The economy at war

Abstract

Australia went into the First World War as a small, open economy dependent on exports of primary produce and minerals, with a limited manufacturing sector, and an atypically large tertiary sector. The Australian economy in 1914 was quite unlike other early twentieth-century industrialised nations. The nation had then, and still has in the early 1990s, a small, open economy highly vulnerable to international trade fluctuations, shifts in preferences and/or trade policies of world's major commodity producers and purchasers. The very fabric of economy and society was strained as local industries and infrastructure struggled to meet increased and diversified wartime demands. Heavy industry barely existed in prewar Australia-a situation which altered swiftly as shipping shortages and the switch of British manufacturers from exports to war production together provided natural protection for the 'infant' Australian steel industry. Careful qualitative examination shows that war-related changes generated new production patterns which eventually enabled a greater contribution by postwar secondary industry to national economic growth.