Nation goes backwards as middle-class shrinks
Australia has slipped dramatically in international rankings measuring innovation and economic complexity over the past couple of decades.
The Atlas of Economic Complexity, produced by the Growth Lab at Harvard University, measures (you guessed it) the complexity of economies around the world. The researchers analysed 133 countries and placed Australia at 93, an embarrassing rank. This makes our economy less economically complex than Uganda, ranked 92. In the 2000 version of this ranking Australia sat significantly higher (rank 60).
We also continuously lost ground on the Global Innovation Index published by the World Intellectual Property Organisation. When the ranking was first published in 2007, Australia was considered the 17th most innovative economy. Now, we are ranked the 24th most innovative economy. Considering our high GDP, we should be able to invest more into innovation than we have in the past.
Australia has become lazy and complacent. We have rested too long on our laurels.
The simple business model of Australia allowed us to fall behind in these rankings without experiencing immediate pain.
Quick recap on what our national business model actually is. We sell raw mining and agricultural commodities to the world, largely to Asian nations. On top of these we educate international students and entertain international tourists. That’s it. That’s all we do as a nation that is of any concern to the rest of the world.
On the back of a booming Chinese economy over the past two decades selling some basic raw commodities was enough to grow our economy. We not only failed to diversify our economy but made it less diverse. This is a problem now that China started its inevitable demographic decline. We react to this by broadening the range of countries we sell stuff to, as I described in an earlier column.
Before we explore what could be done to diversify our national economy, we must quickly discuss whether economic........
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