Australian Economic Institutions and Performance essay sample

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Australian Economic Institutions

Introduction

As the majority of developed economies, Australia has faced a transition from protectionism to more liberal forms of political economic practices that explain the possibility of human well-being enhancement based on concepts of free markets and trade (Weller & O’Neill, 2014). There are, however, two-edged discussions among economic practitioners regarding the correct definition of this economic end state as ‘neoliberalism’. Similarly to the developed countries of Europe and the United States, Australia introduced protectionism to promote industrialization, which at a time has the replication effect on labor markets and the establishment of raw material periphery along with New Zealand and Latin America. Consequences of two World Wars have only enhanced protectionism along with the formation of the first trading blocs, building walls on the way of progressive international trade and loss of suppliers (Chase, 2005).

Economic maturity has been first established in Australia between 1950s-1960s, followed by globalization, and free trade in 1980s. This period is considered by researchers as the first major step towards neoliberalisation in Australian executed through deregulation of everything. Deregulation of Australian labor market at the beginning of 1980s, followed by the opposite regulation since the end of 2000s will be discussed in this essay, attempting to evaluate whether Australian economy and political forces were successful in this endeavor. Deregulation of Labour MarketsAnalysing cases and consequences of market deregulation based on economic data of twenty OECD countries through 1984 until 2004, Storm & Naastepad (2009) characterised Australia as the country with relatively unregulated labour markets, low employment protection and labour taxes, worker unfriendly benefit systems and comparatively high inequalities in earnings contrasting against Central European and Nordic countries.

In the meanwhile, Australia was compared to United States, Canada and the United Kingdom due to the similarities in those indices, which is particularly explained by a turning point of Australia to look over American economic development and avoiding direct military engagement during World Wars. Storm & Naastepad (2009) concluded, however, that countries with more liberal labor relations systems, like the one in Australia, have lower labor productivity growth comparing to the countries with more regulated labor systems. Another remark states that labor market regulation normally raises wage claims in line with productivity growth, with the low or insignificant impact over production costs, inflation, and unemployment, whereas employment protection has (Amable et al., 2011; Storm & Naastepad, 2009). Australian labor market deregulation took place under specific political and economic conditions since 1980s described with volatile shifts in employment status, stagnation of private sector investments, a balance of payment concerns as well as fierce competition between leading political parties (Campbell & Brosnan, 1999). By 1990s, this process converted into a far-reaching scenario, where the removal …

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