The Australian Economy Introduced
Australia is one of the wealthiest nations in the world with a strong economy and a very high standard of living. Australia was one of the few developed nations in the world to avoid falling into a recession as the result of the recent global financial crisis. This has been largely due to good fiscal policy and a strong banking sector. They are also somewhat insulated because they don't really have an close neighbours so their economy is not as integrated as others are. This means that they don't suffer the same fallout that is caused when other countries run into trouble. This has not only helped to keep the economy strong but it has also given the country a very diversified economy.
Through most of its history Australia has followed some fairly socialist policies with considerable government ownership and a great deal of regulation. However like most socialist countries over the last couple of decades Australia has started to revert to a more free enterprise approach. Most government owned businesses were privatized and a number of industries have been deregulated. This has been a major factor in the strong growth that the Australian economy has had over the last few years. The result is a very high standard of living with a very low rate of unemployment. In fact one of the biggest issue facing Australia is finding enough employees.
Like most developed countries Australia has an economy that is largely based on the service sector. However they do rely more on the primary sector than most other developed countries. Australia is blessed with a large number of natural resources and this remains a large part of the nations economy. There is also a strong agricultural sector that employs a large number of people.
Over the last few years the strength of the Australian economy has been based largely on high commodity prices. They really don't export a great deal of manufactured products. Mainly Australia exports commodities like minerals and agricultural products. This has given the country a strong balance of trade and a large trade surplus because of the high prices brought in by most commodities in recent years. However this does create a danger of the economy struggling if the price of commodities were to decline.
The other issue facing the Australian economy is location, they are a long way from any other large nation and that discourages trade because of the transport costs. In some ways this has been beneficial for the Australian economy in the sense that they have a more diversified economy than other countries of a similar size because they produce items that most other countries import. However this also hurts the economy overall since they are continuing to operate in industries where they have a comparative disadvantage. This makes their products less competitive in foreign markets which is why they don't export a lot of manufactured products.