The Record of Global Economic Development

The Record of Global Economic Development

Eric Jones

The Record of Global Economic Development analyses the long-term and current economic forces which promote or impede globalisation, drawing on the experience of economic history to help interpret major trends in modern economies.

Chapter 10: Making Business Competitive: The Australian Experience

Eric Jones

Subjects: economics and finance, economic psychology, institutional economics


INTRODUCTION Very few commentators predicted the onset of the Asian Crisis and those who did so were not heeded. This lapse led to much soul-searching, not to say hand-wringing, on the part of forecasters. It made even more embarrassing their subsequent failure to anticipate that the Australian economy would be able to shrug off many of the effects of the Crisis. Yet, by the second quarter of 1999, loud notes of self-congratulation were being sounded about Australia’s performance. For the first time since the Second World War the country was at the top of the OECD league for productivity growth with a rate twice that which it had achieved during the 1980s. The economics’ editor of The Australian, Alan Wood, greeted this as no less than ‘a remarkable break with [Australia’s] economic past’ (1 June 1999). The productivity achievement seems attributable less to strong business leadership in the major corporations than to a combination of input-saving technologies and changes in policy reforms that have obliged firms to respond. Much of the gain seems to have originated outside the individual firm - in the form of reduced assistance to manufacturers, especially tariff reduction, the deregulation of financial markets, privatisations, and the opportunity to secure more flexible labour contracts. Smaller firms have tended to perform better than large ones, and certainly the current level of productivity seems pleasing when contrasted with the earlier lacklustre performance and with sluggishness overseas. Therefore it might be churlish to quibble about the accompanying weakness of the...

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