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OECD Economic Surveys: Australia 2017

image of OECD Economic Surveys: Australia 2017

Australia’s economy has enjoyed considerable success in recent decades, reflecting strong macroeconomic policy, structural reform and the long commodity boom. Living standards and well-being are generally high, though challenges remain in gender gaps and in GHG emissions. The economy is now rebalancing following the end of the commodity boom, supported by an accommodative macroeconomic stance and currency depreciation. The strengthening non-mining sector is projected to support output growth and spur further reductions in unemployment. Low interest rates have supported aggregate demand but are ramping up investor risk taking and putting pressure on the housing market.

Improving competition and other framework conditions that influence the absorption and development of innovation are key for restoring productivity growth. Innovation requires labour and capital markets that facilitate new business models. Productivity growth could be boosted through stronger collaboration between business and research sectors in R&D activity.   

Australia’s adjustment to the end of the commodity boom has not been painless. Unemployment has risen, and inequality is rising. In addition, large socioeconomic gaps between Australia's indigenous community and the rest of the population remain. Developing innovation-related skills will be important for the underprivileged and those displaced by economic restructuring and can help reduce gender wage gaps.

SPECIAL FEATURES: INNOVATION-DRIVEN PRODUCTIVITY; BOOSTING R&D OUTCOMES

  

 

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Creating good conditions for innovation-driven productivity gains

Innovation is key to boosting Australia’s productivity and inclusiveness. This chapter examines the policies that create good conditions for innovation, not only in science and technology but also wider forms, such as business-model innovation. Competition and flexible markets are particularly important in the Australian context. Also there is room to improve the environment for firm entry and exit, and intellectual property arrangements. However, the returns to public spending on Australia’s numerous innovation-related SME support schemes are uncertain. Federal and state governments are taking a positive approach to the new wave of disruptive service-sector innovations, such as those underway in personal transport, accommodation, legal and financial services. Harnessing the full benefits of today's innovation requires household and business have access to high-speed ICT; and there is room for improvement on this front in Australia. In education, Australia’s STEM-oriented strategy could be strengthened. Innovation in public-services should receive considerable attention as this can raise aggregate productivity and improve living standards.

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