Academic journal article The Economic and Labour Relations Review : ELRR

Australia's Future in the Asian-Pacific Economy: A Japanese View

Academic journal article The Economic and Labour Relations Review : ELRR

Australia's Future in the Asian-Pacific Economy: A Japanese View

Article excerpt

1. The Problem

Australia has one of the world's highest per capita incomes supported by rich agricultural and mineral resources. Moreover, it is adjacent to one of the fastest growing areas in the world.

After World War 2, in the Asian-Pacific region, Japan, Korea, Taiwan, Hong Kong and Singapore developed rapidly and now the other ASEAN countries are also growing rapidly. Surrounded by these rapid growth countries, Australia has been a "lucky country". But it is doubtful whether in future Australia will still be a "lucky country" unless it can implement policies to achieve economic allies, sustainable success and prosperity within the Asia-Pacific region.

This article considers what should be the leading industries of the Australian economy in future. This will be considered not just from the point of view of the bilateral Australia-Japan relationship, but in the broad framework of multilateral relations among the countries of Asia and Pacific Basin.

Encel (1976, p.318) has summarised Australia's situation under the following seven headings.

* A plantation or colonial economy;

* A high level of dependence on government, through public enterprise, regulation, protection and incentives;

* A high level of overseas investment and ownership;

* The dependence of prosperity on export income from primary products, i.e. farm products and minerals;

* A high standard of living, protected by a wide variety of politico --legal devices;

* Industrial activity characterised by small and medium-sized enterprises;

* A high level of concentration of ownership and control of industry and finance;

Beside these, we can add three further points:

* Shortage of labour at various stages of economic development; One of the largest Australian economic restrictions can be described as the following inequality. There are a lot of natural resources, some capital and only limited labour.

* Predominantly a service-oriented economy; From the beginning of the 20th century, industrialisation has not developed as much as might be expected. Australia's share of manufacturing in GDP is among the lowest of all industrial countries. Australia has the largest share of employment in services among the industrial countries with the exception of Canada and the US.

* Australia may be characterised as being physically located in Asia, but still European in spirit.

Under this environment, the Australian government needs to manage the economy. This article is not concerned with short run economic management, but with strategies to improve Australia's economic competitiveness in the medium to long run so that continued growth and prosperity is ensured. Australian primary industry (the mining and farm sector) is a leading exporting industry with international competitive force. However, in the long time horizon, resource exporting countries can not maintain an advantageous position vis a vis manufactured goods exporting countries. For example while Australia was able to expand rapidly its food and ore exports to Japan, Japan became a leading supplier of manufactures to Australia. The expansion of trade was managed by the Japanese and it was backed by the Japanese investment in Australia. In Australia the manufacturing sector has not grown autonomously, because of the small operating scale that manufacturers can attain in the country's small and isolated markets. The growth that did occur was largely due to various incentives to foreign real investment.

As is well known, until the first half of the 20th century, Australia (together with Argentina, Canada, New Zealand and South Africa) were linked with the international economy as a result of growing European demand for food and raw materials. In the latter half of the 20th century, Australia still continues to be a highly efficient producer of commodities such as wool, coal, grain, iron ore and base metals, but exports now more to the Asia-Pacific region. …

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