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It might not feel like it, given recent interest rate jumps and a rising cost of living, but we live in a very rich country.

Divide our GDP by the number of adults and we are among the very richest countries in the world. Government debt is relatively low. Compared to similar countries, our tax rates are low. Despite our relatively small population, we have the 13th largest economy in the world.

Why? That’s one of the great economic mysteries. “It is difficult to explain why Australia has grown so much over time,” says Professor Jakob Madsen, an economic historian at Monash University. “It certainly has been exceptional.”

A replica of the Endeavour, which sailed into what became Botany Bay 250 years ago today.Credit: AP

Australia is a colonised nation, and many nations colonised by Britain – think Nigeria, Zimbabwe – have fared very poorly compared to their colonisers.

Even neighbouring Indonesia, which also suffered colonisation, has an economy a fraction of the size of ours on a per-person basis.

So why did Australia get rich?

A fascinating 2001 study, from three researchers awarded the Nobel prize for Economics last week, gives us an answer, one that explains not just Australia’s fortune but the fortune of many countries: the fate of our first European colonisers.

The harsh lifestyles of the first settlers to land at Sydney Cove are part of Australian myth.

But compared to other colonies, the First Fleeters had it easy, argue Daron........

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