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The Impact of Federation on Australia's Trade Flows

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  • DOUGLAS A. IRWIN

Abstract

In 1901, six Australian states joined together in political and economic union, creating an internal free trade area and adopting a common external tariff. This paper investigates the impact of federation on Australia's internal and international trade flows by studying changes in the ‘border effect’ over this time. This is possible because Australian states reported intra‐Australian trade prior to 1901 and for 8 years after federation. The results indicate that federation itself produced little change in Australia's trade patterns, but that the border effect increased substantially between 1906 and 1909 when the protectionist Lyne Tariff was imposed.

Suggested Citation

  • Douglas A. Irwin, 2006. "The Impact of Federation on Australia's Trade Flows," The Economic Record, The Economic Society of Australia, vol. 82(258), pages 315-324, September.
    • Handle: RePEc:bla:ecorec:v:82:y:2006:i:258:p:315-324
    DOI: 10.1111/j.1475-4932.2006.00342.x
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    References listed on IDEAS

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    1. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    2. Paul A. Cashin, 1995. "Real Gdp In The Seven Colonies Of Australasia: 1861–1991," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(1), pages 19-39, March.
    3. Robert C. Feenstra, 2002. "Border Effects and the Gravity Equation: Consistent Methods for Estimation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 491-506, November.
    4. Richard Pomfret, 2005. "Regional Trade Agreements," Adelaide Economics Working Papers 2005-15, Adelaide University, School of Economics.
    5. Peter J. Lloyd & Donald Maclaren, 2004. "Gains and Losses from Regional Trading Agreements: A Survey," The Economic Record, The Economic Society of Australia, vol. 80(251), pages 445-467, December.
    6. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-623, June.
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    Cited by:

    1. Luke H. Grayson & Brian D. Varian, 2023. "Economic Aspects of Australian Federation: Trade Restrictiveness and Welfare Effects in the Colonies and the Commonwealth, 1901-3," CEH Discussion Papers 01, Centre for Economic History, Research School of Economics, Australian National University.
    2. P. J. Lloyd, 2016. "The First 100 Years of Tariffs in Australia: the Colonies," Department of Economics - Working Papers Series 2018, The University of Melbourne.
    3. William Coleman, 2018. "Was Federation Uniting or Dividing? The Impact of the Customs Union of 1901 on Australian Trade Relationships," Economic Papers, The Economic Society of Australia, vol. 37(3), pages 230-247, September.
    4. Magee, Gary & Ishaq Bhatti, M. & Li, Alice Shuaishuai, 2015. "The economic modeling of migration and consumption patterns in the English-speaking world," Economic Modelling, Elsevier, vol. 50(C), pages 322-330.
    5. Rohan Alexander & Timothy J. Hatton, 2025. "The making of a nation: Who voted for Australian federation?," Asia-Pacific Economic History Review, John Wiley & Sons, vol. 65(2), pages 192-214, July.
    6. Brian D. Varian, 2024. "Market integration and a lower-productivity economy: the case of Australian federation and Queensland’s manufacturing sector, 1897–1906," CEH Discussion Papers 06, Centre for Economic History, Research School of Economics, Australian National University.
    7. Peter Lloyd, 2017. "Excise Tax Harmonisation in Australia at Federation," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 57(1), pages 45-64, March.
    8. Ian Keay & Brian D. Varian, 2024. "The impact of preferential market access: British imports into Canada, 1892–1903," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(1), pages 140-164, February.
    9. Brian D. Varian, 2022. "Imperial preference before the Ottawa Agreements: Evidence from New Zealand's Preferential and Reciprocal Trade Act of 1903," Economic History Review, Economic History Society, vol. 75(4), pages 1214-1241, November.
    10. P.J. Lloyd, 2015. "The First 100 Years of Tariffs in Australia: The Colonies," CEH Discussion Papers 043, Centre for Economic History, Research School of Economics, Australian National University.

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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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