Organization For Economic Co-operation And Development (OECD) Member States: Australia, Japan, Austria, And Germany

Overview of the OECD

Organization for Economic Co-operation and Development, OECD, is a global network with 35 member states, the organization was established in 1961 and currently all its members the developed countries with high incomes. Its headquarters are in France, Paris. The member states create a forum that discusses the market economy possible investments in member countries and they also encourage foreign direct investment in the member states. They help solve problems amongst themselves and establish policies that are fair both in the domestic economy and the international economy too and improve the world’s well-being.

Australia is one of among the active member states of OECD since the year 1971, it has a strong economy and potentially profitable in terms of investment. It has a high standard of living and the GDP of the economy is quite high. Australia has participated in contributing contribute in agriculture, trade policies, energy, education and also taxation. (Sharrock, 2016). Australia had to spend lower due to a higher GDP growth.

Australia has forty years in membership with the OECD, Australia has helped many women and other underemployed groups in the secure employment, its strong economy is predicted to have a shortage of labor in future due to the incorporation of the whole population in the public service Australia has actively participated to achieve the OECD goals such as expanding the world trade, improving economic development, creating employment and improving the standard of living in the country. Same is expected to all member state of the Organization for Economic Co-operation and Development.

Japan joined the OECD in 1964. Japan has various sectors such as technology, education, agriculture, energy, finance, innovations among others. Though it is known to be productive japan faces a number of challenges. For instance it’s struggling with the government huge debts and also there is a quick rate at which the working population is declining. This into consideration, Japans’ GDP is generally declining. There is low foreign investment in major fields in the economy. Japan has a high export record of motor vehicles and steel products. Its major export partners are United Stated, China, Korea and Taiwan. Though it still faces competition from China and South Korea Japan has shifted its focus primarily on exporting goods such as hybrid vehicles and robotics which makes it dominant in that sector in the market. Japan has the largest world’s private sector and it is the world’s largest creditor. Most developing country has a huge debt obligation to Japan.

Australia's Membership in the OECD

There’s is a widening gap between the manufacturing and the service industry. Also the government expenditure is higher compared to the revenue (OECD, 2017) This will lead to a deficit in the total revenue and the economy will deteriorate.

The falling yen is not good for investors, therefore discouraging investment in Japan. When stocks are bought in dollars and sold in yen the investor will not be sure of whether they will generate a profit of a loss since the currency is unstable. This calls for the need for investors to hedge your investments until they are sure of what direction the currency takes. Uncertainty on the appreciation or depreciation of the yen is unattractive to many investors. Therefore it’s more likely that investors could forego the option of investing in Japan due to its instability in their currency and opt to venture in other countries with favorable business environment. On April 30^th, the bank of Japan reduced the consumer price index to 0.8% from 1.0% as in January. It also reduced the fiscal year from 2.1% to 2.0%. This confirms that Japan is not a certain country as far as investment is concerned (Ashworth, 2015).

The equity market and the economy of Japan is mostly affected by the central bank. If the bank lowers the interest rates, they make loans attractive and competitive. Therefore individuals will loan more and thus spend more. They may buy a car, a house, invest or just spend the money. When consumers spend more money this implies the economy is growing. Therefore if the Feds lower the interest rates investors will invest more. Lowering the interest rates has both positive and negative impacts, the investors will secure loans and invest and will also create business opportunities in the country therefore they will create employment opportunities. The negative impact will be that if the interest rates are low the yen will weaken.

Austria signed the convention of the Organization for Economic Co-operation and Development, OECD in 1961. Austria is currently strengthening its economy by the recent tax reforms and an improvement in participation in the international trade. Therefore there have been policies enacted to and deeper structural reforms that will improve the fiscal stability and social cohesion in the economy.

Austria is among the wealthiest states in the OECD. They have improved tax reforms however their output growth is declining due to various factors such as the increased number in labor supply, women, the elderly and the large number of immigrants has been incorporated in the labor force though the number of working hours per individual had been reduced. There’s also the adoption of information and technology which is faster adopted by the young generation and the highly educated individuals but the elderly and the immigrants seem to lag behind. This has slowed the rate of productivity and Austria is losing market shares. Technology and other business innovations will improve the business models and will also most business operations will be faster effective and easier it will also improve productivity and social cohesion will improve mostly through social media that is the most recent form of interaction (OECD, 2017). Digitalizing the economy will improve productivity. People can work at their homes, communication will be made faster and easier also most businesses can be done online therefore it saves time and resources.

Japan's Challenges and Export Dominance

Austria’s’ economic performance is on the rise with declining unemployment rates. There’s is also an increase in foreign investment in the country in the service and the industrial sector. The large number of immigrants that relief the strain of the ageing population therefore the economy is labor market is always flooded with long-term skilled labor. Trade is important in Austria though there are complex regulations governing trade and investment in the country. For instance there is no transfer of currency, no access to foreign exchange of repatriation of profits (freedom, 2017).

Investors may or may not opt to venture in Austria since it has strict restrictions and regulations on foreign investment also it has policies that are favorable to investments. Investors will be attracted to the well-developed infrastructure, it’s skilled and highly productive work force. Austria also has a wide range of pharmaceutical industry therefore attracting big companies in the biotechnological sector. Austria is politically stable and provides a conducive business environment. There’s also high personal security and quality of life is high (Trade, 2017).

Despite being wealthy and being a potential target to investors, Austria has also some deficits that might scare away investors. Austria lacks migration laws that controls migration, the country is dependent on Central and Eastern Europe where investments have taken place which is risky considering they are related to a number of crisis. Also the Austrian economy is not restrictive on its internal market. This can lead to monopolies, overpricing, poor standard of goods in the market and other violations in the market. Repatriation of profits to the home country and also the restriction on foreign exchange are among the unfavorable conditions discouraging foreign investment.

