Australia has dropped another two places on the Harvard Economic Complexity Index (ECI) to rank 93rd out of 133 countries. The lowest of any OECD nation by 50 places.
Advanced Manufacturing Growth Centre (AMGC) managing director, Dr Jens Goennemann, said, “Australia’s continued fall in ECI rankings is completely predictable. If this is to change, then we must focus on transitioning away from a luck-based economy to becoming smarter if we are to protect our high standards of living and prosperity into the future.”
The index systematically ranks 133 countries by their ability to manufacture and export diverse and complex items and services. It has been a global benchmark of a nation’s global impact since 1995, when Australia ranked 55 on the index.
Australia has fallen 12 places in the last decade, and a further two spots lower from 91st last year, despite having the 9th richest economy per capita out of the 133.
The report said: “Australia’s worsening complexity has been driven by a lack of diversification of exports. Moving forward, Australia is positioned to take advantage of a moderate number of opportunities to diversify its production using its existing knowhow.
“Australia is less complex than expected for its income level. As a result, its economy is projected to grow slowly. The Growth Lab’s 2031 Growth Projections foresee growth in Australia of 2.0 per cent annually over the coming decade, ranking in the bottom half of countries globally.”
The continued fall in ECI rankings puts Australia between Uganda and Pakistan in the bottom third of monitored nations for economic complexity.
“There is no excuse for Australia’s poor ECI ranking, and our continued decline shows Australia’s luck is on borrowed time. We have the human capital, abundant natural resources, and capable yet subscale manufacturers. The missing piece of the puzzle is long-term focus through continuity of programs and investment for industry – which other countries do well.
“We must invest now while the times are good to ensure that we have a robust manufacturing industry making the high value, highly complex items the world needs to whether future bad times and to give our children meaningful and resilient jobs,” said Goennemann.
The report said, “Australia has seen a troubling pattern of export growth, with the largest contribution to export growth coming from low and moderate complexity products, particularly Ores, slag and ash and Mineral fuels, oils and waxes products.”
Goennemann added, “The future looks quite bleak unless serious long-term strategy and capital commitments are made to turn the tide of Australia’s continued complexity decline. It is also incumbent on Australian industry to band together, collaborate and focus its efforts beyond the Australian domestic market if we want to safeguard our future prosperity and lift our global influence.”
The Advanced Manufacturing Growth Centre (AMGC) is an industry-led, not-for-profit organisation. AMGC’s vision is to transform Australian manufacturing to become an internationally competitive, dynamic, and thriving industry with advanced capabilities and skills at its core.
AMGC has successfully demonstrated how to build capability and scale through its well-managed $57 million co-investments targeted directly to Australia’s manufacturing SMEs. AMGC’s co-investments of 141 projects have committed a dedicated research partner to commercialise research findings by helping to resolve real-world manufacturing challenges and lifting product complexity along the way.
These projects are expected to generate over 4200 new highly skilled, and well-paid roles, and on completion will return $1.6 billion to the economy.
To read Harvard’s ECI report in full, click here.
