The Asian crisis gives Australia a chance to catch up to income levels of some Asian economies, according to University of Queensland reader in economics Dr Tony Makin.
"Now is the time for increased Australian commitment to economic reform to take advantage of the opportunity," Dr Makin said.
"Policy paralysis on economic reform is a recipe for continued decline."
Dr Makin will speak at a University Faculty of Business, Economics and Law symposium: The Asian Economic Crisis: Lessons and Opportunities at the Sheraton Hotel and Towers on Tuesday, July 28 from 9am.
UQ Vice-Chancellor Professor John Hay will welcome delegates to the function, which is supported by the University's Economics Department and the Economics Alumni Association.
The symposium will explain the nature, causes and economic implications of the crisis, including the impact on the Australian and Queensland economies and regional trade.
Speakers will include Professor Akira Kohsaka of Osaka University School of International Public Policy who will discuss the Asian crisis, the IMF and the Japanese economy. Other speakers include Dr Jon Stanford of the UQ Economics Department, Sally Jones of the Australian Trade Commission, Sydney, and former Queensland under treasurer Dr Doug McTaggart.
Dr Makin said at the start of the Nineties, the World Bank ranked Australia at number 18 in the national income league tables based on Australia's GDP per person, relative to income levels in other nations, adjusted for differences in living costs. Australia reached this position after sliding several places over the course of the 1970's and 1980's.
This downhill trend provided a major rationale for improving the competitiveness and efficiency of the economy. However, the World Bank in its World Development Indicators recently reported that Australia had slid yet another place to number 19.
GDP per person, 1996 - Country Ranking
1. Luxembourg
2. United States
3. Singapore
4. Switzerland
5. Hong Kong
6. Japan
7. Norway
8. Belgium
9. Denmark
10. Iceland 11. Austria
12. France
13. Canada
14. Germany
15.Netherlands
16. Cyprus
17. Britain
18. Italy
19. Australia
20. Sweden
"On the other hand, the World Bank in a 1995 study has also ranked Australia number one in the world on the basis of wealth per head," Dr Makin said. "As a stock rather than flow measure, the amount of wealth per head reflects the total value of Australia's assets. These assets include a large natural resource base and a highly educated and skilled workforce.
"Taken together, the separate income and wealth rankings imply that Australia is asset rich, yet relatively income poor. In turn, this suggests that Australia's assets are not being used as efficiently as they could be to generate the highest possible return which manifests as greater national income.
"Improving efficiency is a central ingredient to raising the return on the economy's total asset base and hence for improving the nation's relative income level. The further slide in Australia's income ranking suggests that there has been insufficient economic reform as a means to this end.
"The opposite of improving economic efficiency is worsening economic inefficiency, which stymies dynamism in the economy."
Dr Makin said critics of measures to improve Australia's relative income position had successfully managed to turn "economic rationalism", a synonym for improving efficiency and economic growth, into a pejorative term.
"They do not seem to realise that it is also economically rational to buy the specials at the local supermarket, shop around for a home loan, or obtain several quotes on a repair job. Yet, no one is ever criticised for being too economically rational when engaging in these everyday activities," he said.
"Without more economic rationalism, Australia's ranking in the international income tables could continue to slide. Economic rationalism is about improving efficiency in 1001 ways in order to minimise resource waste in the economy and allow those resources to find their most productive use. Over recent years, only some of these ways have been tried. We might be still trying, but our latest world ranking suggests it is not hard enough."
People wishing to attend the symposium can contact the UQ Economics Department, tel 07 3365 6570, fax 07 3365 7299, email: r.lawson@commerce.uq.edu.au
Media: For further information, contact Dr Makin, telephone 07 3365-6560
email: makin@commerce.uq.edu.au
