Answer to Question #16185 in Economics of Enterprise for a n m
Which of the following are major explanations of the sustained economic growth that Australia has achieved over the past 50 years?
(a) A closing of the gap between actual and potential output. Yes/No
(b) Increases in labour productivity. Yes/No
(c) Technological progress. Yes/No
(d) Sustained increases in the capital stock. Yes/No
(e) Reductions in unemployment. Yes/No
(f) Increases in human capital. Yes/No
Major explanations of the sustained economic growth that Australia has achieved over the past 50 years are:
(a) A closing of the gap between actual and potential output -No. Over the past 28 years, Australian real-time output-gap estimates show no apparent bias, when compared with ﬁnal output-gap estimates derived with the beneﬁt of hindsight using the latest available data. Furthermore, the root-mean-square difference between the real-time and ﬁnal output-gap series is less than 2 percentage points, and the correlation between them is over 0.8.
(b) Increases in labour productivity - No. Productivity growth has been negligible, and well below the rates achieved in the preceding 50 years. Productivity across most segments of the Australian economy is well below world-best practice. The Business Council of Australia, for example, estimates that construction costs of Australian hospitals, schools, and oil and gas plants are 40% or more below US levels.
(c) Technological progress - Yes. Over last 50 years the great progress was in the telecommunication field, which is important part of every business today.
(d) Sustained increases in the capital stock - No. Australia is failing to make the transition towards sustainable development - a consequence of Australia's inefficiency, its addiction to growth and its failure to embrace the notions of sufficiency, equity and natural capital maintenance
(e) Reductions in unemployment - Yes. In the Australian experience, unemployment has been a nagging, and sometimes intense, problem for the past 30 years. But a sustained expansion in the economy lasting, now, 13 years has reduced current unemployment to unusually low levels. The gains in reducing unemployment are evident even in the most problematic areas, such as youth unemployment, long-term unemployment and poor employment opportunities for older workers.
(f) Increases in human capital - Yes. Human capital is widely accepted as a key driver of productivity growth. In Australian MFP statistics, the impact of human capital is captured by accounting for compositional changes in the work force due to factors such as changes in educational attainment and workforce experience.