The only nation to occupy a continent, Australia is a country of approximately 21.5 million people (2008 estimate) and had a gross domestic product in nominal dollars that ranked 14th in the world in 2007. Although less populous than Romania, Australia occupies an area approximately 80 percent the size of the continental United States and is one of the wealthier economies in the world. The country is endowed with substantial natural resources, especially coal and precious metals, which serve as primary exports. Agriculture, though declining in relative importance as in most developing countries, is also an important export sector. The economy is reasonably diversified and post-industrial with services being the leading sector (70.7 percent of total GDP in 2007), followed by industry (25.6 percent) and agriculture (3.7 percent).
Australia shares many similarities, and a few important differences, with Canada, a country that it is often compared to. Both are countries founded by the British and both retain ties to that country through the British Commonwealth. As a result, both have legal and political systems based on English common law and parliamentary government. Both countries have significant mineral, energy, and agricultural export sectors. Both countries have small populations within very large national boundaries that nonetheless concentrate heavily in urban areas outside a largely uninhabitable interior (in Australia, along the coasts away from the hot and dry interior broadly referred to as “the Outback”). Both are federal systems formed out of unions of previously separate British colonies.
The differences, however, are equally telling. In particular, Australia has what is frequently referred to as a “Washminster” political system that rests heavily on the model of the British Parliament but that explicitly borrows elements of the U.S. political system such as a written constitution with clearly delineated powers and an upper house of government called the Senate that has nonproportional representation.
Australia also has a persistent trade deficit and its economic fortunes are particularly, though not exclusively, tied to swings in resource prices. Whereas Canadian economic cycles tend to move much in parallel with those of its neighbor the United States, Australia’s booms and busts have tended to diverge quite markedly in timing, rising and falling with resource prices. Because of this close link, the value of the Australian dollar in foreign exchange markets tends to move in a wide range and is very volatile. It is one of the 10 most traded currencies in the world mainly because of its being a perceived proxy for commodities prices and also because of its role in the foreign exchange “carry trade” in which speculators move into and out of a currency to exploit differentials in domestic interest rates across different countries.
Australia is continually defining its role in the greater Asian region in which it is located. Originally setting itself apart from Asia and closely aligning itself with Great Britain and, after World War II, the United States, the country has increasingly drawn closer to its Asian neighbors, though not always smoothly. Economic links with Asian countries have vastly increased (China is now Australia’s largest trading partner) and immigration into the country has become more open, in contrast to a long-standing and infamous “White Australia” immigration policy that was ultimately repealed in the 1960s. Although still predominantly European Caucasian, other ethnic groups have grown strongly in relative and absolute number and the population is increasingly diverse.
The country also established in 1989 the Asia-Pacific Economic Cooperation (APEC), a forum for 21 Pacific Rim countries to discuss the regional economy.
Australia is a generally free-market economy with a mostly two-party political system, with the major parties being loosely left-of-center and right-of-center, respectively. However on issues of economic sector reform, especially in the area of privatization and financial deregulation, there is a broad bipartisan consensus at both federal and state levels. There has also been liberalization in the area of labor relations although this is less bipartisan and was interrupted and in the process of a partial reverse with the election of the Australian Labor Party (ALP) to the federal government in 2007 after 11 years out of power.
The natural environment looms large in Australian society and economy. The country is quite dry and has been in a sustained and serious drought for at least a decade, with many thinking the change to be a permanent trend due to climate change. Such a permanent shift would pose serious challenges to both urban drinking water and to the agricultural sector, both of which are under stress as a result. Also, the resources sector is a major contributor to greenhouse gas and other emissions, with Australia having one of the highest per capita levels of emissions in the world. Thus debate about the causes and effects of climate change and policies needed to meet the issue are present throughout the world but have a special resonance (though not necessarily always a clear consensus) in Australia.
Culturally, Australia is ranked according to the cross-cultural scale developed by Geert Hofstede as highly individualistic, very close to the United States, but with a more egalitarian social structure than that country, indicating a communitarian streak.
- Australian Bureau of Statistics, www.abs.gov.au (cited March 2009);
- CIA, “Australia,” World Factbook, www.cia.gov (cited March 2009);
- International Monetary Fund, World Economic Outlook Database, April2008 (2007);
- Organisation for Economic Development and Co-operation, Economic Survey of Australia 2006 (2006);
- Singh et al., “A Comparative Study of the Contents of Corporate Codes of Ethics in Australia, Canada and Sweden,” Journal of World Business (2005);
- Thompson, “The ‘Washminster’ Mutation,” Australian Journal of Political Science (1980).
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