reviewed by Wright & Ville (2017), the Australian bushfire has destroyed the political environment of the country as the fire consumed more than 25 million acres, more than 2500 people had died and more than 1400 homes were burned. Thus, the fight over climate change has led to the leadership changes within the government of the distinguished political parties. Thus the government of the nation mobilized 3000 members of the Australian defense Force and the government had spent more than $1.4 (AUD) billion for preventing the bush fire.

4. Business System in Australia, Leadership, Human Resource Management and Change management process
According to the view of Stewart (2017), Australia government always focuses on the fair trading process for maintaining equality in business system. Furthermore, the market based supply and demand helps to enhance the economic development of the country. The business system considers market trends in case of developing industrial growth and it has strengthened the economic backbone of the nation. Considering competition law, consumer law and environment protection law the business system tries to enhance the position in the domestic as well as international market. The Australia government is also strict in the regulation process as it helps to maintain transparency in the business system in Australia. Based on the view of Zaccaro, Green, Dubrow and Kolze (2018), the business system in Australia has been developed considering situational and transformational leadership styles. This is because; the situation based decision enhances the power of protecting any adverse situation. On the other hand, the transformational leadership style helps to realize the importance of change in the business performance in the dynamic competitive environment. The key focuses of political and business system in Australia are management of conflict, development of communication, strategic thinking and enhancing professional relationship.

The policy of equality is followed in terms of human resource management process in Australia as it enhances long term good relationship between employees and business. The effective human resource management has helped to enhance urban economic development of Australia. According to McCann’s economic analysis the urban and local economic development both are important to maintain stability of a country’s economic performance. Considering this view, the Australia government provides equal opportunities to different human beings within the nation regarding economic activities. Furthermore, business enterprises consider skill development process of human resources for enhancing productivity. The McCann’s country or economy based discussion also states that skilled labour are essential in case of enhancing local economy as well as economic development of urban areas. In order to implement change management process successfully, the transformational leadership style has been followed by the government as well as business organizations. As asserted by Nguyen, Mia, Winata and Chong (2017), implementation of transformational style of leadership can help an economy to develop in the competition as required changes can be implemented successfully.

Based on the recent national crisis in Australia due to heavy bushfire, the local economy has been damaged in some areas but metropolitan economies are not hampered severely. The changes required to be implemented within the systems, for preventing the spread of disease as well as for funding the population, in the face of such grave situation proes to be significant economic liability for the Australia government. Hence, the urban economic development has helped to recover the adverse situation positively. Australia government has declared New South Wales area as high alert place during November 2019 as so many bushfire are occurred in New South Wales. Hence, the government of Australia has experienced the bushfire disaster previously and it has helped to protect the economy of the country effectively. After the recent bushfire, the New South Wales area has been severely affected and it has damaged the economic development process. Considering the view of McCann, it is found that local economy has been destroyed as a result of bushfire. In this case the application of situational leadership style has helped the government of Australia to protect the economy of Australia successfully. As environment in different areas are damaged, the government has to bear huge cost to recover the situation completely. The government has the aim to implement change management process for overcoming the negative situation successfully.

The McCann’s theory says that cities are having typical clusters as different types of industries have developed and hence, it is difficult to damage economy of highly developed cities easily. In case of Australia high development has been found in different cities throughout the country and it has enhanced economic power of the nation. The bushfire issue has created temporary national crisis and in this case damaged areas are now needed to be recovered based on sufficient contribution. The urbanization process has helped to maintain sustainability and that would help the government to recover the economy successfully. As a result of national crisis, the local business system has been completely destroyed and it is difficult now to get skilled labour. As mentioned by Pflüger and Tabuchi (2019), the pure model of agglomeration says that inter firm relationship is inherently transient and the theory of market power is irrelevant. This is because; business firms change their relationship with others according to the requirements. For instance, as Australia has faced the national crisis and in this case large corporations in metro cities need to focus on the good relationship with small firms of different affected areas in the country. Furthermore, the government and large business organisations have to focus on the human resource management process for overcoming economic problem. Hence, the urban economy of Australia can save the affected local economy as a result of national crisis.

