Lost Exceptionalism? Comparative Income and Productivity in Australia and the UK, 1861-1948

13 Pages Posted: 18 Sep 2007

See all articles by Stephen N. Broadberry

Stephen N. Broadberry

London School of Economics & Political Science (LSE)

Douglas A. Irwin

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

Australia had one of the highest per capita incomes in the world in the late nineteenth century, although this exceptional position subsequently eroded over time. This paper compares national income and sectoral labour productivity in Australia and the UK between 1861 and 1948 to uncover the underlying sources of Australia's high income and the reasons for its subsequent relative decline. We find that the country's higher per capita income was due primarily to higher labour productivity, because labour force participation, although higher in Australia than in the USA, was lower than in the UK. Australia had a substantial labour productivity lead in agriculture throughout the period, due to the importance of high value-added, non-arable farming, and a smaller lead in industry before World War I. The early productivity lead in industry was largely based on the importance of mining, and disappeared as manufacturing became more important. There was little productivity difference in services. These results reaffirm the importance of Australia's successful exploitation of its natural resource endowments in explaining the country's high initial income.

Suggested Citation

Broadberry, Stephen N. and Irwin, Douglas A., Lost Exceptionalism? Comparative Income and Productivity in Australia and the UK, 1861-1948. Economic Record, Vol. 83, No. 262, pp. 262-274, September 2007. Available at SSRN: https://ssrn.com/abstract=1014702 or http://dx.doi.org/10.1111/j.1475-4932.2007.00413.x

Stephen N. Broadberry (Contact Author)

London School of Economics & Political Science (LSE) ( email )

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Douglas A. Irwin

Dartmouth College - Department of Economics ( email )

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United States
603-646-2942 (Phone)
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National Bureau of Economic Research (NBER)

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