IDEAS home Printed from https://ideas.repec.org/a/bla/ajarec/v56y2012i2p171-200.html
   My bibliography  Save this article

Living standards, terms of trade and foreign ownership: reflections on the Australian mining boom

Author

Listed:
  • Robert G Gregory

Abstract

Australia is experiencing its largest mining boom for more than a century and a half. This paper explores, from a national perspective, important economic differences that arise when a mining boom, such as the current one, is generated by sustained export price increases (trading gains) rather than export volume increases. Since 2003 the terms of trade changes – through their direct trading gain effect and indirect real GDP effects - have increased Australian living standards. The increase, measured from official data and relative to the US, is about 25 per cent; an increase which probably places Australian living standards well above those of the US. But official data inadequately adjusts for foreign ownership of mining resources suggesting that this estimate is probably a little too high.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Robert G Gregory, 2012. "Living standards, terms of trade and foreign ownership: reflections on the Australian mining boom," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), pages 171-200, April.
    • Handle: RePEc:bla:ajarec:v:56:y:2012:i:2:p:171-200
    DOI: j.1467-8489.2012.00588.x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/j.1467-8489.2012.00588.x
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/j.1467-8489.2012.00588.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mick Silver & Khashayar Mahdavy, 1989. "The Measurement of a Nation's Terms of Trade Effect and Real National Disposable Income Within a National Accounting Framework," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 152(1), pages 87-107, January.
    2. G. S. Dorrance, 1948. "The Income Terms of Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 16(1), pages 50-56.
    3. Peter Warr, 2006. "The Gregory Thesis Visits the Tropics," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 177-194, June.
    4. Diewart, W Erwin & Morrison, Catherine J, 1986. "Adjusting Output and Productivity Indexes for Changes in the Terms of Trade," Economic Journal, Royal Economic Society, vol. 96(383), pages 659-679, September.
    5. Maddock, Rodney & McLean, Ian, 1984. "Supply-Side Shocks: The Case of Australian Gold," The Journal of Economic History, Cambridge University Press, vol. 44(4), pages 1047-1067, December.
    6. William Coleman, 2008. "Gauging Economic Performance Under Changing Terms Of Trade: Real Gross Domestic Income Or Real Gross Domestic Product?," Economic Papers, The Economic Society of Australia, vol. 27(4), pages 329-342, December.
    7. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-380, November.
    8. Bryn Battersby, 2007. "Does distance matter?: The effect of geographic isolation on productivity levels," OECD Economic Studies, OECD Publishing, vol. 2006(1), pages 205-225.
    9. Paul Frijters & Robert Gregory, 2006. "From Golden Age to Golden Age: Australia's ‘Great Leap Forward’?," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 207-224, June.
    10. Jyoti Rahman, 2005. "Comparing Australian and United States productivity," Economic Roundup, The Treasury, Australian Government, issue 2, pages 27-45, June.
    11. P. J. Forsyth & J. A. Kay, 1981. "Oil revenues and manufacturing output," Fiscal Studies, Institute for Fiscal Studies, vol. 2(2), pages 9-17, July.
    12. R.G. Gregory, 1976. "Some Implications Of The Growth Of The Mineral Sector," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 20(2), pages 71-91, August.
    13. Kohli, Ulrich, 2004. "Real GDP, real domestic income, and terms-of-trade changes," Journal of International Economics, Elsevier, vol. 62(1), pages 83-106, January.
    14. Ellis Connolly & David Orsmond, 2011. "The Mining Industry: From Bust to Boom," RBA Research Discussion Papers rdp2011-08, Reserve Bank of Australia.
    15. Vernon Topp & Leo Soames & Dean Parham & Harry Bloch, 2008. "Productivity in the Mining Industry: Measurement and Interpretation," Staff Working Papers 0807, Productivity Commission, Government of Australia.
    16. Robert C. Feenstra & Alan Heston & Marcel P. Timmer & Haiyan Deng, 2009. "Estimating Real Production and Expenditures across Nations: A Proposal for Improving the Penn World Tables," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 201-212, February.
    17. repec:bla:ecorec:v:69:y:1993:i:204:p:61-76 is not listed on IDEAS
    18. Tony McDonald & Steven Morling, 2011. "The Australian economy and the global downturn, Part 1: Reasons for resilience," Economic Roundup, The Treasury, Australian Government, issue 2, pages 1-31, September.
    19. Ryan Macdonald, 2010. "Real Gross Domestic Income, Relative Prices, And Economic Performance Across The Oecd," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(3), pages 498-518, September.
    20. Vivian Chen & Abhay Gupta & Andre Therrien & Gad Levanon & Bart van Ark, 2010. "Recent Productivity Developments in the World Economy: An Overview from The Conference Board Total Economy Database," International Productivity Monitor, Centre for the Study of Living Standards, vol. 19, pages 3-19, Spring.
    21. Tony McDonald & Steven Morling, 2011. "The Australian economy and the global downturn, Part 2: The key quarters," Economic Roundup, The Treasury, Australian Government, issue 2, pages 33-60, September.
    22. R.G. Gregory, 1993. "Aspects of Australian and US Living Standards: The Disappointing Decades 1970–1990," The Economic Record, The Economic Society of Australia, vol. 69(1), pages 61-76, March.
