Australia in the Asian Century: Aiming for the 'Top Ten'

Parliament house flag post

Australia in the Asian Century: Aiming for the 'Top Ten'

Posted 31/10/2012 by Robert Dolamore

In the Australia in the Asian Century white paper the Government has set the goal of Australia becoming one of the top ten countries in the world in terms of GDP per capita by 2025. This post briefly considers how achievable the government’s objective is and how useful a focus on GDP per capita is.

The IMF World Economic Outlook database shows that in terms of GDP per capita (measured in purchasing power parity dollars) Australia ranked 13th in 2011 and is forecast to move to the 12th spot in 2012. However, there is little separating the countries around Australia in the rankings. In 2011 Australia ranked 13th with GDP per capita of $40,847.13 while Canada with GDP per capita of $40,519.11 was ranked 16th. Although ranked three places higher on the league table, Australia’s GDP per capita was just 0.8 per cent higher than Canada’s. 

At face value the GDP per capita league table confirms Australia enjoys a relatively high standard of living by world standards. However, when countries are closely bunched, small movements in rankings say very little about changes in relative living standards. 

The IMF’s forecasts suggest Australia will move to the 11th spot in 2013 and will hold this position out to the end of the forecast period in 2017. Extrapolating the IMF projections confirms that Australia’s growth would not be sufficient to secure the number 10 spot on a business as usual basis. The white paper argues that for Australia to be ranked 10th by 2025, a labour productivity growth boost of ½ of a percentage point a year is required. 

The question is therefore whether Australia will be able to achieve and sustain the kind of productivity growth it experienced in the 1990s. 

The white paper focuses on the key productivity drivers of skills and education, innovation, infrastructure, tax reform and regulatory reform. The types of changes envisaged by the white paper in these areas should improve Australia’s long-term growth prospects. However, it appears much of the detail including the timing of specific measures has yet to be settled. Given this, whether or not Australia achieves the kind of productivity growth needed to secure the number 10 spot by 2025 may depend more on the reforms of the last ten years than those foreshadowed in the white paper. Has Australia’s reform agenda been ambitious enough over the last decade to achieve a marked and sustained improvement in our productivity performance? 

The experience of the 1980s and 1990s suggests that it takes time for the transformational effects of reforms to flow through the economy and show up in the productivity numbers. 

Encouragingly, there are signs that Australia’s productivity growth is picking up. The Library has estimated that over the last 20 (financial) years labour productivity has grown at an annual average rate of 2.1 per cent. In 2011-12 labour productivity increased by 2.7 per cent its highest rate since 2003-04. This improved productivity performance will need to be sustained if Australia is to achieve further gains in the real incomes of the Australian community. This is particularly the case as the boost in real incomes Australia has enjoyed as a result of the resources boom is unlikely to be replicated. 

While GDP per capita is a useful marker of success in terms of material living standards it conveys only limited information about economic performance and social progress. The plan for seizing the economic opportunities posed by Asia’s transformation contained in the white paper could have been underpinned by an agreed set of indicators for measuring Australia’s progress over time. Internationally, the report by the Commission on the Measurement of Economic Performance and Social Progress convincingly made the case for the need for broader measures of wellbeing. It favoured developing a well identified ‘dashboard’ of indicators with a strong focus on sustainability. 

The OECD’s work in developing a set of wellbeing indicators provides an example of both the feasibility and usefulness of this approach. The OECD’s indicators try to capture the most important aspects that shape people’s lives and wellbeing including income, jobs, housing, health, work and life-balance, education, social connections, civic engagement and governance, environment, personal security and subjective wellbeing. 

This type of approach potentially provides a way of tracking whether Australia’s success in exploiting the economic opportunities presented by the Asian century is translating into a better quality of life for the Australian community. It also provides a useful analytical tool for helping think through the implications of policy measures from a broad perspective.

Thank you for your comment. If it does not require moderation, it will appear shortly.

Add your comment

[Click to expand]

We welcome your comments, or additional information which is relevant to a post. These can be added by clicking on the ‘Add your comment’ option above. Please note that the Parliamentary Library will moderate comments, and reserves the right not to publish comments that are inconsistent with the objectives of FlagPost. This includes comments that are not relevant to the article, factually incorrect or politically partisan, as well as spam, profanity and personal abuse. We will close comments after three months.

Generate a new image
Type characters from the image:

Facebook LinkedIn Twitter Add | Email Print


Flagpost is a blog on current issues of interest to members of the Australian Parliament

