Economic history of Australia


Economic history of Australia

This article is a brief timeline of the economic history of Australia.

Before 1850

1850 - 1860

The discovery of gold in 1851 changed the direction of the Australian economy. The discovery led to increased immigration, which put a burden on the gold supply. This in turn led to the resumption of wool as the principal provider of economic growth by 1860. Actual estimates of populations of the time indicate that the population of 400,000 at the start of the decade increased to 1,000,000 by 1860.

The Australian government started a "development strategy" by issuing bonds to the London market, selling public land and using this to fund infrastructure.

1860 - 1875

Due to the increases in income attributable to the “Gold rush”, manufacturing and construction sectors of the economy fared very well.

1875 - 1880

As fertile land became less available to settlers, pastoral industries continued to increase their land holdings for the use of wool production. This caused a retraction in returns on investment by pastoral companies. Even when poorer land was utilized for the purpose of wool production there was continued investment both from private backers, and governments (in the form of transportation infrastructure).

1880 - 1890

An investment boom in Australia in this decade saw increased economic expansion despite the fact that the investments were providing less of a return per dollar spent on investment. This can be attributed to foreign funds' becoming more available to Australia. This influx of capital led to Australians' experiencing the highest per capita incomes in the world during the late nineteenth century. However, by the end of the decade 1880-1890, overseas investors became more concerned with the difference between expected returns and actual returns on Australian investment and withdrew further funding. Consequently Australia saw the start of a severe depression starting in 1890. Australian economic historian Noel Butlin would later argue that the history of Australian settlement has been one of growth financed by foreign capital, punctuated by depression caused by balance of payments crises after a collapse in commodity prices and exacerbated by the imprudent use of capital.

1890 - 1900

*1890- The Great maritime strike

*1891- Australian shearers' strike

*1891- 16 small banks and building societies collapse in Melbourne http://150.theage.com.au/list_event.asp?intera=3 "The Age" 2004 "Timeline | Depression" Access date: November 29, 2007. ]
*1892- Broken Hill strike
*1892- 133 limited companies go into liquidation in Victoria alone

*1893- major international depression

*1893- Australian banking crisis of 1893: the Federal Bank collapses; many financial institutions, including several major ones, suspend trading

** 1 May 1893- Government of Victoria implements a five-day bank holiday to address the panic

*1894- The worst of the economic crisis was over and the task of rebuilding society started. There were some reforms to regulation and law with a view to preventing future abuse. [cite book|last=Cannon|first=Michael|title=The Land Boomers|publisher=Melbourne University Press|year=1966|pages=p 197]

1900 - 1939

While wool-growing remained at the centre of economic activity, a variety of new goods such as wheat, dairy and other agriculturally based produce became a part of the Australian export repertoire. It was in this period that the latter started contributing more to economic growth than wool production. Part of this emergence of other sources of economic expansion came from technological progress, such as disease-resistant wheat and refrigerated shipping. It was also the development of this technology that renewed large-scale foreign investment.

This injection of foreign investment led to increases in construction, particularly in the private residential sector. The fact that this injection of foreign cash was the main contributor to economic expansion was again troublesome for Australia’s economy. Returns on investments, as before, were immensely different from expected returns. By the 1920s agricultural producers were experiencing profit troubles and governments, who invested heavily on transportation infrastructure, were not getting the returns they expected. Cutbacks in borrowing, government and private expenditure in the late 1920s led to a recession. The recession itself became worse as internationally nations fell into depressions which not only cut back on foreign investments to Australia, but also led to a lower demand for Australian exports. This culminated into the biggest recession in Australia’s history which peaked in 1931-1932.

The recession was not felt as badly in Australia as compared to its international counterparts, due to the increases in productivity from the manufacturing sector. (In William Sinclair [http://www.assa.edu.au/Directory/listall.asp?id=296] 's terms [http://isbndb.com/d/book/australian_economic_development.html] , this is where Australia moved from the old model to the new model.) Trade protection, particularly from tariffs implemented by governments at the time were instrumental to the prosperity of the manufacturing sector.

1939 - 1974

The highest growth in the manufacturing sector was found in the period after the end of the Second World War. Import restrictions implemented by the government of the time led to increased profits to the manufacturing industry, which encompassed a wide range of industries including motor vehicles, metal processing, TCF (textiles, clothing and footwear) and chemicals. The impetus, for the most part, was U.S. investment in Australia. The manufacturing industry was bolstered only to serve the domestic market, led by economic policy makers who implemented “import replacement” strategies. This was afforded by continuing increases in both productivity and economic protection.

In the 1950s and 1960s, Australian manufacturers which were nurtured by government policy failed to increase productivity. This was highlighted by the increases in the productivity of overseas manufacturing who did not have the same level of protection as Australian producers. Foreign investors noticed this lack of competitiveness and investment declined in the manufacturing sector.

Economic growth was not hampered by this, as the development of mining initiatives to exploit Australia’s natural resources attracted foreign investment, which underpinned economic expansion. This establishment of a mining industry continued the high level of economic growth in the post-war period.

1974 was the end of the "long boom".

1974 - present

The Australian Stock Exchange Limited (ASX) was formed in 1987 through the amalgamation of six independent stock exchanges that formerly operated in the state capitals. Each of those exchanges had a history of share trading dating back to the 19th century.

Deregulation of the Australian government started under the Hawke Labor government. Tariffs were progressively cut, the Australian dollar was floated in 1983 and government run enterprises from the Commonwealth Serum Laboratories to Qantas were privatised. The Howard government continued with even more controversial reforms, including establishing a Goods and Services Tax and deregulating labor markets.

The 1980s economic reforms, intended to diversify the national economy and make it more resilient, were introduced after the mid-1980s decline in the terms of trade. [cite web|url=http://www.treasury.gov.au/documents/1400/HTML/docshell.asp?URL=Structural_Effects_Terms_of_Trade.htm|author=Adam McKissack, Jennifer Chang, Robert Ewing and Jyoti Rahman|title=Structural effects of a sustained rise in the terms of trade|publisher=Australian Treasury|year=2008]

This is a chart of trend of gross domestic product of Australia at market prices [http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm.cfm?G=2001 estimated] by the International Monetary Fund with figures in millions of Australian Dollars.

For purchasing power parity comparisons, the US Dollar is exchanged at 1.19 Australian Dollars.

References

ources

*cite book | last = Butlin | first = N. G. | authorlink = | coauthors = | title = Investment in Australian Economic Development | publisher = Cambridge University Press | year = 1964 | location = | pages = | url = | doi = | id = | isbn =
*cite book | last = Sinclair | first = W. A. | authorlink = | coauthors = | title = The Process of Economic Development in Australia | publisher = Cheshire | year = 1976 | location = Melbourne | pages = | url = | doi = | id = | isbn =
*cite book | last = Snooks | first = G.D. | authorlink = | coauthors = | title = Portrait of the Family within the Total Economy, Australia Since 1788 | publisher = Cambridge University Press | year = 1994 | location = | pages = | url = | doi = | id = | isbn =


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