PURPOSE OF BOOK

This book considers how ordinary people can help to develop Australia's economy so that economic and employment growth can be rapid, whilst growth occurs in high productivity industries, is socially and environmentally responsible, and benefits enterprises, as well as their customers, employees and investors.

THE ISSUE

In the 1980s, all Australian Governments sought to redirect the economy, as it is badly structured by relying on agricultural and mineral commodity exports which are slow growing sectors in the world economy. However, Australia is the 'Tortoise' of the Asia / Pacific region because economic development has been too slow to gain adequate competitiveness in high productivity industries.

Indicators of Australia's weak economic capabilities are:

• despite selling commodities to the world's fastest growing markets in Asia, Australia's share of world exports has steadily declined;
• Australia ranks poorly on many measures of competitiveness (eg labour market; quality; financial systems; regulatory systems; outward orientation; long term orientation);
• Australia's productivity is 25% below world best practice in manufacturing, 50% below in some public utilities;
• productivity growth in the late 1980s was behind the OECD average;
• significant value adding to natural resources is impossible unless this situation improves;
• diversification of the Australian economy has been into capital intensive industries, while many Asian countries shift out of unskilled capital intensive industries into human capital intensive industries;
• Australia's human resource quality is relatively high, but poorly used;
• Australia has few world class enterprises relative to its size.

(Source: Access Economics et al, 1991)

Though masked by the worst recession in 50 years with high unemployment and many social stresses, Australia's weak productive capacity demands new efforts, as balance of payments deficits and foreign debts limit the growth urgently needed to create employment, raise living standards, and increase savings. High foreign debts place both Australia's living standards and its status as an independent democracy at risk. Thus the question addressed here is: Can a society rapidly improve its productivity and competitiveness by stimulating change at an industry or enterprise level?

OUTLINE OF BOOK

The plan of this book is outlined below. Each chapter concludes with a review which provide a summary of the themes addressed. Furthermore, possible theoretical and practical 'breakthrough's which have been achieved are summarised after Chapter 7. The book draws upon many sources which are listed in an annotated bibliography.

Chapter 2 considers worldwide experience and debate about economic development and possible roles for government. It shows that ideas about political economy, economic management and development economics are changing. A new form of socio-political economy has emerged in East Asia. The 'State' does not have the same meaning everywhere as in Anglo-American societies, which are based on British Law. This affects the role the State can play. Nations have had varying degrees of economic success or failure because of the methods they have used.

Chapter 3 suggests an approach to economic development based on systems concepts. It shows that the earlier concern with how economic progress is achieved is re-emerging. The failures of a market economy could be addressed either by intervention to affect outcomes or by development of the economic system. However, natural limits to rationality prevent centralised management of economic outcomes. In Western societies progress has traditionally been achieved just by understanding the relationships which determine the behaviour of a system. Development (which changes those relationships) can have a large impact on growth and productivity. Development is overlooked by traditional economics because it is assumed that relationships are fixed in order to allow predictions.

Chapter 4 considers the intellectual basis of Japan's rapid economic development. Japan's methods of problem solving, which are used in various ways elsewhere in East Asia, are quite different to those which Western societies inherited from Greek philosophers. Japan did not accept the limits set by its original comparative advantage in low productivity industries but applied (Taoist?) methods to manage development directly, and so achieve rapid growth. These methods also have weaknesses.

Chapter 5 considers Australia's efforts to diversify its economy, and current debates about this. Australia's economic prospects are outlined, showing that current proposals are inadequate, and that Australia's position is very exposed. Australia's challenges are economic, socio-political and environmental, as well as dealing successfully with emergent Asian prosperity.

Chapter 6 suggests what might be done in practice to rapidly improve Australia's position. Traditional efforts to provide government 'assistance' to industry is the opposite of economic development, and it is physically impossible for politically responsive organisations to contribute to constructive economic development. Strategic management, however, does allow faster economic development, and might be undertaken under suitable protocols by individuals, and various non-political organisations in their own indirect interest. The role of government needs to be rebuilt to suit a post-industrial world.

Chapter 7 concludes the book as outlined below.

THE OUTCOME

There is a new standard for economic management set by Japan and the newly industrialised economies in East Asia. If this proves sustainable, which is not yet certain, then organisational and enterprise development must be much faster than Western assumptions and institutions allow, if high productivity enterprises and industries are to be established and maintained.

The debate about strengthening Australia's economy has been about whether this is best achieved by the market ('economic rationalism') or by government intervention. It is submitted that 'economic rationalism' is necessary to 'free' the market of traditional forms of government intervention, and that this is not sufficient to allow enough enterprises to achieve sustainable competitive positions. Economic development is also vital, ie systematic enhancement of market mechanisms by which business and the community assist industry, but this can not be achieved by organisations affected by interest group politics.

The 'Tortoise' of the Asia / Pacific region can be transformed if a systems view of development is used as the key to faster growth and increased competitiveness, and development is de-politicised through leadership by ordinary citizens and non-political organisations. Development can be faster if analysis of economic options is directly linked to practical experience with a view to action. Strengthening organisations to undertake these roles is a key task, as is reducing the effect that politics can have on economic outcomes. This will have constitutional implications. A social dimension is also required in economic development if the social costs of economic changes are not to cause insurmountable political obstacles.

[This book is for sale from Prosperity Press]