Australia People: Economy

Australia is a relatively affluent, industrialized nation but much of its wealth still comes from agriculture and mining. It has a small domestic market and its manufacturing sector is comparatively weak. Nevertheless, a substantial proportion of the population is employed in manufacturing, and for much of Australia's history it has been argued that these industries need tariff protection from imports to ensure their survival.

The natural conditions encounted by the first colonists encouraged a pastoral economy. Sheep farming was the first form of agriculture developed in Australia; Australia now has 15% of the world's sheep, and produces 25% of the world's wool. Wool remains the biggest source of income accounting for five billion Australian dollars.

It is followed by coal (approximately the same value), gold (2.5 billion Australian dollars), meat (2 billion) and wheat (1.8 billion). Cattle are also reared and large area of land is devoted to livestock grazing. Wool, beaf, wheat, dairy products, and minerals account for about 85% of Australian exports. Nation> is self-sufficient in food.

Wheat, timber and many kinds of fruit are grown; wine is produced. Major mineral deposits include coal - 99 billion tons of proven reserves - lead, copper, iron ore, gold, silver, tin and uranium. Some big discoveries were made during the 1960s.

The application of the postwar technology to the mining industry and the growing demand for metals needed for the US huge armaments industry caused a boom in the Australian economy. By the 1970s Australia had become the leading supplier of lead, and now it leads the, world in output of lead and zinc, and has opened up major deposits of uranium, copper, coal, manganese, iron ore, nickel, silver, tin, phosphate, oil, and natural gas.

A consequence of this boom has been a huge inflow of foreign capital, principally from the United States, Japan, and Britain. One of the features of the socio-economic development in Australia is that key areas of the economy are dominated by foreign capital. Of the 200 biggest companies in the manufacturing industry 87 are under foreign capital control: 34 American, 44 British and EEC, and 9 from other countries.

By the middle of the 1980s the country had entered a long-drawn-out period of crisis. The country's outdated economic structure threatens to turn it into another 'banana republic' because of raw materials appendage to the world economy. Indeed, a country 80% of whose exports consist of raw materials cannot count on success in the age of synthetic materials and high technologies. Gone are the times when mineral extraction was an easy road to riches.

By the middle of the 1980s export earnings of the industry had fallen because it turned out that Australian factories, which had for a long time been sheltered by protectionist barriers, were unable to produce competitive goods. And the Australians themselves preferred to buy imported machine tools, computers, cars, household appliances and clothing.

Today, however, efforts are being made to increase Australia's international competitiveness. This has become more important as prices of traditional primary exports have become more volatile. During the 1980s and early '90s, Labor sought to restrain the growth of real wages with the assistance of the Australian Council of Trade Unions (ACTU), to make Australian products more competitive overseas, but this Accord, as it was known, ended with the 1996 election of the conservative Howard government.

An important source of income is the tourism industry, with the numbers of visitors rising each year and projections for even greater numbers in the future. The other bright spot is the booming economies of South-East Asia, with Australia perfectly positioned to enter these markets- 55% of Australia's exports go to the Asian region.

Agriculture, formerly the cornerstone of the Australian economy, today accounts for about 4% of production, while mining contributes about 8% and manufacturing about 16%. Major commodity exports include wool (Australia is the world's largest supplier), wheat, barley, sugar, coal and iron ore. Japan is Australia's biggest trading partner, but the economies of China, Korea and Vietnam are becoming increasingly important. Regionally, Australia recently initiated the establishment of the Asia-Pacific Economic Cooperation (APEC) group, a body aimed at furthering the economic interests of the Pacific nations.

The Australian economy is growing at the rate of around 4% per year and inflation is low, at around 4%.