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Lost Exceptionalism? Comparative Income and Productivity in Australia and the UK, 1861-1948

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  • STEPHEN BROADBERRY
  • DOUGLAS A. IRWIN

Abstract

Australia had one of the highest per capita incomes in the world in the late nineteenth century, although this exceptional position subsequently eroded over time. This paper compares national income and sectoral labour productivity in Australia and the UK between 1861 and 1948 to uncover the underlying sources of Australia's high income and the reasons for its subsequent relative decline. We find that the country's higher per capita income was due primarily to higher labour productivity, because labour force participation, although higher in Australia than in the USA, was lower than in the UK. Australia had a substantial labour productivity lead in agriculture throughout the period, due to the importance of high value-added, non-arable farming, and a smaller lead in industry before World War I. The early productivity lead in industry was largely based on the importance of mining, and disappeared as manufacturing became more important. There was little productivity difference in services. These results reaffirm the importance of Australia's successful exploitation of its natural resource endowments in explaining the country's high initial income. Copyright © 2007 The Economic Society of Australia.

Suggested Citation

  • Stephen Broadberry & Douglas A. Irwin, 2007. "Lost Exceptionalism? Comparative Income and Productivity in Australia and the UK, 1861-1948," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 262-274, September.
  • Handle: RePEc:bla:ecorec:v:83:y:2007:i:262:p:262-274
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    Cited by:

    1. Panza, Laura & Williamson, Jeffrey G, 2017. "Australian Exceptionalism? Inequality and Living Standards 1821-1871," CEPR Discussion Papers 11756, C.E.P.R. Discussion Papers.
    2. Ian W. McLean, 2010. "Responding to Shocks: Australia's Institutions and Policies," School of Economics Working Papers 2010-30, University of Adelaide, School of Economics.
    3. Wolcott, Susan, 2010. "Explorations' contribution to the 'Asian Century'," Explorations in Economic History, Elsevier, vol. 47(3), pages 360-367, July.
    4. Broadberry, Stephen & Fukao, Kyoji & Zammit, Nick, 2015. "How Did Japan Catch-up On The West? A Sectoral Analysis Of Anglo-Japanese Productivity Differences, 1885-2000," CAGE Online Working Paper Series 231, Competitive Advantage in the Global Economy (CAGE).
    5. Broadberry, Stephen & Gupta, Bishnupriya, 2010. "The historical roots of India's service-led development: A sectoral analysis of Anglo-Indian productivity differences, 1870-2000," Explorations in Economic History, Elsevier, vol. 47(3), pages 264-278, July.
    6. Bergeaud, A. & Cette, G. & Lecat, R., 2015. "Productivity trends from 1890 to 2012 in advanced countries," Rue de la Banque, Banque de France, issue 07, June..
    7. Broadberry, Stephen & Giordano, Claire & Zollino, Francesco, 2011. "A Sectoral Analysis of Italy's Development: 1861 -2010," CAGE Online Working Paper Series 62, Competitive Advantage in the Global Economy (CAGE).
    8. Ho, Chi Pui, 2016. "GeoPopulation-Institution Hypothesis: Reconciling American Development Process and Reversal of Fortune within a Unified Growth Framework," MPRA Paper 73863, University Library of Munich, Germany.

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