Parliamentary Library Logo showing Information Analysis & Advice




Refugees asylum immigration climate change Australian foreign policy Parliament social security elections welfare reform welfare policy school education Australian Defence Force health financing indigenous Australians women Private health insurance higher education emissions trading people trafficking Middle East taxation Employment illicit drugs gambling health reform federal election 2010 Medicare disability Sport Australian Bureau of Statistics statistics United Nations Asia criminal law Afghanistan income management health forced labour Australian Sports Anti-Doping Agency World Anti-Doping Agency United States federal budget Industrial Relations Carbon Pricing Mechanism politics dental health Australian Public Service constitution Australian Electoral Commission WADA transport aid child protection environment poker machines Australia in the Asian Century steroids National Disability Insurance Scheme detention aged care 43rd Parliament slavery health system OECD ASADA Law Enforcement Australian Federal Police Fair Work Act governance labour force people smuggling debt international relations New Zealand food Australian Crime Commission pharmaceutical benefits scheme banking International Women's Day corruption pensions public service reform children's health Aviation federal election 2013 foreign debt gross debt net debt defence capability parliamentary procedure Senate Senators and Members ALP Newstart Parenting Payment multiculturalism Youth Allowance sea farers High Court skilled migration UK Parliament election results voting mental health Federal Court terrorist groups science social media Higher Education Loan Program HECS federal state relations accountability Papua New Guinea youth paid parental leave same sex relationships coal seam gas customs planning doping crime health risks Gonski Review of Funding for Schooling sex slavery Special Rapporteur Northern Territory Emergency Response social policy firearms public policy Census Population violence against women domestic violence China ADRV terrorism transparency research and development welfare ASIO intelligence community Australian Security Intelligence Organisation carbon tax mining military history electoral reform employer employee renewable energy regional unemployment fishing by-election European Union family assistance United Nations Security Council Australian economy forestry food labelling vocational education and training Drugs welfare systems Indonesia children Constitutional reform local government codes of conduct terrorist financing homelessness Parliamentary remuneration money laundering Trafficking in Persons Report energy social inclusion human rights paternalism early childhood education Canada Financial sector national security fuel disability employment Tasmania integrity standards NATO Australian Secret Intelligence Service sexual abuse World Trade Organization Australia public health housing affordability bulk billing political parties water productivity health policy Governor-General US economy trade unions export liquefied natural gas foreign bribery question time speaker superannuation public housing expertise climate Intergovernmental Panel on Climate Change leadership Department of Agriculture Fisheries and Forestry regulation Pacific Islands reserved seats new psychoactive substances synthetic drugs UNODC carbon markets animal health middle class welfare Indigenous constitutional recognition of local government referendum consumer laws PISA competition policy royal commission US politics language education baby bonus Leaders of the Opposition citizen engagement policymaking Australia Greens servitude Trafficking Protocol forced marriage rural and regional alcohol entitlements ministries Hung Parliament social citizenship maritime Iran ANZUS regional students school chaplains federal budget 2011-12 salary Medicare Locals primary care Building the Education Revolution procurement Indigenous health e-voting internet voting nsw state elections 44th Parliament 2015 ABS Age Pension Death penalty capital punishment execution Bali nine Bali bombings Trade EU China soft power education Fiji India Disability Support Pension Antarctica Diplomacy by-elections state and territories Bills anti-corruption fraud bribery corporate ownership whistleblower G20 economic reform innovation Members of Parliament Scottish referendum Middle East; national security; terrorism social services Criminal Code Amendment (Misrepresentation of Age to a Minor) Bill 2013 online grooming sexual assault of minors ACT Assembly smoking plain packaging tobacco cigarettes Asia; Japan; international relations Work Health and Safety Migration; asylum seekers; regional processing China; United States; international relations fiscal policy Racial Discrimination Act; social policy; human rights; indigenous Australians Foreign policy Southeast Asia Israel Palestine asylum refugees immigration political finance donations foreign aid Economics efficiency human rights; Racial Discrimination Act employment law bullying asylum seekers Animal law; food copyright Australian Law Reform Commission industry peace keeping contracts workplace policies same-sex marriage disorderly conduct retirement Parliament House standing orders prime ministers election timetable sitting days First speech defence budget submarines workers Somalia United Kingdom GDP world heritage political engagement leave loading Trade; tariffs; safeguards; Anti-dumping public interest disclosure whistleblowing Productivity Commission limitation period universities Ireland cancer gene patents genetic testing suspension of standing and sessional orders live exports infant mortality honorary citizen railways disciplinary tribunals standard of proof World Health Organisation arts international students skilled graduate visas temporary employment visas apologies roads Italy national heritage NHMRC nutrition anti-dumping Rent Assistance obesity evidence law sacrament of confession US presidential election international days DFAT UN General Assembly deregulation Regulation Impact Statements administrative law small business Breaker Morant regional engagement social determinants of health abortion Members suspension workplace health and safety marine reserves hearing TAFE Victoria astronomy resources sector YMCA youth parliament Korea rebate Australian Greens presidential nomination Racial Discrimination Act political parties preselection solar hot water Financial Action Taskforce Horn of Africa peacekeeping piracy Great Barrier Reef Stronger futures political financing political education Social Inclusion Board early childhood National Quality Framework for Early Childhood Education and Care Murray-Darling Basin sanctions Norway hospitals republic President Barack Obama Presidential visits qantas counselling Korean peninsula Work Choices biosecurity hendra environmental law federalism federation preselection therapeutic goods Therapeutic Goods Administration plebiscites computer games pests suicide nuclear COAG Ministerial Councils floods ADHD stimulant medication advertising electricity extradition conscience votes poverty preventative health rural health coastal erosion Parliamentary Budget Office work-life balance

Show all
Show less
Back to top