Oceania Countries

Australia Economy Overview

ECONOMY: GENERAL INFORMATION

Having long remained a land of exploitation that supplied agricultural and mining products to Great Britain, over the years Australia has created more solid structures; although it has not entirely lost its character as a land of colonization (exports are still largely represented by unprocessed products such as iron and coal, meat, wheat, etc.) and this makes the Australian economy effectively vulnerable to fluctuations of the international market. The industrialization process, initiated by the British at the time of the Second World War, was favored by numerous factors: the wealth of mineral resources, skilled labor, proximity to the large markets of Asia and Oceania. Moreover, the entire Australian economy finds favorable conditions for development: the presence of a homogeneous population, the restrictive laws on immigration, political stability and social peace that attract capital from abroad, the orderly and advanced organization of work, the general orientation of the country which, although liberal, tends to to eliminate social and regional imbalances and to enhance local resources with conspicuous investments. These factors are responsible for the increase in national income which, evaluated per capita, places Australia among the richest countries; the population enjoys, among other things, one of the most advanced social security systems and very high wages, even if the growth in wages, favored by the structure of the sector market and by the reduction of labor costs (2005 reform) was and is accompanied by inflationary pressures. In the second half of the eighties of the century. XX, after a period of stagnation due to various factors (difficulties in expanding the Australian product market, devaluation of the national currency against the dollar and the yen, more restrictive wage policies and privatization of manufacturing industries, national airline and banking sector), the Australian economy quickly recovered favorable economic and financial conditions, bringing deficits and inflation back to almost physiological levels. The economic structure, however, despite its increased solidity, is still significantly affected by the effect of natural or political events, however extra-economic (an example of this is the profound repercussion following the promulgation of the December 1993 law which recognized traditional property of Aboriginal communities on uncultivated land – hitherto considered res nullius– effectively questioning the activities of many mining companies and breeders). As far as the agricultural and livestock sector is concerned, if on the one hand the traditionally large production continues to guarantee a considerable contribution to exports, in the presence of a large surplus on the internal needs, on the other its conditions have relatively worsened, especially for a more difficult access to aquifers, impoverished by intense exploitation, especially in the arid areas of the country. Generally speaking, during the twentieth century Australia’s economic policy went from an initial attitude favorable to the birth of small companies (functional for the population of uninhabited areas) to the implementation of incentives to promote large companies., more profitable. The active presence on export markets, to which intensive crops are destined, however, makes the country’s economy dependent on international trends: for example, the production of wool (of which as a country located in Oceania according to aceinland, Australia continues to be the world’s largest exporter) 1989 and 1993 and then again in 2000, it suffered a decline due to lower international demand, the spread of other fibers and lastly, changes in the national economic and social structure. The sector, however, has also been able to equip itself with innovative tools (starting with the use of the satellite for land planning), managing to cope with restrictions on land use as well as the need to adapt to ecologically compatible agricultural practices. With regard to mining production, however, the dispute over property rights on state-owned lands has been resolved to the advantage of the aborigines – for which the mining companies will owe to the aborigines, hitherto marginalized, forms of compensation for the exploitation of the fields -, it continues to have considerable importance, fueling both exports and some industrial sectors (chemical and petrochemical, metallurgy); However, the production of consumer goods (textiles, mechanics) is also assuming greater weight than in the past. However, Australia’s major efforts are aimed at making manufacturing production more competitive in the face of competition from Southeast Asian countries, against which protectionist measures are also maintained. Since the end of the Second World War, in fact, this industry has experienced a period of strong production increase.

In the 1960s, also due to demographic growth and a greater demand for consumer goods, there was a decline in the food, clothing and wood industries and the emergence of the chemical, electrical and machine tools industries. (capital-intensive industries) and oil industries. Since the end of the 1980s, however, the country has engaged in a process of deindustrialisation (abandoning the less competitive sectors) and of tertiarisation of the economy which, on the one hand, has led to a sharp increase in the share of unemployed (especially products from industrial restructuring, but then partially reabsorbed up to about 8% of the active population), from on the other hand, it brought Australia closer to the model of the main economic powers, giving the country a position of supremacy and reference (in the technological, managerial, financial fields) for many Asian countries. It is precisely in opening up to the outside that Australia seeks its definitive strengthening. With regard to South-East Asia, in particular, Australia is increasingly defining a line of economic cooperation and political-diplomatic collaboration that should strengthen its regional position: examples of this are mediation in the institutional crisis in Cambodia; the doubling of aid granted to Viet Nam; economic cooperation activities with Laos and Thailand; diplomatic support for Japan in the trade dispute with the USA. Basically, the APEC, which also includes Japan, China and North American countries, or by the AFTA (Economic Organization of the Countries of Indochina and Insulindia). The importance of the Asian area is evidently both political-strategic and economic: Australia receives most of its imports from Asia, and directs over half of its exports there. Despite this growing importance in the geopolitical area of ​​the Pacific, the positive ability to attract capital and the increase in foreign investments (especially in the manufacturing and technology sectors), Australia remains in some respects very dependent on external actors, such as the large multinationals, attracted by the proximity to Asian markets and by the possibilities offered by the country (skilled labor, effective telecommunications and infrastructure system, high standard and quality of life). To overcome these dependencies, the country has implemented some economic reforms such as, for example, the control of the money supply, the simplification of bureaucracy and the promotion of competitiveness. The growth of confidence in the internal market, the containment of the role of the state in the economy and the monitoring of inflation are also favored by the reduction of public spending. In the early years of the new millennium, despite the negative effects resulting from the great drought that hit the agricultural sector, the country’s economy grew, with a GDP of US $ 997,201 million for 2009, with a GDP per capita of US $ 45,587. The export trend was also positive, thanks also to the attracting power of the new markets represented by China and India.

Australia Economy Overview