5. Differences in Finance & Banking System and its influence on Business in Australia
The key difference in terms of finance and banking system has been identified that financial system regulates the banking performance. Hence, finance system is broad concept and it is related to the economic development process and on the other hand the policy of finance system is reflected in the banking performance. Based on the view of Nassios, Giesecke Dixon & Rimmer (2019), the financial service sector in Australia is highly developed as major GDP comes from this industry in that country. The national crisis that has been happened as a result of bushfire has completely damaged banking system in several areas of Australia. Considering McCann’s economic analysis, it can be stated that the financial service industry has been deteriorated and it has damaged local economic or regional economic development. Hence, it is completely clear that national crisis has direct impact on the financial service sector. Although the bushfire has explored severely during March 2020 but it has been started from the year January 2020 (Bushfire-Australia, 2020). The effect of this issue and new COVID 19 problem have damaged banking system in Australia and the official interest rate has been reduced by Reserve Bank of Australia. Banks have had to close down their operations, in an effort to control the spread of COVID 19, which has hampered its operations. The rules to be followed after the system resumes also requires effective change management within the existing banking systems, to ensure the safety of the customers as well as the employees. The reason of decrease in the rate of interest rate is ASX performance has been deteriorated and it has difficult to the financial sector to get good return from the investment in stock market. The severe adverse economic impact has been identified in case of island areas and this has been investigated by the federal as well as territory government properly.

The decrease in the performance of banking sector has deteriorated industrial development. As the money supply has been destroyed as a result of bushfire problem, the demand in the industry has been decreased. Hence, the deterioration in the performance of financial sector has directly impacted the performance of business performance (Hamdaoui and Maktouf, 2020). The government has borne the loss as a result of damage in coastal areas and this is why the demand of has been hampered. The decrease in demand has hampered productivity in the industry and economic performance has been deteriorated. In this case the McCann’s interpretation cannot provide fruitful result in terms of protecting economy. This is because the financial service and banking sector is the backbone of any country and hence, in case Australia also, the loss in the performance of financial sector has completely damaged industrial growth (Hamdaoui and Maktouf, 2020). In this context, it can be stated that the improvement in the urban economy can protect this sudden economic shock to some extent. As Australia is highly developed nation and hence, the control of rate of interest can enhance stability of the economy and local economy cannot be damaged completely.

As mentioned by Taffler, Spence & Eshraghi (2017), the equal distribution of fund has been reduced in primary and secondary sectors in Australia. The reason is the demand of fund has been reduced and a major portion of the government fund has been utilized in the in the management of national disaster. The McCann’s view reveals that urban and local economic development both are important in case of a country as it ensures sustainability but the destruction of banking sector creates issue in the smooth flow of funds to the economy and entire economy has been damaged (MaCann, 2013). Hence, the analysis of financial sector performance after bushfire issue depicts that business performance has been adversely impacted not only in coastal or rural areas, urban areas also. Hence, from this comprehensive analysis, it is found that the bushfire issue has deteriorated banking performance in Australia and it has deteriorated industrial productivity. This has damaged the gross domestic product of the nation and economic power has been deteriorated to some extent. Not only has the domestic business, international business been hampered as currency value has been decreased as a result of national crisis (bushfire) (bushfire- Australia, 2020). Hence, there is a significant relationship between the performance bank & financial sector with other industries.

6. Difference in legal system and its impact on business in Australia
In case of business system regulation process, Consumer Law, Competition Law and Export & Import Law have significant role. The reason is consumer law considers interest of customers and based on this, business regulations are farmed. The Competition law in Australia prohibits unnecessary or illegal competition including use of unlawful means to reach products to the customers. The legal system of a country focuses on the proper business regulation process and in case of Australia, it has been found that different anatomies of law focuses on various important areas of business regulations (Petit, 2017). Hence, business laws are having conceptual difference but in terms of application all types of laws are same. Hence, the legal system in Australia has the target to control overall business activities successfully. Different types of business regulations have positively impacted organizational performance in Australia and it has helped to maintain transparency in the business.

The recent national crisis bushfire and Coronavirus have adversely impacted the business performance in Australia. This is because, the demand and supply has been hampered as a result of the issue and the country has faced economic trouble to some extent. The private sector business organisations have significant contribution to the development of business performance in Australia rather than public sector. The reason is business regulatory laws have maintained transparency in the performance of private sector organisations. Two serious issues in Australia have damaged the consistency in the performance of both public and private sector organisations and economic growth has been reduced. Based on the view of Walters, Zeller & Trakman (2018), competition law in Australia emphasizes the fair trading policy in case of public and private sector organisations. However, in case of private sector business enterprise, it has been identified that fair trading policy has not been considered properly and it negatively impacted the business performance of organizations. The bushfire incident has damaged the regulatory policy of business throughout the country. Actually, legal system can be considered as heart of business system of a country and that has been damaged in case of Australia as the control over business activities has been completely destroyed (de Vet and Eriksen, 2020). Furthermore, the Import and Export regulations in Australia controls international business process and after the bushfire, this has been hampered and international supply has been stopped.

