income-growth-australia by Academic Answers

Subject Area - Economics Income Growth Australia New Zealand-Australia economic growth and per capita income differences from the 1870s onwards Introduction New Zealand and Australia have a lot in common, including a shared colonial past, geographic proximity, and a close economic integration. Both countries also have a similar approach to immigration policies, and they both emphasize the expected economic contribution from immigrants. Since the early years of European occupation, Australia’s economy has been a source of high standard of living for the original British colonizers, and generations of migrants, including their descendants. As shown in table 10, this was about as high as any other country in the world, as at the end of the nineteenth century. During the 1900’s, the country’s national income per member fell and became lower than that of several other countries, but could still be favorably compared with most countries. In 2004, Australia was ranked behind only Norway and Sweden in the United Nation’s Human Development Index. Economic historians have differed over the sources of growth that made this possible. Butlin emphasized the significance of local factors like the unusually high rate of urbanization and the expansion of domestic manufacturing. In important respects, however, Australia was subject to the same forces as other European settler societies in New Zealand and Latin America, and its development bore striking similarities to theirs. From the 1820s, its economy grew as one frontier of an expanding western capitalism. With its close institutional ties to, and complementarities with, the most dynamic parts of the world economy, it drew capital and migrants from them, supplied them with commodities, and shared the benefits of their growth. Like other settler societies, it sought population growth as an end in itself and, from the turn of the nineteenth century, aspired to the creation of a national manufacturing base. Finally, when openness to the world economy appeared to threaten growth and living standards, governments intervened to regulate and protect with broader social objectives in mind. But there were also striking contrasts with other settler economies, notably those in Latin America like Argentina, with which it has been frequently compared. In particular, Australia responded to successive challenges to growth by finding new opportunities for wealth creation with a minimum of political disturbance, social conflict or economic instability, while sharing a rising national income as widely as possible. Table 1 Per capita GDP in Australia, United States and Argentina Find more free essays like this one... We have a large reference library of essays that you can use as research materials to help with your own writing check out our free economics essays. Share this resource with your friends... We hope you found this information in this free pdf useful. Please spread the word and tell your friends how this information has helped you with your studies and feel free to share this pdf with others, so it can help them too.

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The UK’s original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/custom-essays/income-growth-australia.php Sources: Australia: GDP, Haig (2001) as converted in Maddison (2003); all other data Maddison (1995) and (2001) From the mid-twentieth century, Australia’s experience also resembled that of many advanced western countries. This included the post-war willingness to use macroeconomic policy to maintain growth and full employment; and, after the 1970s, the abandonment of much government intervention in private markets while at the same time retaining strong social services and seeking to improve education and training. Australia also experienced a similar relative decline of manufacturing, permanent rise of unemployment, and transition to a more service-based economy typical of high income countries. By the beginning of the new millennium, services accounted for over 70 percent of national income Australia remained vulnerable as an exporter of commodities and importer of capital but its endowment of natural resources and the skills of its population were also creating opportunities. The country was again favorably positioned to take advantage of growth in the most dynamic parts of the world economy, particularly China. With the final abandonment of the White Australia policy during the 1970s, it had also started to integrate more closely with its region. This was further evidence of the capacity to change that allowed Australians to face the future with confidence. Calculated from: Reserve Bank of Australia, G10Hist.xls and H03Hist.xls; World Bank, World Development Indicators (Sept. 2005). Chain volume measures, except shares of GDP, 1983, which are at current prices. Maddison observed that “Australia had the highest per capita income in the world during the late nineteenth century, substantially above that of the United Kingdom and other countries” (Maddison 2003). This exceptional position subsequently got eroded over time. We find the country’s higher per capita income was due primarily to higher labour productivity. Table 3 The Australian Economy, 1974-2004 Percentage shares of value-added, constant prices By the early twentieth century, Australia’s per capita income was comparable to that of other leading countries, and just prior to World War II Australia’s income trailed that of the United States and United Kingdom by a slight margin (McLean 2004). The unusual evolution of Australia’s position in per capita income rankings has led to numerous questions about the underlying sources of Australia’s high income and the reasons for its subsequent relative decline. For example, McLean (2005b) explains Australia’s high per capita income relative to the United States in the 1870s and 1880s as a combination of favourable demographic factors and higher labour productivity, with each explaining roughly half of Australia’s superiority. McLean investigates various channels by which labour productivity might be higher, such as resource endowments, investment and capital accumulation, and education and schooling, but his conclusions about the productivity advantage Find more free essays like this one... We have a large reference library of essays that you can use as research materials to help with your own writing check out our free economics essays. Share this resource with your friends... We hope you found this information in this free pdf useful. Please spread the word and tell your friends how this information has helped you with your studies and feel free to share this pdf with others, so it can help them too.

