I found this while reading an article which argues in favour of alternative energy for Australia.
Part of the article is talking about Australia’s coal export to Japan, and how vulnerable Australia is to Japanese preferences. An interesting and compelling part of it was the argument that by not having diverse sources of economic growth/income, when the bottom falls out (preferences change) then there is nothing to cushion the shock.
I like this point a lot because I feel that it is extremely short sighted for production and manufacture (and resources) to be sent overseas when in reality a country can and should support local industry, even if it means the cost of goods is higher and the economy is slower. The sustainability of this approach is much more justifiable.
Here’s the relevant section with some editing:
[T]he great majority of coal exports (and other types of commodity exports) from Australia are directed at East Asia [and] the resources sector accounts for more than half of Australian total exports. Moreover, Australia exports more coal to Japan than the rest of the world put together; thus leading to the issue of the Japanese monopsony (where a large buyer controls the market).
Furthermore, these countries’ (most notably Japan’s) energy preferences can also have huge effects on Australia’s terms of trade and trade volumes. For example, if East Asian nations were to apply strict environmental rules in the near future, or even in the presence of market-based policies such as cap-and trade systems, there could be major shocks to Australian commodity exports that would translate into domestic job and investment losses. Australia might face what is commonly known as the “Dutch Disease.”
The Dutch Disease has its origins in Dutch exports of natural gas and, in this case, [is] described as “the negative symbiosis between the mining and other tradable sectors that mutes both the rate and efficiency of economic growth.”
This is an argument for alternative investments in other sectors other than mining. The Dutch Disease will cause a nation’s currency to appreciate, because of an increased demand for the natural resource, and, therefore, make other exports (manufactures in this case) less competitive. This, again, provides an argument for investing heavily in other sectors such as renewable energy technologies. In this sense, expansion of one part of the economy draws resources from the rest creating serious imbalances and inflation. This phenomenon provides important insight for the mining sector and most notably the coal sector.
Article here: http://www.geni.org/globalenergy/research/economic-argument-for-adopting-a-zero-emissions-energy-policy-in-australia/The-Economic-Argument-for-Adopting-a-Zero-Emissions-Energy-Policy-in-Australia.pdf