Slow economic growth is a serious problem for some of the world’s largest advanced economies, the Great Recession contributing to the slowdown for several regions. Australia’s economic slowdown, however, was small in contrast to that suffered by other advanced economies as a result of the global recession. With an average 2.72 percent GDP growth over the decade 2005-2015, Australia’s economic growth was more than a percentage point faster than that of Germany or the United States. Australia is also celebrating 25 years without a recession, having avoided the pitfalls of the global financial crisis and failures of its major banks.
Martin Baily examines Australia’s economic ecosystem, with a look toward innovation, productivity growth and competitiveness, while pulling together lessons in the three from the United States. In this paper, he examines industry policies along with those policies’ rationale and most important criticisms, and innovation policies in the United States.
Baily also looks at aggregate and broad industry level productivity, and competitiveness using a new measure of a country’s structural competitiveness.
Utilizing this framework to measure Australia’s competitiveness, he compares data for Australia and the U.S. while also applying lessons from the United States to an Australian context to aid in determining policies to enhance Australia’s economic performance.
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