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The UK’s original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/custom-essays/income-growth-australia.php and decline are speculative. Another question concerning Australia’s exceptional position is the accuracy of nineteenth century income comparisons. The successive versions of the Maddison (1982; 1991; 1995; 2001; 2003) data rest on the backward projection of time series of real GDP from a benchmark data near the present. This methodology has been called into question by Prados de la Escosura (2000) and Ward and Devereux (2003), who argue that index number problems make projection over long periods subject to potentially large errors. On a Sectoral basis, the estimates of productivity of labour can show the sources of Australia’s original lead, and outline the history of Australia’s subsequent convergence to other countries like the UK. Australia had a substantial labour productivity lead in agriculture throughout the period, due to the importance of highvalue-added, non-arable farming. Australia had a smaller lead in industry before World War I based on the importance of the mining sector, but this lead disappeared as manufacturing became more important. There was little productivity difference in services (Stephen Broadberry and Douglas A. Irwin 2006) New Zealand shares a wealth of common interests and experiences with Australia and the UK stemming from trade, factor flows and cultural inheritances. Until recently, her links with North America have been somewhat weaker, although Australia, Canada and New Zealand have a common heritage that makes these countries natural candidates for a Dominions Convergence Club. In a series of papers using the time-series based tests of Bernard & Durlauf (1996), and their own modifications, Greasley & Oxley investigate the time series properties of Australian, Canadian and British real income per capita, where they conclude in favour of a long-run convergence between the UK and Australia and ‘catching-up’ between the UK and Canada (see Greasley & Oxley, 1997, 1998a; Oxley & Greasley, 1995). These authors demonstrate the need both for long time series of data and for investigating the existence of structural breaks in the underlying income series. Find out how our expert essay writers can help you with your work... To date, convergence tests incorporating New Zealand have been hampered by the paucity of data. The annual series we provide here opens the possibility of including New Zealand in time-series based investigations of convergence. Official New Zealand real national income estimates date from 1955. A variety of semiofficial and private estimates of GDP and GNP are available for earlier years and, by splicing elements of these data, we are able to construct an annual income per capita series for New Zealand covering the period since 1870. A partial resolution to the puzzle lies in the income per capita data that DeLong deploys for New Zealand, which are from Bairoch (1981). Rankin (1992) casts serious doubt on these data, arguing that they understate substantially pre1914 levels of New Zealand’s income per capita. Rankin’s position receives support from Maddison’s (1991) more recent work - which also utilizes Coghlan’s (n.d.) income estimates for 1900/1--and from Cashin (1995). However, Rankin’s (1992) argument that upwardly revising New Zealand’s pre-1914 income estimates offers support to Baumol’s (1986) convergence hypothesis may be misleading, since a higher starting position accentuates the extent of New Zealand’s subsequent comparative decline. According to Maddison, New Zealand is a middle income country and can be grouped with contries like Portugal, Czechoslovakia, Spain, Hungary, and the USSR in terms of economic development. On the basis of Maddison’s data, Find more free essays like this one... We have a large reference library of essays that you can use as research materials to help with your own writing check out our free economics essays. Share this resource with your friends... We hope you found this information in this free pdf useful. Please spread the word and tell your friends how this information has helped you with your studies and feel free to share this pdf with others, so it can help them too.

