Abstract
Australia’s several major mining booms since the 1840s have impacted positively on national economic growth and non-trivially on the competitiveness of other sectors of its economy. This paper shows the latter to be consistent with economic theory only when sectoral policy developments are taken into consideration. It reveals several features that make the sectoral composition of Australia’s economy unusual. One is that the manufacturing share of GDP was unusually high until protectionism was phased out from the 1970s. Another is that the farm sector continued to enjoy a strong comparative advantage despite mining booms and high rates of assistance to import-competing manufacturers. Also, the agricultural and services sectors’ shares of GDP remained fairly constant rather than diverging during 1860–1960. The paper concludes by drawing out implications for future policies.
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Notes
National income is less likely to rise the poorer the government’s macroeconomic management and the more distorting are its sectoral and trade policies. Adverse outcomes are so common among developing countries as to have given rise to the term “resource curse” (coined by Auty 1993). Extensive reviews of that literature can be found in van der Ploeg (2011), Smith (2015), and Venables (2016).
It leaves aside the question of how these structural changes and shocks contributed to the growth and fluctuations in the country’s aggregate output, employment, and income. The reasons for high per capita income in Australia in the nineteenth century and continued prosperity to date is the subject of a study by McLean (2013). Evidently Australia managed to avoid the “resource curse.”
Gold (not shown) contributed more than meat to New Zealand’s exports prior to the 1880s. Argentina’s exports also were highly concentrated on two products: wool and hides to the 1880s and wool and grain from then to World War I.
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Thanks are due to referees for comments on an earlier draft. (Kym Anderson)
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Anderson, K. Mining’s impact on the competitiveness of other sectors in a resource-rich economy: Australia since the 1840s. Miner Econ 31, 141–151 (2018). https://doi.org/10.1007/s13563-017-0133-8
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DOI: https://doi.org/10.1007/s13563-017-0133-8