Economic Growth of Australia (Post-WWII)
Research Paper, 2012
Conclusion (excerpt)
Australia’s economic development is marked with significant socio-economic structural changes as growth proceeds overtime. Compared to other advanced western economies, Australia also experienced a similar relative decline of manufacturing, permanent rise of unemployment after the 1980s recession, and transition to a more service-based economy typical of high income countries. Structural reforms of institutions clearly contributed to stable economic growth and performance, but they were also influenced by other factors including, falling transportation costs; the communications and information technology revolutions; increased integration with international economy; and trade benefits from the remarkable surge of economic growth in East Asia during the late 20th century. Other key reforms also characterized the 20th century Australia including, financial deregulation, improvements in the performance of regulated industries and private enterprises; the removal of the centralized system of wage-fixing; deregulation of manufacturing and agriculture sectors as well as sectors like transport and telecommunications; and promotion of greater competition and better resource use through privatization. By the beginning of the new millennium, services accounted for over 70 percent of national income while, agriculture’s share of GDP was only two percent (Attard). While manufacturing output has continued to increase, the services sector has grown much faster. As a consequence, manufacturing now accounts for a smaller share of GDP and employment. Australia still remains as a crucial exporter of commodities which is one of the reasons why Australia’s economy was minimally affected by the global financial crises that began in 2008. The increased demand for commodities as well as implementation of reformed macroeconomic policies during the crises enabled Australia to swiftly improve its economic performance. Australia’s remarkable growth since past 17 years and swift recovery from the global financial crises testifies for its sustainability in the future. As a result of an improved economy post-global financial crises, the budget deficit is expected to peak below 4.2% of GDP and the government could return to budget surpluses as early as 2015 (CIA). Australia is also one of the first advanced economies to raise interest rates, with seven rate hikes