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Living standards, terms of trade and foreign ownership: reflections on the Australian mining boom

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  • Robert G Gregory

Abstract

Australia is experiencing its largest mining boom for more than a century and a half. This paper explores, from a national perspective, important economic differences that arise when a mining boom, such as the current one, is generated by sustained export price increases (trading gains) rather than export volume increases. Since 2003 the terms of trade changes – through their direct trading gain effect and indirect real GDP effects - have increased Australian living standards. The increase, measured from official data and relative to the US, is about 25 per cent; an increase which probably places Australian living standards well above those of the US. But official data inadequately adjusts for foreign ownership of mining resources suggesting that this estimate is probably a little too high.
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  • Robert G Gregory, 2012. "Living standards, terms of trade and foreign ownership: reflections on the Australian mining boom," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), pages 171-200, April.
  • Handle: RePEc:bla:ajarec:v:56:y:2012:i:2:p:171-200
    DOI: j.1467-8489.2012.00588.x
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    File URL: http://hdl.handle.net/10.1111/j.1467-8489.2012.00588.x
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    Cited by:

    1. Yogi Vidyattama & Maheshwar Rao & Itismita Mohanty & Robert Tanton, 2014. "Modelling the impact of declining Australian terms of trade on the spatial distribution of income," International Journal of Microsimulation, International Microsimulation Association, vol. 7(1), pages 100-126.
    2. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    3. Freebairn, John, 2015. "Mining booms and the exchange rate," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(4), October.
    4. Fleming, David A. & Measham, Thomas G., 2015. "Local economic impacts of an unconventional energy boom: the coal seam gas industry in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(1), January.
    5. Kotey, Bernice & Rolfe, John, 2014. "Demographic and economic impact of mining on remote communities in Australia," Resources Policy, Elsevier, vol. 42(C), pages 65-72.
    6. Huong Dinh & Ben Freyens & Anne Daly & Yogi Vidyattama, 2017. "Measuring Community Economic Resilience in Australia: Estimates of Recent Levels and Trends," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 132(3), pages 1217-1236, July.
    7. Grace Taylor & Rod Tyers, 2017. "Secular Stagnation: Determinants and Consequences for Australia," The Economic Record, The Economic Society of Australia, vol. 93(303), pages 615-650, December.
    8. Grant Mark Nülle & Graham A. Davis, 2018. "Neither Dutch nor disease?—natural resource booms in theory and empirics," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 35-59, May.
    9. Allen, Creina & Day, Garth, 2014. "Depletion of non-renewable resources imported by China," China Economic Review, Elsevier, vol. 30(C), pages 235-243.
    10. Fleming, David A. & Measham, Thomas G., 2014. "Local job multipliers of mining," Resources Policy, Elsevier, vol. 41(C), pages 9-15.
    11. Creina Allen & Garth Day, 2014. "Does China's demand boom curb Australian iron ore mining depletion?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), pages 244-262, April.

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    More about this item

    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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