Overview of Australia\’s economy from the perspective of the Economic Complexity Index.

1. Innovation and Australia’s
Economic Complexity Index
Ranking
http://atlas.media.mit.edu/media/atlas/pdf/Harvard
MIT_AtlasOfEconomicComplexity.pdf

2. 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.

3. Economic Complexity Index for Selected Countries (1987-2008)
3 3
2.5
2.5
2 2
Japan
JPN
USA
USA
1.5
1.5
New
NZ Zealand
Philippines
PHL
Singapore
SGP
1 1
Saudi Arabia
SAU
Australia
AUS
0.5
0.5
0 0
-0.5
-0.5
1987 1990 1993 1996 1999 2002 2005 2008

4. Australia’s ECI is Low
Does it matter?
Australia's median wealth per
adult of $US194,000 is the
highest in the world.
Credit Suisse Global Wealth Report 2012

5. Australia’s Economy
Perhaps 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.

6. 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 GDP
http://atlas.media.mit.edu/media/atlas/pdf/HarvardMIT_AtlasOfEconomicComplexity.pdf

7. Australia’s Economy
Australia’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).

8. 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

9. 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

10. Australia’s Economy
What 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!

11. 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 GDP
http://atlas.media.mit.edu/media/atlas/pdf/HarvardMIT_AtlasOfEconomicComplexity.pdf

12. Australia’s Economy
Is it time to have a close look at
what we do and how we do it?