To prevent unemployment as a problem and develop Australian industry, the government could choose to benefit the capital intensive businesses in the country to replace the deficiency created by the labor intensive ones moving overseas. A greater effort may be required in the case ofAustralia’s private sector but once it is made capital intensive with the extensive use of machinery over labor, it could make the country’s products more competitive in foreign markets and thus lead to development of business.
The theories of international trade and investment with regards to the balance of payments of the country may also be important (Stein 1997). With the manufacturing sector mostly moving overseas,Australia will see a steady rise in imports of manufactured goods leading to possible an adverse balance of trade. However, if the government measures with regards to tariffs are imposed, it may lead to a bucking of this trend and increased reliance on home produced goods and thus a decline in imports. However this is a two way game as other countries may respond with similar measures leading to an equivalent decline in exports, thus not improving the balance of trade any further.