Austria’s GDP was worth 283.43 billion US dollars in 2016. This represents a 0.62% of the world’s economy (Economies, 2017).

Germany sighed the OECD in 1916. German is well known in the motor vehicle industry, machinery, chemicals, computers and electronic products, foodstuff and also in the plastic and rubber industry. Germany has an outstanding economic pace growth due to major export of motor vehicles from the country which is the most dominant economic activity in Germany. There has been a fixed steady growth in investment. The winter weather resulted to increased construction activities. The private sector increase their consumption, unemployment decreased and Germany has been struggling with its labor crisis since 2008. The private sector has been strengthened and unemployment has been reduced. Germany also introduced a minimum wage which has now improve the life style of many that have low wages. Though the economic performance has been great, Germany is weak on labor productivity which is seen to be low in the service sector (Fuentes, 2016).

Investing in Japan

Investment in Germany is attractive as many other euro countries. Uncertainties in the market economy can possibly damage the investment potential. Too much regulatory such as requirements for market entry, restrictions on advertisement and productivity are most likely lead to a decreased investment. Germany being a member of the European Union requires it to participate in bailouts. There bailouts are expensive and it affects the economy severely especially if many countries faces these problems and have to be bailed out. This union also has debt issues and if one country fails to pay their debt then the outcome ends up affecting other countries Germany included. The ageing population in Germany is also a warring factor to investment. The working age is ageing and the fertility rate of the country is relatively low, this will imply that in future the older population will be greater than the population in the labor industry. The older people will increase dependency rate and the economy will suffer from insufficient manpower in the labor market.

Despite the risks involved in investing in Germany, the German economy has a strong economy it has specialized in major exports and the general GDP of the country reaches up to 3.573 trillion euros on a normal basis. (Kuepper, 2016). Germany is a country with a solid economy, but it requires investment for a stronger economy. The huge number of immigrants especially in Berlin City will add to the working force in the country. To have a large number of investors Germany should loosen on its regulations that are a restrain to investors. Applying low interest rates in banks and ensuring political stability is key for high productivity in investments.

The city of Berlin has various challenges major one being the gentrification problem. Berlin is known for the birth of most of the working class in Germany and it inherits culture policies to all the cities around. The problem of fast raising rents and lack of space for people to live leads to displacement. The German government attempts to subsidize some residential houses was fruitless before Berlin became rampant for hiking rents. Several laws have been passed hopefully to help reach a manageable rent prices. As Berlin struggles with gentrification and displacement of people, investors may find an opportunity to invest in real estates. Houses that are of manageable rents are at a higher demand and they can therefore venture by taking the gentrification problem at their advantage.

Austria's Economic Performance and Investment Potential

Germany still tops on the economic performance among the OECD member countries. Investments have improved and the exports have also improved. Increased investments contributes to a higher GDP in the economy, also investors have created employment to the working population. Though there’s the problem of repatriation of profits to the home country of the investors, a portion of the profits is also left in Germanys’ economy and it has been use to improve infrastructures such as health care, construction of roads and developing telecommunication.

Japan, Austria and Germany are all fulfilling the Organization for Economic Co-operation and Development goals. There have been an improvement in policies, investment has been promoted and development in the countries can be accounted for. There has been an improved standard of living in these countries by creation of employment improved infrastructure among others. There is also strong partnership and creation of unions among members. There has been an improvement in health services, telecommunication, infrastructure and policies on maintaining the environment has led to environmental conservation.

The investments in foreign countries have created custom unions that facilitated trade in the region. These unions come along with benefits such as alleviation of taxes to goods across member countries, it’s is a good thing but then countries end up losing valuable tax revenue due to the free exports and imports. Also involves moving of capital goods and services across borders through investment. It brings goods and services into the country also improve the domestic growth of the country, investors also improves competitiveness between the foreign and the domestic organizations thus making companies produce goods and services of better quality. Foreign investment will also create new employment opportunities to the domestic population therefore the unemployment rate is reduced.

Foreign investment also has its negative consequences on the domestic economy. Small businesses and companies are killed due to the monopoly power of these companies. These companies have capital intensive technology that is quite expensive. Chances are that these companies will develop to be monopolies the market, they become the price setters and the citizens are the price takers, they exploit the common citizens with high prices.(Parikh, 2012) This calls for government intervention in controlling their market operations thro price setting and other policies that keeps them in check. 

Reference List

Ashworth, D., 2015. Inveesting in Japan has some risks. [Online]

Available at: https://finance.yahoo.com/news/investing-japan-risks-150706042.html

Economies, T., 2017. Austria GDP. [Online].

freedom, I. o. e., 2017. ECONOMIC FREEDEOM. [Online].

Fuentes, A., 2016. OECD ECOSCOPE. [Online].

Kuepper, J., 2016. The definative guide to iinvesting in Germany. [Online]

Available at: https://www.thebalance.com/the-definative-guide-to-invest-in-germany-1979023

OECD, 2017. EconomicSurvey of Austria. [Online]

Available at: www.oecd.org/austria/economic-survey-austria.htm

OECD, 2017. eonomic survey of Japan 2017. [Online].

Parikh, V., 2012. LetsLearnFinance. [Online]

Available at: www.letslearnfinance.com/advantages-and-disadvantages-of-fdi.html

Sharrock, G., 2016. THE CONVERSTION. [Online]

Available at: theconversation.com/oecd-figures-are-not-what-they-seem-in-higher-education-60786

[Accessed 6 sep 2017].

Trade, S., 2017. AUSTRIA: FOREIGHN INVESTMENT. [Online]

Available at: https://en.portal.standardtrade.com/establish-overseas/austria/foreighn-investment