Domestic saving, international capital flows,
and the evolution of domestic capital
markets: The Australian experience
The Australian experience stands in marked contrast to those of Canada and the United States.800 Although all three were frontier countries, initially Australia had by far the smallest population, and, therefore, population growth over the next half century depended relatively more on immigration. In 1865 the population of the six colonies was less than 1.4 million. In contrast, the Canadian population was 3.4 million, and that of the United States, 35.7 million. Over the next five decades Canadian population grew at an annual rate of 1.7 percent, that of the United States at 2.0 percent, but that of Australia at 2.5 percent.
Initially, Australian income had been raised by the gold and silver discoveries of the 1850s, but gold can be taken out of the ground only once. Between 1860 and the Western Australian discoveries of the late 1880s, precious metal production played a steadily decreasing role in the continent's economic expansion. Given the initial high levels of income and the subsequent exhaustion of the mines, except for the fifteen years from 1889 to 1904, Australia's economic performance was remarkably good.____________________