Lead Story
Issue No. 53 - June/July 2010
How growth works...
by Professor Richard Blandy
The growth rate of Australia’s economy (Gross Domestic Product or GDP) from 1990-2009 was 3.2% per annum. In global terms, this was a fast rate for an advanced economy.
However, there were great differences between the States and Territories in the growth rates of their economies (GSP or Gross State Product). Their growth rates were (from fastest to slowest):
• Queensland (4.5% pa)
• WA (4.2% pa)
• NT (3.6% pa)
• ACT (3.2% pa)
• Victoria (3.1% pa)
• Tasmania (2.6% pa)
• NSW (2.5% pa) and
• South Australia (2.4% pa)
Why were these growth rates so different among the States and Territories? Were there structural reasons that explain this pattern? Did the faster-growing states and territories have larger initial shares of the more rapidly growing sectors than the slower-growing states and territories did? Did the faster-growing states and territories have sectors that grew exceptionally fast?
In order to examine these questions we have divided the Australian, State and Territory economies up into industry sectors, concentrating on sectors showing significant change at the national level, or which are important for other reasons – public administration and safety, for example. These industry sectors are:
• Agriculture, forestry and fishing
• Mining
• Manufacturing
• Financial and insurance services
• Professional, scientific and technical services
• Public administration and safety
The many other industry sectors, some of them of similar or even larger size than those identified here, showed relatively little change and have been lumped together for brevity’s sake. Structural change by industry sector
In Table 1, below, we present data for Australia as a whole showing
• initial industry sector shares of GDP in 1990
• industry sector shares of growth in GDP from 1990-
2009
• rates of growth of...