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New Zealand’s income per capita in 1913 exceeded the average of his rich 16 by 40%, and ranked third in the world behind Australia and the USA. By 1989, New Zealand’s income per capita averaged 76% of the rich 16 in Maddison’s data. Defining New Zealand as a middle income economy rests on using endpoint income per capita data. Among DeLong’s (1988) group of once rich economies, only Argentina experienced slower per capita growth than New Zealand in the twentieth century. Taylor (1992) considers Argentina’s position, especially relative to Australia’s, emphasizing the deleterious effects of fast population growth and a high dependency ratio. (Maddison’s 1991) Table 4 New Zealand’s Per capita GDP, annual average rate of growth %, constant prices 1973-84 1.2 1984-94 1.7 1994-2004 2.5 (Calculated from World Bank, World Development Indicators, Sept. 2005) The wider debates surrounding the empirics of economic growth may give clues to New Zealand’s performance. Levine & Renelt (1992) consider a range of characteristics that may influence growth, including openness to international competition. New Zealand’s economic policies, particularly in the period since 1938, have been protectionist, and distinguished by the use of import licenses. The issues of New Zealand’s population size may also be relevant. Kuznets (1960) articulates the implications of small size, arguing that small nations, because of their greater social homogeneity, might adjust more readily to shocks, and Saul (1982) highlights their success in exploiting niches in the international market. Conclusion In the past, Australia ranked an equal second with New Zealand on a per-capita basis, behind only Canada. Both Australia and New Zealand have shared British political traditions since the 1870’s and, Bibliography Rainer Winkelmann (2001) Immigration Policies and their Impact: The Case of New Find more free essays like this one... We have a large reference library of essays that you can use as research materials to help with your own writing check out our free economics essays. Share this resource with your friends... We hope you found this information in this free pdf useful. Please spread the word and tell your friends how this information has helped you with your studies and feel free to share this pdf with others, so it can help them too.

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Zealand and Australia (retrieved from ) Stephen Broadberry and Douglas A. Irwin (2006) COMPARATIVE INCOME AND PRODUCTIVITY IN AUSTRALIA AND THE UNITED KINGDOM, 18611948. IEHC Helsinki 2006 (retrieved from ) Singleton, John. “New Zealand in the Nineteenth and Twentieth Centuries”. EH.Net Encyclopedia, edited by Robert Whaples. February 10, 2008. URL http://eh.net/encyclopedia/article/Singleton.NZ Commonwealth Bureau of Census and Statistics, Production Bulletin, 1936/37, Part I, Secondary Industries, Canberra Maddison, Angus (1982), Phases of Capitalist Development, Oxford: Oxford University Press. Maddison, Angus (1991), Dynamic Forces in Capitalist Development, Oxford: Oxford University Press Maddison, Angus (1995), Monitoring the World Economy, 1820-1992, Paris: Organisation for Economic Co-operation and Development Maddison, Angus (2001), The World Economy: A Millennial Perspective, Paris: Organization for Economic Co-operation and Development Maddison, Angus (2003), The World Economy: Historical Statistics, Paris: Organization for Economic Co-operation and Development Maddock, Rodney, and Ian McLean (1984), “Supply-Side Shocks: The Case of Australian Gold,” Journal of Economic History, 44, 1047-1067. Find more free essays like this one... We have a large reference library of essays that you can use as research materials to help with your own writing check out our free economics essays. Share this resource with your friends... We hope you found this information in this free pdf useful. Please spread the word and tell your friends how this information has helped you with your studies and feel free to share this pdf with others, so it can help them too.

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The UKâ&#x20AC;&#x2122;s original provider of custom essays www.ukessays.com If you are using this resource in your work please remember to reference and cite the original work found here: http://www.ukessays.com/custom-essays/income-growth-australia.php

Matthews, Robin C.O., Feinstein, Charles H. and Odling-Smee, John C. (1982), British Economic Growth, 1856-1973, Oxford: Clarendon. Mulhall, Michael G. (1899), The Dictionary of Statistics, (4th edition), London: Routledge This essay was written by a student and then submitted to us to help other students. You should not hand in this essay as your own work - we do not condone plagiarism! If you need custom essay help, then check out our essay writing service.

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