Explaining Australian Economic Success: Good Policy or Good Luck?

Abstract

Australia and some European countries experienced economic “miracles” in the 1990s that reversed prior poor export, employment, and fiscal performance. The miracles might provide transferable lessons about economic governance if it were true that economic governance institutions are malleable, and that actors deliberately changed those institutions in ways that contributed to the miracles. This paper analyzes Australian policy responses to see whether remediation should be attributed to pluck (intentional, strategic remediation of dysfunctional institutions to make them conform with the external environment), luck (environmental change that makes formerly dysfunctional institutions suddenly functional), or just being stuck (endogenous or path-dependent change that brings institutions into conformity with the environment). These distinctions help establish whether actors can consciously engineer institutional change that is “off-path.” While pluck appears to explain more than either stuck or luck in the Australian case, the analysis suggests that both off-path behavior and policy transfer are probably rare.