Among the economies of Southeast Asia, Australia stands out on its own. Viewed by many as the stronghold of the West in the East, its GDP per capita of $69,000 competes with the richest EU countries and even stands above the UK’s. Some attribute modern Australia’s success to its colonial origins or to its influx of skilled immigrants over the last hundred years. However, the secret to the growth of Australia over the last century lies deeper, within the land itself. 

The first key to understanding the success of the Australian economy is appreciating its sheer size. As the sixth largest country in the world, it had an abundance of mostly undeveloped land at the time of its federation in 1901. There are 426 million hectares currently used for farming across the vast island– spread among a population of only 26.64 million. This allows for livestock farming on an enormous scale. For this reason, Australia’s economy was for a long time considered to be “riding on the sheep’s back.” 

The key contributor to Australia’s success, however, was the natural resources under all this land – which are fundamental both to its economic prosperity and its global influence. It boasts vast mineral wealth, including the world’s largest reserves of gold, iron ore, and uranium. Exports of iron ore alone contribute $87.9 billion USD to its GDP each year. In addition, Australia is coal rich, as the top global exporter of thermal and metallurgical coal in 2019. These resources, as they were mostly untapped before the nineteenth century, provided a stepping stone for Australia before it transitioned to a service-based economy (currently, the service sector comprises 62.7% of the Australian economy). 

The gold rush of the mid-19th century was one of the defining moments in Australia’s economic development. Beginning in the 1850s, it attracted thousands of immigrants from Europe, the United States, and Asia. The influx of wealth and labour transformed cities like Melbourne into hubs of commerce, laying the foundation for modern infrastructure and trade networks. This rush also bolstered Australia’s global reputation as a land of opportunity. 

Crucially, Australia’s natural resources allow for greater resilience in the face of external shocks, most notably after the 2008 financial crisis. While much of the rest of the world encountered recessions, Australia’s  export connections to China helped maintain aggregate demand. China’s hunger for iron ore and coal for its industrial expansion played a critical role in shielding Australia from the worst impacts of the global downturn. Similarly, the mining boom of the 2000s brought unprecedented growth to the country, with investments in exploration, infrastructure, and job creation boosting overall economic stability. 

In terms of the economies of historically colonized countries, Australia is the exception that proves the rule. Many of the resource-rich countries of the British Empire were

exploited, leaving struggling economies and unstable political environments behind once the British withdrew. However, it was the unique circumstances surrounding Britain’s occupation since 1788 that spared Australia of such challenges. As Australia was settled by the British first as a penal colony, the priority was, initially, more immigration than exploitation. Over time, Australia, unlike much of Africa, was viewed as an extension of British civilisation, and so inherited the inherent advantages of the rule of law and a parliamentary democracy. 

Much of Australia’s growth in the nineteenth century was thanks to enterprising immigrants who reinvested in the economy, rather than colonial taskmasters that depleted resources. This created a legacy of immigration which helped Australia maximize the potential of its plentiful natural resources. For example, the introduction of advanced drilling and mining techniques by post-war European immigrants enabled Australia to become a global leader in resource extraction, particularly in iron ore and natural gas production. 

While Australia’s immigration policies might be draconian at the moment, for much of the 20th century “Populate or Perish” was their slogan, as they encouraged discounted migration of British citizens and, indeed, many Chinese and Southeast Asians. The influx of young, skilled workers, coupled with the democratic structures put in place by the British, as well as the high education rate, allowed Australia to harness its natural resources beyond many other resource-rich countries, using new mining technologies. 

However, while these natural resources have been crucial to Australia’s growth over the last century, it is important to avoid complacency. Changing dynamics and geopolitical tensions mean that its strong trading partnership with China is generating some cracks, as they struggle to balance it with their military alliance with the US. Additionally, as the world shifts further away from fossil fuel usage, their coal exports, which contribute 15% to their overall export revenue, may soon become redundant. They must not succumb to the “Dutch Disease,” whereby an over-reliance on resource exports stifles the growth of other sectors, leading to economic imbalance. 

Ultimately, Australia, given its democratic stability and high education level, is well- placed to handle these challenges and transition to relying less on exports of raw materials. Perhaps the next step for Australia is to invest in secondary processing of its natural gifts. Under its surface lies not only the materials to power the Old World, like coal and iron, but also those that will drive our digital age, like lithium, rare earth elements, and nickel. A recent OECD study emphasized that diversification into green technologies and advanced manufacturing could ensure Australia’s continued success in the 21st century.