Chapter 5: Peculiar Legacies: Geography, State Intervention, and the Shaping of Australian Business

In a vast land with a small population, Australian business has been shaped by two peculiar legacies, one geographic and the other legislative. Initially, geographic isolation allowed the European society that established itself after 1788 to avoid engagement with Asia. Economic activity revolved around highly capitalized mining and pastoral operations in the interior. Such a narrow economic base, however, exposed Australia’s people to the vagaries of commodity markets. In the wake of the 1890s depression, the newly established Australian Commonwealth sought to overcome the legacies of geography by reinforcing an already strong tradition of state intervention in economic affairs. Between 1901 and the early 1980s this model achieved its primary purposes, creating a substantial manufacturing sector while preserving citizenship for those of European ancestry. In the end, however, geography and international competition proved the more powerful influences. Unable to achieve economies of scale in the small domestic market, Australia’s manu-factoring sector remained inefficient. Eventually, protective tariffs proved incapable of defending the manufacturing sector from overseas competition. This led in 1983 to the dismantling of the protective regime and a more open market economy that has increasingly engaged with Asia.