Australian economic growth and its drivers since European settlement

Jakob B. Madsen

Research output: Chapter in Book/Report/Conference proceedingChapterResearch

Abstract

Introduction: Characteristic of Australian economic growth history is that agriculture and mining have been the dominant forces of economic development during the 19th century and, to a lesser degree, up to the present day. It only took a few years of structural adjustment after European settlers arrived in Australia in 1788 before Australia's per capita income among settlers reached that of United Kingdom, which was the country with the highest per capita income in the world at that time. Following the gold rush that took place at the beginning of the 1850s, Australia, in terms of per capita income, became the richest country in the world - a lead that endured to the depression of the early 1890s. Probably the most important factor behind Australia's 19th-century's richness has been abundance of land and mineral resources. The wool industry was highly productive and competitive because of low production costs, the low weight-cost ratio, and not being heavily dependent on investment in transport infrastructure (Schedvin 1990; McLean 2013). Furthermore, replacing shepherds by fencing in the second half of the 19th century reduced the need for permanent labour. Sinclair (1976) argues that the mining sector was influential for Australia's economic growth and prosperity because of positive spillover effects for other sectors of the economy and because it redistributed large numbers of workers across the economy after the 1850s gold rush. However, being highly dependent on natural resources has had its downside in that Australia, until World War 2, was dependent on the highly volatile demand and supply conditions in the world market for agricultural and mineral products. That resulted in large booms and depressions, such as the depressions in the periods 1840-42, 1890-96 and 1930-33.

Original languageEnglish
Title of host publicationThe Cambridge economic history of Australia
EditorsSimon Ville, Glenn Withers
Place of PublicationPort Melbourne
PublisherCambridge University Press
Pages29-51
Number of pages23
ISBN (Electronic)9781107445222
ISBN (Print)9781107029491
DOIs
Publication statusPublished - 1 Jan 2015
Externally publishedYes

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