Australian Economic Growth: A Structural Perspective (A Preliminary Report)

Abstract

In this paper we argue that Australia's current economic problems are not just the result of our being at the bottom of the cycle, but rather reflect a longer term decline. The reasons for this decline are located in structural problems relating to the decline of the industrial sector and the increasing unreliability of the export sector. We view industry as the core sector which generates technology and growth. Within the industrial sector, capital goods producing industries are the ‘hot bed’ (so to speak) of structure change and technical progress. Australia has let these industries decline. As a result, traditional remedies in the form of either demand management policies or ‘waiting for the world recovery’ will not be enough. In fact, recent economic policies, rather than being a panacea, have exacerbated the problem.