Australia’s established world reputation has long been that of a wealthy underpopulated country prone to natural disasters, its economy depending heavily on agriculture (“riding on the sheep’s back”) and foreign investment. This description was reasonably fair during the first century of European settlement, when wool exports reigned supreme. Wheat, beef, lamb, dairy produce, and a range of irrigated crops also became important, but the key significance of farming and grazing was not challenged. However, this image was shattered by the growth of manufacturing and services and especially by the spectacular developments in mineral exploitation after World War II.
In another sense, there was no break in continuity. Reliance on foreign investment and a vulnerability to world markets made it difficult for Australians to divest themselves of their traditional roles as minor or peripheral players in an interconnected global system. As manufacturing began declining in the last decades of the 20th century, other aspects of this entrenched dependency status were exposed. Australia’s governments have usually shown a pronounced readiness to intervene in the economy, but in general the economy has been dominated by foreign interests—first by those of the United Kingdom, then by the United States and Japan, and more recently by giant multinational corporations.
Nonetheless, there are two distinct and comparatively new features of Australia’s economy. The first has been a grudging acceptance of the vital economic and strategic significance of the Asia-Pacific region and a rising awareness of the opportunities to be grasped there. Second, despite a measure of discomfiture in some quarters, Australia’s corporate, financial, political, and bureaucratic cultures have steadfastly embraced a more rationalist economic philosophy that seemed to accept as inevitable a comprehensive globalization and deregulation of the country’s economy.