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Why did agriculture's share of Australian gross domestic product not decline for a century?

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  • Anderson, Kym

Abstract

The agricultural sector's share of gross domestic product (GDP) in growing economies typically declines but, for a century from the early 1850s, Australia's did not. Drawing on recent structural transformation literature, this paper seeks explanations for this unusual phenomenon, which is all the more striking because agriculture's share of employment continued to decline throughout and growth in manufacturing was being stimulated by tariff protection from imports. Several factors contributed, including a huge land frontier that took more than a century for settlers to explore, rapid declines in initially crippling domestic and ocean trade costs for farm products, the absence of a need to do any processing of the two main exports during that period (gold and wool) and innovations by farmers and via a strong public agricultural R&D system that contributed to farm labour productivity nearly doubling over those 10 decades. The ban on iron ore exports from 1938 and low export prices for fuels, minerals and metals during the two world wars and in the intervening decades also contributed.

Suggested Citation

  • Anderson, Kym, 2023. "Why did agriculture's share of Australian gross domestic product not decline for a century?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 68(01), September.
    • Handle: RePEc:ags:aareaj:343077
    DOI: 10.22004/ag.econ.343077
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    References listed on IDEAS

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    1. Duncan, Ronald C., 1972. "Technological Change In The Arid Zone Of New South Wales," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 16(01), pages 1-12, April.
    2. Kym Anderson & Gordon Rausser & Johan Swinnen, 2013. "Political Economy of Public Policies: Insights from Distortions to Agricultural and Food Markets," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 423-477, June.
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    7. Ronald C. Duncan, 1972. "Technological Change In The Arid Zone Of New South Wales," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 16(1), pages 22-33, April.
    8. Victor R. Fuchs, 1980. "Economic Growth and the Rise of Service Employment," NBER Working Papers 0486, National Bureau of Economic Research, Inc.
    9. Klaus Deininger & Songqing Jin & Meilin Ma, 2022. "Structural Transformation of the Agricultural Sector In Low- and Middle-Income Economies," Annual Review of Resource Economics, Annual Reviews, vol. 14(1), pages 221-241, October.
    10. Duncan, Ronald C., 1972. "Evaluating Returns To Research In Pasture Improvement," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 16(3), pages 1-16, December.
    11. Ronald C. Duncan, 1972. "Evaluating Returns To Research In Pasture Improvement," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 16(3), pages 153-168, December.
    12. Kym Anderson & Sundar Ponnusamy, 2023. "Structural transformation away from agriculture in growing open economies," Agricultural Economics, International Association of Agricultural Economists, vol. 54(1), pages 62-76, January.
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