1301.0 - Year Book Australia, 2008  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 07/02/2008   
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Contents >> Industry structure and performance >> Evolution of Australian industry


Australia's economic development has been one of contrast and change. In the early years of European settlement, between 1788 and 1820, there was little scope for industrial or commercial enterprises. The government, as both main producer and main consumer, established workshops to produce the basic necessities of life - flour, salt, bread, candles, leather and leather articles, blacksmith's products, tools and domestic items.

Between 1820 and 1850 the pastoral industry led Australia's economic development, and by 1850 it was supplying well over half of the British market for imported wool. The growth in the wool industry brought great advances in the rest of the economy, with local manufacturing industries being established in response to new market opportunities. Gold surpassed wool as Australia's major export earner throughout the 1850s and 1860s, resulting in a rapid expansion of banking and commerce. Increased public works activity during the 1870s played an important role in encouraging expansion in manufacturing. By 1901 this expansion had resulted in an economy where agriculture, manufacturing, mining, construction and the service industries all provided significant contributions to Australia's wealth.

From 1901 to 1930 manufacturing expanded further, with impetus from Federation and the elimination of customs barriers between states, and from World War I. With the onset of World War II, the Australian manufacturing sector was sufficiently developed and diversified to respond to the demand for war materials and equipment. Key industries expanded and new ones developed rapidly to produce munitions, ships, aircraft, new kinds of equipment and machinery, chemicals, textiles and so on. After the war all sectors of the economy experienced growth. The manufacturing sector's contribution to the economy peaked at just under 30% of gross domestic product (GDP) in the late-1950s and early-1960s.

The onset of the oil price rises in the early-1970s led the world into recession. Inflation, coupled with slower growth in Australia's GDP, affected all sectors of the economy. The modest employment growth in the 1970s was dominated by the service industries.

The 1980s and 1990s saw a decline in the relative contribution to GDP from goods-producing industries and a rise in the contribution from service industries. The falling contribution from goods-producing industries was largely the result of a decline in manufacturing's share of GDP. The mining, manufacturing, and electricity, gas and water supply industries experienced declining employment, along with outsourcing of some activities, particularly support services.

The early-2000s have seen a continuing decline in the relative contribution to GDP from goods-producing industries, and a continuing rise in the contribution from service industries. While manufacturing remains a significant industry, Property and business services now has the highest relative contribution to GDP. Manufacturing's share of GDP continues to be the primary driver for the falling contribution from goods-producing industries, while the Finance and insurance industry has provided the largest increase in service industries.

The article 100 years of change in Australian industry in Year Book Australia 2005 provides more information about the evolution of Australian industry in the 20th century.

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