Harvard University’s Kennedy School’s Centre for International Development recently published its Atlas of Economic Complexity. It’s a fascinating read because it measures what the University calls an index of the value added by countries to their economies, and then rates them.
Its power comes from being able to compare what drives a country’s economic activity, the point where added value appears, and the proportion it contributes to the overall figure. Digivizer plays on the ICT sector, so we looked into how Australia’s ICT sector performs. The answer is sobering – over the past 30 years or so, it’s essentially flatlined. The Australian Financial Review carried my observations as an opinion piece, but if you don’t have a subscription, here’s the summary:
- The Australian Financial Review’s Aaron Patrick described the findings for Australia as: we’re rich, dumb, and getting dumber. Our Economic Complexity Index ranking has dropped from 19th to 32nd even as our GDP per capita has grown by 182% between 1995 and 2017
- At no point does ICT rise by more than 157 basis points in a year (1991-1992, in reality a reversal of a similar drop the previous year). In contrast, the biggest annual rise for iron ore was 426 basis points (2007-2008), 605 basis points for coal (also 2007-2008) and 267 basis points for travel (2014-2015)
Source: The Growth Lab at Harvard University. The Atlas of Economic Complexity. http://www.atlas.cid.harvard.edu. Analysis and chart by Digivizer. Terms used are those used in the source.
- If we overlay the IPO dates of Altium (August 1999), Atlassian (December 2015), and WiseTech (2016), we can see small increases in the export activity of our ICT sector. It seems that these companies have contributed some heavy lifting
- Comparing other markets and choosing the US as an example, we see consistent growth, even after the original dotcom bust. The sector is back to where it peaked just before the GFC. In comparison, and within its own context, Australia’s ICT export recovery was slower and flatter
Long-term commitments are needed to kick-start Australia’s ICT heart. Industries such as ICT, as well as pharmaceuticals, medical products, high-technology and manufacturing, are needed to create the economic future and competitive playing field that we deserve in Australia. Action is required now if we are to maintain our standard of living.