Innovation and Australia’sEconomic Complexity Index Ranking http://atlas.media.mit.edu/media/atlas/pdf/Harvard MIT_AtlasOfEconomicComplexity.pdf
Australia’s Economy Australia has survived the GFC in relatively good shape. However, many sense all is not quite right. Are we all we could be? Perhaps not if we look at our ECI.
Economic Complexity Index for Selected Countries (1987-2008) 3 32.5 2.5 2 2 Japan JPN USA USA1.5 1.5 New NZ Zealand Philippines PHL Singapore SGP 1 1 Saudi Arabia SAU Australia AUS0.5 0.5 0 0-0.5 -0.5 1987 1990 1993 1996 1999 2002 2005 2008
Australia’s ECI is LowDoes it matter? Australias median wealth per adult of $US194,000 is the highest in the world. Credit Suisse Global Wealth Report 2012
Australia’s EconomyPerhaps in the medium to long term it does.Research from Harvard/MIT indicates that 75% of the wealth of a nation can be predicted from the ECI.
Per Capita GDP Vs Economic Complexity Index (2008/9) 2 R = 0.75 . AUS Natural resource exports >10% of GDP Natural resource exports <10% of GDPhttp://atlas.media.mit.edu/media/atlas/pdf/HarvardMIT_AtlasOfEconomicComplexity.pdf
Australia’s EconomyAustralia’s GDP is significantly higher than predicted by the ECI.The resources boom may have moved Australia even lower on the ECI index (blue to red transition on the plot).
Not a New Phenomenon Australia is a lucky country .......... A nation more concerned with styles of life than with achievement has managed to achieve what may be the most evenly prosperous society in the world. It has done this in a social climate largely inimical to originality and the desire for excellence (except in sport) and in which there is less and less acclamation of hard work. According to the rules Australia has not deserved its good fortune.Donald Horne, The Lucky Country 1964
Economic Reform has Played a Role The social reforms of the 1970s and the economic reforms of the 1980s and 1990s were sufficient to get us through the GFC. But without a new generation of leadership that can tap Australia’s willingness to continue to change, the Great Escape will be a comment on a successful past, not confirmation of Australian greatness.George Megalogenis, The Australian Moment 2012
Australia’s EconomyWhat if Australia’s economy “corrected” to be closer to the numbers predicted by the ECI?We could see an order of magnitude downward shift in GDP!
Per Capita GDP Vs Economic Complexity Index (2008/9) 75% of GDP can be predicted R2= 0.75 . AUS from the ECI Natural resource exports >10% of GDP Natural resource exports <10% of GDPhttp://atlas.media.mit.edu/media/atlas/pdf/HarvardMIT_AtlasOfEconomicComplexity.pdf
Australia’s EconomyIs it time to have a close look at what we do and how we do it?