McCann’s city based economic development of a country has focused on the industrial development of different sectors in different cities (McCann and Van Oort, 2019). In this case, international business development is essential but that has been completely hampered and city based economic development process has been damaged. In case of any national crisis, global city index is needed to be followed in order to compare the development with smart cities throughout the globe. The market based economy in Australia has been damaged due to bushfire and hence it is essential to consider global city index for developing economic and other performance effectively. McCann has focused on the spatial economic analysis, which considers population distribution within the country and based on population growth human capital utilisation technique is followed by a country (McCann, 2013). This perception has developed the concept of urbanization and sustainable economic development of a country. The bushfire problem has damaged application of laws in the business and economic development o Australia and new policies are adopted by the government to overcome the adverse situation. Under these circumstances, population based analysis is needed to be made by the government to identify affected population based on cities or territory.

7. Ethical matters chosen by Australia and how they may affect the business performance of the country
According to the view of Harris, (2017), ethical policy in Australia focuses on direct and indirect negotiation and communication process. This helps to maintain effective performance in the business and sustainable economic development can be ensured. Continuing in the same vein Greenwood and Freeman (2018), has stated that quality culture is the first priority in case of business ethics in Australia and this has helped to the country to make a strong market based economy. However, the national crisis has damaged the flawless growth of GDP of the country and business performance has been deteriorated. A business enterprise under the adverse economic situation has to focus on the social investment to recover economic position. The urban economic development has been completely smashed as a result of bushfire and hence, it is essential to recover the economic situation of the country successfully. Hence, ethics is important in case of ensuring performance of normal business and after the national crisis also. The reason is ethics can help a country to recover its position and economy of a nation cannot be hampered in long run.

In terms of ethics in Australia, it can be clearly stated that value to the resources is primary ethics as it helps to enhance human resource development process. Based on skill development program, Australia government tries to develop performance level of individual human resource. The skill development program helps the business enterprises including public and private sector organisations to get quality human resources and economic competency level can be maintained in the international market. Furthermore, the government in Australia has considered the community development process in social planning and it has helped to enhance regional development all over the country (Ferrell, Harrison, Ferrell & Hair, 2019). According to the view of Werhane (2019), the ethical practices including human resource development, community development are essential for ensuring economic standard. The reason is it increases quality of lifestyle but the bushfire issue has damaged community investment process in Australia. It has hampered development of different communities including residents of Mungallala and communities of Queensland.

Hence, based on the comprehensive analysis of ethical practices in Australia, it has been identified that under national crisis, a country cannot follow ethical values properly. For instance, the current bushfire has hampered ethical considerations of the country and the business performance is also damaged. According to McCann, regional and urban data analysis regarding economic development is essential as it ensures the measurement of actual economic performance of a country. The measurement of inequality is needed to be maintained through GDP as whole and GVA per capita in different areas of a country. In this case financial and non financial values including ethical practices are considered. In case of Australia, the national crisis has damaged the measurement process of gross value added per capita and the economic development has been deteriorated. Furthermore, GDP per capita is an essential measurement of regional economic development but national crisis hampers this policy. Hence, it is clear that bushfire has destroyed economic development in Australia and it has damaged growth of regional and city based economic growth in the country.

Based on overall ethical analysis, it has been identified that Australia focuses on the ethical practices for maintaining sustainable economic development of the country. However, bushfire problem has completely damaged the performance of economy in Australia and the country could not maintain its market based economic performance. The COVID 19 problem is a comprehensive issue and its impact is more serious than bushfire as no medicine has come in the market to protect against this disease. McCann’s country based analysis shows that regional and urban economic development both are essential and that are measured by numerous factors including productivity, living cost, ethics and so on.

The present study has focused upon the McCann's country analysis upon Australia regarding its political and economic structure and the historical basis for them. The nature of the business, leadership, Human Resource Management; the principle of Change management, and its effects on the business operations have been illustrated in the study. The impact of bushfire and COVID 19 issue both have been identified in the study for evaluating current political and economic position of Australia. Furthermore, the finance and banking system, the legal system, and the ethical matters of the country that affects its business performance have been explained in the study clearly. The financial system of a country has been considered as a backbone of an economy and the national crisis hampers this sector which destroys the economic development of a nation. McCann's regional and urbanization process in the case of developing a country has been discussed in terms of economic, political, ethical, and legal perspectives in Australia.

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Appendix 1

Consumer Law and Competition Law

Focuses on Consumer Protection in Australia and Competition law focuses on fair trade policy

Bushfire Issue

Smashed regional economic development and political environment has faced problem in nation policy making process

Financial Sector

Deterioration in the performance of financial sector has damaged banking performance in Australia due to Bushfire

Some Key Highlights
(Source: Developed by Author)


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