Australia’s Economic Model Faces Challenges, Ranks 19th in World Competitiveness Report

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Australia has secured the 19th position out of 64 countries in the recently released World Competitiveness Yearbook report by the International Institute for Management Development.

While Australia excels in life expectancy and health coverage, its rankings in entrepreneurship (62nd place) and productivity (46th place) reveal areas of concern.

Director of the World Competitiveness Centre, Arturo Bris, argued that although resource-rich countries like Australia tend to be more productive, they can learn valuable lessons from nations such as Switzerland and Singapore, which have developed highly productive economic models despite lacking natural resources.

“Resource-rich countries, including Australia, inherently exhibit greater productivity,” Professor Bris said. “However, the challenge lies in converting this efficiency into prosperity and improving people’s lives. This demands effective policies, robust institutions, and drawing inspiration from countries that have built thriving economies without relying on natural resources.”

Critics argue that Australia’s economic model revolves around extracting resources from the ground and importing consumers, hindering economic complexity and sophistication.

Matt Barrie, CEO of Freelancer, criticised Australia’s overreliance on commodities and heavy dependence on China for exports. He also highlighted the adverse effects of population growth through immigration, such as inflated housing prices, strained infrastructure, and declining living standards. He emphasised the immediate need for an inclusive economic strategy prioritising diversification and reducing reliance on resource extraction and immigration-driven growth.

Cassandra Winzar, Chief Economist of the Committee for Economic Development of Australia, emphasised the need for economic diversification. She acknowledged that Australia’s competitiveness benefits from solid commodity prices and a robust job market, but relying solely on traditional trade strengths is unsustainable.

“We must intensify our efforts to enrich the complexity of our economy, particularly in the face of declining productivity,” stated Winzar.As Australia grapples with these challenges, there is a growing realisation that its economic future requires a broader focus beyond its traditional strengths.

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