Mining’s impact on the competitiveness of other sectors in a resource-rich economy: Australia since the 1840s

Australia’s several major mining booms since the 1840s have impacted positively on national economic growth and non-trivially on the competitiveness of other sectors of its economy. This paper shows the latter to be consistent with economic theory only when sectoral policy developments are taken into consideration. It reveals several features that make the sectoral composition of Australia’s economy unusual. One is that the manufacturing share of GDP was unusually high until protectionism was phased out from the 1970s. Another is that the farm sector continued to enjoy a strong comparative advantage despite mining booms and high rates of assistance to import-competing manufacturers. Also, the agricultural and services sectors’ shares of GDP remained fairly constant rather than diverging during 1860–1960. The paper concludes by drawing out implications for future policies.