What is the economic system of Australia? The economy of Australia is based on a mixed economy, that resembles a market economy. The country’s economic system combines elements of a market economy and a planned economy, individuals are free to work, produce, consume, and invest in any way they please.
In Australia, the economy is composed of a private sector, consisting of individuals and businesses that make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of certain goods and services. No country is purely capitalist or purely communist.
What do the freedom indexes tell about the economic system of Australia?
Now, to determine if a country is mostly a market economy or a planned economy, it is useful to examine some economic indexes. For instance, according to the 2022 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Australia is ranked 12th globally and 4th in Asia-Pacific indicating that the country has a mostly free economy.
In a similar way, the 2022 Freedom House index evaluates the state of political rights and civil liberties globally. Generally, market economies tend to align more with democracy and freedom, while command economies tend to be characterized by greater state control and fewer democratic and civil liberty protections. Australia gets a score of 95/100, which qualifies it as free. Australia is a country where the government does not control what people do for political reasons, and people have the freedom to choose (what, how much, and how to produce, whether to buy or not, selling price, etc.)
The Link Between Public Sector Employment and the Economic System of Australia
An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Australia, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 28.9% (2020).In the country, the public sector tends to be small and efficient. As result, the number of public sector employees as a percentage of the total workforce is low compared to other countries.
What does the biggest company in Australia say about the country’s economic system
The biggest company in Australia should also be looked at, as well as whether it is a state-owned or private company. In this case, The BHP Group from Australia is a mixed private-public company. It is owned by public and private shareholders, making it a unique hybrid of the public and private sectors.
The historical factors that have influenced the economic system of Australia
Australia’s mixed economy system has been shaped by its history of colonialism, globalization, and deregulation. The current system is the result of a combination of government intervention in the economy, market forces, and the development of a strong export sector. This allowed for the growth of multiple industries like manufacturing, finance, and services, and has enabled Australia to become a prosperous and competitive economy.