Times Of Economic Complex ity, Going for Gold: An Idea

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Times Of Economic Complexity, Going for Gold: An Idea

In times of economic complexity, going for gold is a good idea.

In order to create more IndustrIal sovereIgnty, australIa should look to improve its economy through sophisticated manufacturing and export diversification. Australia finished sixth overall with 46 medals, including 17 gold, at the 2020 Tokyo Olympic Games. In this nation consisting of 25 million people, Australia has punched way above its weight in the modern Olympics, achieving one of its finest results.

Years of planning and investment went into this success. In the four years running up to the Tokyo Olympics, the Australian Sports Commission (ASC) spent more than $500 million on athlete preparation.

While Olympic success is crucial for encouraging community participation and instilling a sense of national pride, Australia is woefully behind the curve when it comes to a key indicator of long-term economic success: economic complexity. Economic complexity is a metric that assesses a country's ability to produce goods and the sophistication of its exports. These are necessary for increased productivity and global competitiveness.

Australia was ranked 79th in the world for economic complexity in 2019. This ranking places them behind emerging economies such as Kazakhstan and Chile and only marginally ahead of Mauritius and Guatemala, despite the fact that we consider ourselves to be an "advanced economy." Korea, Singapore, and the United States, on the other hand, make up the top ten nations for economic complexity.

In comparison to the majority of industrialized economies, Australian exports are both diverse and sophisticated. Iron ore, coal, and mineral fuels are major exports, leaving the economy subject to commodity price fluctuations while also denying Australia the potential to create onshore value by leveraging its human and financial capital.

Although Australian miners' efficiency is undeniable, the dig-and-ship model that underlies the economy needs to be reconsidered if Australia is to succeed in the decades ahead.

Throughout the COVID epidemic, the limitations of Australia's industrial capability have been exposed. During the early phases of the pandemic, supply chain breakdowns of vital protective equipment and face masks were common,

Although Australian miners' efficiency is undeniable, the dig-and-ship model that underlies the economy needs to be reconsidered if Australia is to succeed in the decades ahead.

and Australia's ability to vaccinate the population quickly was limited due to a lack of onshore mRNA vaccine manufacturing expertise. CSL's manufacturing capability, on the other hand, has been important in maintaining a consistent supply of vaccines in the face of other countries' export embargoes, demonstrating the necessity of preserving sovereign capability. Other countries recognize the importance of maintaining and expanding sovereign capabilities in an increasingly technical and scientific-driven global economy. South Korea has become a major producer and exporter of electrical machinery, circuit boards, computers, batteries, and automobiles, thanks to well-crafted legislation.

This benefits the citizens' well-being and the country's balance of payments. Furthermore, by 2025, South Korea will have invested around AUD $2.7 billion to become one of the top five vaccine producers in the world.

The Commonwealth Government's $1.5 billion Modern Manufacturing Plan pales in comparison. Australian governments, on the other hand, focused a lot more on boosting the economy through "flashy" infrastructure projects like the $11 billion Western Sydney Airport metro.

If this level of investment were transferred to the promotion of modern manufacturing, huge opportunities would open up. Australia is in a dominant position to become a significant exporter of clean hydrogen and energy-intensive manufactured goods, thanks to the global shift to a low-carbon economy and Europe's recent imposition of carbon border fees. Increasing the domestic value of exports like rare earths and utilizing the research base through increased commercialization of discoveries would create high-value jobs, boost productivity, and ensure the capacity to export competitively for future generations.

Australia is a country with tremendous potential. It's time to go for gold in terms of economic complexity by leveraging rather than exporting the abundant natural resources to develop world-class industrial capabilities. It wouldn't hurt to assist in the repair of the world as well!