Two Economies, With One Set of Flaws: The Economies of Australia and Canada | Econ

Summary

The video script explores the similarities and economic ties between Australia and Canada, highlighting their shared British colonial past, federal systems, and population distributions. It delves into their economies, emphasizing the importance of natural resource exports and the challenges of relying on these resources, including the potential 'resource curse.' The script also touches on the countries' immigration policies, innovation systems, and the impact of their economic reliance on larger economies like China and the U.S., concluding with a comparison of their long-term productivity and living standards.

Takeaways

• 🇦🇺🇨🇦 Australia and Canada are geographically distant yet share commonalities such as British colonial heritage and federal state structures.
• 🌐 Both nations face the challenge of having small populations spread across large, inhospitable areas, with significant population concentrations near international borders.
• 💰 If combined, Australia and Canada would form the world's fifth-largest economy, with similar GDP per capita figures.
• 📈 Their economies show similarities in primary sectors like manufacturing, mining, and agriculture, with Australia focusing more on mining.
• 📊 Stock market growth over the past 30 years for both countries has been similar, influenced by their reliance on exporting natural resources.
• 🏭 Historically, both countries have experienced economic booms related to mining, with fluctuations impacting their economic stability.
• 🏢 Major companies from both countries, such as Macquarie and Brookfield, are significant in global infrastructure investments but lag in global revenue rankings.
• 🛒 In both nations, a few dominant companies control a large portion of the market in sectors like groceries, banking, aviation, and telecoms.
• 🌍 Australia and Canada are heavily reliant on trade with larger economies, with Australia significantly tied to China and Canada to the United States.
• 📉 The 'resource curse' may have led to a lack of diversification in their industries, with a focus on commodities rather than high-tech sectors.
• 🧑🤝🧑 Both countries are immigration hotspots, with immigrants contributing to labor, innovation, and economic growth, as well as impacting housing markets.

Q & A

What is the approximate distance between Australia and Canada?

Australia and Canada are about 14,000 km apart.

Why do Australia and Canada have similar government structures?

Both nations are members of the Commonwealth of Nations, sharing a British colonial heritage, which has influenced their federal states and constitutional monarchies.

What percentage of Canada's population lives within 100 miles of the U.S. border?

Nearly 80% of Canada's population lives within 100 miles of the U.S. border.

If combined, where would Australia and Canada's economy rank globally?

If Australia and Canada were one economy, they would be the world’s fifth-largest.

What is the GDP per person for Australia and Canada, and how does it compare to the United States?

Australia has a GDP per person of around $63,000, and Canada has $58,000, which are similar levels of purchasing power compared to the United States.

How does Australia's economic structure differ from Canada's, particularly in the manufacturing sector?

Australia leans more heavily on mining and less on manufacturing compared to Canada.

What historical event in the late 1800s made Charters Towers in Queensland wealthy enough to open its own stock exchange?

The gold rush in the late 1800s made Charters Towers in Queensland wealthy enough to open its own stock exchange.

How has the mining industry's ups and downs affected Australia's economy?

The mining industry's ups and downs have been tough, but Australia has managed to stay strong, especially during the peak when mining investment made up 9% of the country's GDP.

What is the 'resource curse' and how does it relate to Australia and Canada?

The 'resource curse' refers to problems like political unrest and slower growth in resource-rich countries. For Australia and Canada, it's more about their reliance on resources making them less interested in developing industries that could compete worldwide.

How do the top Australian and Canadian companies compare to the global top firms by revenue?

The top Canadian firm, Brookfield Asset Management, is ranked only 117th, and the top Australian firm, BHP Group, is ranked only 180th globally, indicating that Canadian and Australian firms have challenges in global competition.

What is the situation with high-tech exports in Australia and Canada, and how do they compare to OECD members?

High-tech exports represent more than 7% of the combined exports of OECD members, but only 4% for Canada and less than 2% for Australia, indicating a lack of focus on high-tech industries.

How do Australia and Canada's patent grants per 10,000 people compare to other countries like the United States and South Korea?

Patents granted per 10,000 people are 5.9 in Canada and 6.7 in Australia, compared to 9.9 in America and 28.2 in South Korea, showing a lower level of innovation.

What is the impact of immigration on the economies of Australia and Canada?

Immigration plays a crucial role in their economies, bringing diversity, innovation, and skills, contributing to the labor market's expansion, and stimulating economic activity.

How does the housing market in Australia and Canada compare to the rest of the world in terms of price-to-income ratio?

The average home in Canada is nearly 650,000 U.S. dollars, which is more than nine times household income, indicating a high price-to-income ratio compared to the rest of the world.

What economic reforms did Australia undertake in the 1980s and 1990s, and how did they affect the economy?

Australia undertook extensive economic reforms, opening up the economy to foreign trade and investment, deregulating markets, privatizing state-owned businesses, and introducing competition reforms, which led to better productivity performance and living standard growth.

How do Australia's economic fortunes relate to China, and what potential challenges could arise from this relationship?

Australia's economy is heavily dependent on selling commodities to China, which could suffer if China's economic growth slows down or if there are further trade restrictions.