The recently published Atlas of Economic Complexity, compiled by the Growth Lab at Harvard
University, reveals a troubling trend for Australia's economic competitiveness. The country's
international ranking in economic complexity has fallen to 93 out of 133 countries, indicating a
significant decline from its ranking of 55 in 1995. This deterioration prompts questions about the
factors contributing to this decline, the areas the government should focus on to enhance economic
competitiveness, and the potential long-term implications for Australian businesses and society at
Analysing the Decline
According to the Atlas analysis, Australia's lack of export diversification has been the main factor
contributing to the country's increasing economic complexity. Despite having the twelfth-highest
GDP per capita in 2022, Australia's economy is assessed to be "less complex than would be expected for its income level", highlighting the need for thorough economic diversification.
The Atlas also points out that Australia's two main export industries are agriculture and mining.
Nearly 38% of Australia's net exports are made up of iron ores and concentrates, 15.5 are coal, and
12.1 are petroleum gas. Despite an increase in exports from Australia, China still receives 41.1% of
them, which raises questions about the country's dependency on it. South Korea earns less than 8%,
Implications and Urgent Need for Diversification
The lack of diversification in exports is a critical factor hindering Australia's economic complexity and
resilience. To enhance economic competitiveness, the government must urgently adopt a diversified
approach, expanding beyond resource-driven exports to high-value industries such as
manufacturing, electronics, medical, advanced agriculture, education, and professional services .
Promoting visionary partnerships with non-conflicts of interest enterprises and institutions is vital to
bolstering Australia's economic complexity. Current trends indicate that promising local ventures
may seek opportunities abroad, citing inadequate support and nurturing from government and
associated organisations. Encouraging collaboration between government, academia, and industry
stakeholders will foster an environment conducive to innovation and sustainable economic growth.
The Albanese government's $15 billion commitment to the National Reconstruction Fund to boost
Australian manufacturing in areas like resources, renewable energy, clean technologies, and medical
science is a step in the right direction. However, further emphasis is required to ensure investments
align with genuine diversification potential.
The consequences of failing to address the declining economic complexity can be far-reaching for
Australian businesses and society. Continued over-reliance on a narrow range of exports leaves the
economy vulnerable to global economic fluctuations and resource price volatility. This could lead to
economic instability, job losses, and reduced investment in high-value sectors.
For society, an inadequately diversified economy may result in higher energy and living costs,
impacting the overall standard of living. The exodus of talented professionals and potential
investment opportunities could lead to a brain drain, further impeding economic growth and societal
Why despite decades of advice from various organisations such as the Productivity Commission and
McKinsey and Co are the government failing to listen? The decline in Australia's international ranking
in economic complexity demands immediate action. To overcome this challenge, the government
must prioritise diversification and foster visionary partnerships to bolster Australia's economic
competitiveness. By investing in high-value industries and promoting collaboration among diverse
sectors, Australia can pave the way for a prosperous and resilient economy, benefiting both
businesses and society as a whole. Embracing this strategic approach will unlock the nation's true
potential, ensuring a brighter future for all Australians.