Australia Closes Its Online Development Information Sharing Website

Sources:

AusAID: About AusAID

AusAID: Australian Development Gateway to close

AusAID Engage Blog: Decommissioning the Australian Development Gateway website

Australian Development Gateway: About the Gateway

Development Gateway: About Us

Development Gateway: Country Gateways

On June 19, 2012, Australia’s Agency for International Development (AusAID) announced its decision to close the Australian Development Gateway (ADG), a website for sharing development information and research. The AusAID created the website in 2004 under a World Bank initiative; however, the website’s usefulness has diminished in recent year due to the increased popularity of other social networking and knowledge sharing websites—such as Facebook and Wikipedia.

The World Bank created the Development Gateway in 2000 as a way of using information technology to increase the effectiveness of aid and development efforts. Information technology has the power to increase aid and development effectiveness through faster and more efficient communication and knowledge sharing. In effect, the Development Gateway created a platform for sharing ideas and research in aid and development.

Under the Development Gateway, individual countries could create their own “Development Gateway” that catered to the needs of each country. AusAid created the ADG in 2004 to support its mission of helping people overcome poverty. The ADG created an online meeting place for people and ideas within the Pacific development community. Individuals and organizations could use the ADG to share research, job postings, events, and aid and development opportunities. In the end, the ADG was essentially a social networking website for the Pacific development community used by about 160,000 people.

With the rise in popularity of social networking and knowledge sharing websites, AusAID no longer feels the need for ADG. Because of this reduced need, AusAID decided to close the ADG at the end of June, 2012. Instead, AusAID will use its own website to publish development research, and use existing social and professional network websites to help people in the development community connect with each other. AusAID has already taken steps to shift its online focus from using the ADG to using other websites to fulfill the functions of the ADG. For example, it created a blog in November 2011 to help people connect with AusAID. In addition, AusAID launched its redesigned website in May 2012 to facilitate publishing new research.

Australia sought to take advantage of a valuable resource for increasing development opportunities by creating the ADG under the Development Gateway framework. While the website has been successful, AusAID has decided to close the ADG because its functions can be accomplished by using the AusAID website and other social and professional networking platforms.

Strong Currency Limits Australian Economic Growth

The Australian: Markets See Light at End of Tunnel

FT: Strong ‘Aussie’ Puts Damper on Mining Boom

WSJ: Food Could Be an Aussie Problem Now

On March 21, the Australian dollar (commonly referred to as the “Aussie”) traded at US$1.0537, the highest value with respect to the U.S. dollar in three decades. The Aussie exchange rate has risen over the last three years primarily because Australia has higher interest rates than other advanced economies. A higher interest rate attracts foreign investors who are able to get higher rates of return on their investments than they can elsewhere. The influx of investment to Australia creates a demand for Aussies, which raises the currency’s value relative to other currencies. Another reason why the value of the Aussie has risen is that in the wake of the European sovereign debt crisis, investors have viewed Aussies as a safe investment, which leads investors to buy Aussies, thereby increasing demand and raising the currency’s value. Furthermore, developing countries such as China are looking to diversify their holdings of foreign currency away from the U.S. dollar to minimize their exposure to a potential downturn in the U.S. economy, and the Aussie is viewed as a good alternative given the relatively higher growth rate in the Australian economy compared to the United States.

The higher value of the Aussie has limited the country’s exports (which are a primary driver of economic growth) as Australian products are more expensive for foreigners. Australia’s economy grew by 2.3% in 2011, but only by an annualized growth rate of 0.4% in the fourth quarter—both of these figures are much lower than the average growth rate of 3.25% over the last several years. Furthermore, Australia’s economic growth has been limited because Australian households have increased their savings over the last two years to pay down household debt. With less money being spent in the local economy, businesses are discouraged from expanding their operations which limits economic growth.

Perhaps more concerning to the Australian economy is that demand from China for Australian commodities has decreased and is likely to continue falling. Mining is the main economic sector in Australia and will account for over 40% of total business investment over the next few years. Much of Australia’s mining exports go to China. However, Chinese food and oil prices have been rising over the last several months, which has created inflationary pressure as producers pass on higher costs to consumers in the form of higher prices. With higher inflation, China may tighten its monetary policy by raising its interest rates, thereby encouraging Chinese to save instead of spend, which could decrease demand for Australian goods.

Countries in Asia Prepare for European Debt Crisis Fallout

Sources:

Agence France-Presse: Asian Countries Cut Rates amid Global Economic Woe

FT: Indonesia Slashes Interest Rates by 50 Basis Points

WSJ: Asia—Pacific Economies Gird for Turbulence

WSJ: Some Asian Economies Reflect Strains

Countries throughout Asia and the South Pacific have responded to the European debt crisis and waning global demand by lowering their benchmark interest rates. Australia, China, Indonesia, Pakistan, and Thailand have all decreased benchmark interest rates in recent months, and Malaysia, New Zealand, Singapore, and South Korea are considering other policies to inject more money into their economies.

The use of monetary policy to spur spending and economic growth represents a shift in policy for many of these countries. In recent years, these countries have experienced robust economic growth and have been primarily concerned with curbing high inflation. This concern has led them to maintain high interest rates to decrease the money supply—and thereby inflation—by making saving more attractive and borrowing more expensive. However, the once-rising inflation rate is now falling in many of these countries and economic growth has also decreased. It is this reversal in growth that has convinced many of the countries to change course.

The benchmark interest rate is the rate of return on new government-issued bonds. In theory, lowering the benchmark interest rate can decrease the value of a country’s currency and spur its export industries, which is an effective way to generate economic growth. For example, if Indonesia lowers its benchmark interest rate, demand for Indonesian bonds will fall because they are not as profitable as before. Since investors use the Indonesian currency (rupiah) to buy government bonds, when demand for the bonds falls so does demand for the currency, which lowers its value in accordance with supply and demand principles. If the rupiah costs less on the foreign exchange market, it will be cheaper for businesses in the United States, for example, to buy the rupiah required to pay Indonesian manufacturers for their goods. The lower currency value will, therefore, jumpstart Indonesian export industries and generate economic growth.

A lower benchmark interest rate also has an effect domestically. When interest rates are lower, saving is less attractive and borrowing is cheaper, which encourages people to spend their money rather than save it. The additional spending increases overall demand and economic growth.

Some analysts question whether policies aimed at increasing economic growth at the risk of increased inflation are necessary. Although economic growth rates have fallen of late, a recent Asian Development Bank report indicated that Asian countries are still on pace for 7.5% growth in 2011. These analysts believe that this level of growth is appropriate given the global economic downturn, and think that preventing the potentially destabilizing effects of inflation on food and commodity prices should be the countries’ priority.

Whether this policy shift represents a temporary response to worsening conditions in Europe or a more prolonged transformation of Asian monetary policy remains to be seen. There is no doubt, however, that Asia’s path forward will be closely observed and scrutinized by the global community.