Opinion article

International connectedness critical for regional Australia: Kyl Murphy

International connectedness and the movement of people, ideas and information will be important for Australia's future prosperity. Kyl Murphy discusses regional capitals and global integration.

Increased global integration, international connectedness and opening new markets for goods and services is critical to Australia’s future prosperity and also present opportunities for regional capitals.

Physical connections such as trade, roads, airports and ports are important for business expansion, but there is another connectedness that is essential. That is the connectedness and movement of people, ideas and information.

Later this year, CEDA will release a policy perspective examining the importance of global connectedness to Australia’s future prosperity.

In this research CEDA will examine:

  • The infrastructure to support international connectedness, ports and logistics, and supply chains; but also
  • The characteristics of successful, internationally connected organisations;
  • The level of international connectedness of Australia's managers and business leaders; and
  • The free flow of ideas across borders.

The last three points, which relate primarily to people and ideas, are both the challenge and opportunity for regional capitals to test themselves against.

Part also of our base premise for doing this research project this year, is that the environment of global connectedness is markedly changed and rapidly changing. Australia might not be as well placed as we think we are.

The DHL Global Connectedness Index – and here I acknowledge the work of Pankaj Ghemawat and his colleague Steven Altman – measures cross-border flows of trade, capital, information, and people.  It measures and ranks across 140 countries and territories that add up to 99 per cent of the world’s gross domestic product (GDP) and 95 per cent of its population, and it calibrates the rankings to take account of size and population, and remoteness.

Since 2005 Australia has moved up only one place in the ranking from 33 to 32 where it is currently. That’s okay, in that time many nations have had no, or only small movements: The Netherlands has been number one for 10 years; Ireland has been up and down between two and four; the United States improved from 27 to 23; and New Zealand moved up from 32 to 31.

However, other nations have had huge shifts and the global environment is changing in ways we may have not foreseen. Emerging countries are now involved in the majority of international interactions. The 10 countries where global connectedness increased the most are all emerging economies. South-East Asian economies stand out: Malaysia, Vietnam, Cambodia, Hong Kong and Singapore.

Why do we care? Because Australia like all advanced economies, has not kept up with this shift.  We are not expanding markets, increasing international trade, capital, information or people connections at anywhere near the rate of emerging economies.
If this continues, Australia can only slip down that ranking. That matters because international connectedness and globalisation can drive economic opportunity.

However, Australia’s tendency continues to be towards domestic markets and connections rather than international ones. While we are considering increasing connections and trade into Asia and new markets; those markets and particularly emerging economies are rapidly increasing business with advanced economies and between themselves. In many cases Australia’s future markets are actually a growing force of potential future competitors.

Regional capitals will be competing in an environment where overall increases in levels of globalisation are modest. The index referred to earlier shows that while information and capital flows are growing, flows of people remain stable and trade connectivity is trending down.
Regions connecting to the world will also be pushing against an ingrained national tendency to focus domestically. This sounds counter-intuitive because Australia considers itself a great trading nation that is well connected to the world. But think of it this way, 22 per cent of tertiary students in Australia are international students but only one per cent of Australian tertiary students have left the country to study overseas.

With population growth expected in regional areas, we know that what is critical to Australia’s prosperity – global integration and international connectedness – is also critical for regional capitals.

When we talk about connecting regions to the world, we must talk about trade, capital, information and people and be thinking about the diversity and distribution of our connections.

There is great opportunity for regional capitals to connect, to progress, to be more responsive on a global level than the nation as a whole. Regional capitals are not constrained by national policy settings, programs or initiatives, they can focus on what can be reset and driven locally.

Like all challenges of leadership and change, risk will be involved to do these things. Leaders will have to be a strong voice against protectionist interventions and take risks on new products and in new markets. 

Let’s see regional capitals compete to have the most well-travelled business leaders, culturally diverse boards, employees with international education experience, foreign investment and employing international students.

These may be the type of targets needed to best reflect and measure the characteristics of successful, internationally connected organisations, managers and business leaders; the free flow of ideas, information and people; and the investment, growth and new business that can come from that.

The IMF forecasts global economic growth will be faster from 2014 to 2019 than in the 1980s, 1990s, or the 2000s. 

With a genuine desire to increase incoming and outgoing investment, products, people and information, regional capitals can, individually and as a cohort, lead from the regions, benefit from forthcoming population growth, connect directly to the world, be competitive and benefit socially and economically.

CEDA’s research on international connectedness will be released in November 2015.

This article was adapted from a speech given by CEDA Queensland State Director Kyl Murphy to the Regionalism 2.0 conference of Regional Capitals Australia in Mackay Queensland.

About the authors

Kyl Murphy

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Kyl Murphy
State Director, Queensland

As State Director, Kyl is responsible for CEDA’s operations in Queensland.

Before joining CEDA, Kyl held leadership roles in organisational capability, strategy planning and execution, project and program management, communications, and policy and service reform. She has worked in academia, in the media, in the private sector, in cross-sector partnerships and in federal, state and local government.

Kyl holds a Master of Business from Queensland University of Technology. She is a graduate of the Australian Institute of Company Directors and of INSEAD Executive Education in International Business.

Read more about Kyl.

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