A message from Jens Goennemann
Groundhog Day: The annual Harvard Growth Lab’s Economic Complexity Index (ECI) figures have been released – and Australia’s ranking has dropped, again.
Australia now ranks 105th in the world in the measure of the complexity of the products it produces placing us between Botswana and Côte d’Ivoire. Let me repeat that: Botswana and Côte d’Ivoire!
Our economy possesses the capability to make things far more complex than these countries’ economies.
Am I the only one who thinks something is wrong with the substance of our economy as so under-performing and with a widespread lack of urgency in response to our underperformance?
Why is there no outcry or concern that our economy doesn’t have the enduring ability to justify our wealthy way of living? Are we complacent ostriches with our heads buried in coal, eying at our Super and hopeful that it will be sufficient?
This is what I wrote in 2023: “Australia’s continued fall in ECI rankings is completely predictable. If this is to change, then we must focus on transitioning away from a luck-based economy to becoming smarter if we are to protect our high standards of living and prosperity into the future.”
Harvard’s assessment of our position in 2023 sounds familiar: “Australia has seen a troubling pattern of export growth.” Today, it reads that “economic diversification is again the reason for the poor showing, with Australia achieving a D minus ranking.”
What’s different though is the increasing urgency. Economic complexity relative to income level is something the Growth Lab says has powerful predictive properties. For some time, it has noted that Australia’s luck-based wealth is out of step with our simple export profile: an unsustainable scenario.
Nations with a higher ECI than expected for their income level, such as Vietnam and China, are tipped to lead global growth. This time around, as well as the slip in Complexity rankings, Harvard has now lowered Australia’s forecasted average annual GDP growth from 1.7 per cent down to 1 per cent. Good luck paying back our debt before we hand the keys to our children.
Back to the need for urgency: These new figures are based on export data from 2023. As the Government settles into its second term, there is a necessity to address our pitiful global competitiveness before it is too late.
No matter how well-meaning current policies and programs may be, they are disjointed, slow-moving, and ill-equipped to address the fundamental challenges of growing a manufacturing business in Australia – or of turning that potential into prosperity.
The structural problem is that the industry conveyor belt is broken, with over 45,000 manufacturers sitting at one end and even the most promising amongst them seeing no way to progress up the line. Without decisive action, led by industry, we are set to leave the place worse off for our children than we found it. This is neither constructive for industry development nor is it conducive to building a Future Made in Australia.