2 - Australian economic growth and its drivers since European settlement

Summary

This chapter presents Australian per capita income growth rates over the past two centuries, and identifies long and shorter cycles of growth. It discusses the reasons behind these growth cycles and makes international income comparisons. Next, the chapter analyses how sector shares and sector productivities have evolved over the course of Australian development. Australia's productivity growth spurt in the period 1840-52 was, to a large degree, an outcome of increasing the share of mining and services in total GDP. Finally, the chapter evaluates the factors that are considered to be essential to Australian economic growth, such as capital accumulation, human capital, innovations, interactions with the foreign sector, and health. Australia has been quite innovative since European settlement. Innovation increased over time along with improved tertiary education and increasing R&D outlays. The settlers from Europe brought human capital, culture and institutions to the New World and it is difficult to assess the relative importance of each these factors for economic development.