    23. Ellis Connolly & David Orsmond, 2011. "The Mining Industry: From Bust to Boom," RBA Annual Conference Volume (Discontinued), in: Hugo Gerard & Jonathan Kearns (ed.),The Australian Economy in the 2000s, Reserve Bank of Australia.
    24. W. M. Corden, 1960. "The Geometric Representation of Policies to Attain Internal and External Balance," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 28(1), pages 1-22.
    25. Macdonald, Ryan, 2010. "Real Gross Domestic Income, Relative Prices and Economic Performance Across the OECD," Economic Analysis (EA) Research Paper Series 2010059e, Statistics Canada, Analytical Studies Branch.
    26. T. W.Swan, 1960. "Economic Control In A Dependent Economy," The Economic Record, The Economic Society of Australia, vol. 36(73), pages 51-66, March.
    27. Corden, W Max & Neary, J Peter, 1982. "Booming Sector and De-Industrialisation in a Small Open Economy," Economic Journal, Royal Economic Society, vol. 92(368), pages 825-848, December.
    28. Adrian Blundell-Wignall & Robert G. Gregory, 1990. "Exchange Rate Policy in Advanced Commodity-Exporting Countries: The Case of Australia and New Zealand," OECD Economics Department Working Papers 83, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Freebairn, John, 2015. "Mining booms and the exchange rate," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(4), October.
    2. Huong Dinh & Ben Freyens & Anne Daly & Yogi Vidyattama, 2017. "Measuring Community Economic Resilience in Australia: Estimates of Recent Levels and Trends," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 132(3), pages 1217-1236, July.
    3. Katherine Wynn & Mingji Liu & Jasmine Cohen, 2022. "Quantifying the economy‐wide returns to innovation for Australia," Australian Economic Papers, Wiley Blackwell, vol. 61(3), pages 591-614, September.
    4. Yogi Vidyattama & Maheshwar Rao & Itismita Mohanty & Robert Tanton, 2014. "Modelling the impact of declining Australian terms of trade on the spatial distribution of income," International Journal of Microsimulation, International Microsimulation Association, vol. 7(1), pages 100-126.
    5. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    6. Char-lee Moyle & Fabrizio Carmignani & Brent Moyle & Sajid Anwar, 2021. "Beyond Dutch Disease: Are there mediators of the mining–tourism nexus?," Tourism Economics, , vol. 27(4), pages 744-761, June.
    7. repec:ags:aare16:235308 is not listed on IDEAS
    8. Grace Taylor & Rod Tyers, 2017. "Secular Stagnation: Determinants and Consequences for Australia," The Economic Record, The Economic Society of Australia, vol. 93(303), pages 615-650, December.
    9. Allen, Creina & Day, Garth, 2014. "Depletion of non-renewable resources imported by China," China Economic Review, Elsevier, vol. 30(C), pages 235-243.
    10. Creina Allen & Garth Day, 2014. "Does China's demand boom curb Australian iron ore mining depletion?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), pages 244-262, April.
    11. Pham, Tien & Jago, Leo & Spurr, Ray & Marshall, Justin, 2015. "The Dutch Disease effects on tourism – The case of Australia," Tourism Management, Elsevier, vol. 46(C), pages 610-622.
    12. Kotey, Bernice & Rolfe, John, 2014. "Demographic and economic impact of mining on remote communities in Australia," Resources Policy, Elsevier, vol. 42(C), pages 65-72.
    13. Grant Mark Nülle & Graham A. Davis, 2018. "Neither Dutch nor disease?—natural resource booms in theory and empirics," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 35-59, May.
    14. Fleming, David A. & Measham, Thomas G., 2015. "Local economic impacts of an unconventional energy boom: the coal seam gas industry in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(1), January.
    15. Fleming, David A. & Measham, Thomas G., 2014. "Local job multipliers of mining," Resources Policy, Elsevier, vol. 41(C), pages 9-15.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rod Tyers & Aaron Walker, 2016. "Quantifying Australia's ‘Three-Speed’ Boom," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 49(1), pages 20-43, March.
    2. Phillip Edmund Metaxas & Ernst Juerg Weber, 2016. "An Australian Contribution to International Trade Theory: The Dependent Economy Model," The Economic Record, The Economic Society of Australia, vol. 92(298), pages 464-497, September.
    3. Neil Dias Karunaratne, 2013. "The mining boom, productivity conundrum and monetary policy design to combat resource curse effects in Australia," Discussion Papers Series 504, School of Economics, University of Queensland, Australia.
    4. Ryan Macdonald, 2010. "Real Gross Domestic Income, Relative Prices, And Economic Performance Across The Oecd," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(3), pages 498-518, September.
    5. Grant Mark Nülle & Graham A. Davis, 2018. "Neither Dutch nor disease?—natural resource booms in theory and empirics," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 35-59, May.
    6. Peter Tulip, 2014. "The Effect of the Mining Boom on the Australian Economy," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 17-22, December.
    7. Clements, Kenneth W. & Fry, Renée, 2008. "Commodity currencies and currency commodities," Resources Policy, Elsevier, vol. 33(2), pages 55-73, June.
    8. Hansen, James & Gross, Isaac, 2018. "Commodity price volatility with endogenous natural resources," European Economic Review, Elsevier, vol. 101(C), pages 157-180.
    9. Timothy J. Kehoe & Kim J. Ruhl, 2008. "Are Shocks to the Terms of Trade Shocks to Productivity?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 804-819, October.
    10. Tim Robinson & Tim Atkin & Mark Caputo & Hao Wang, 2017. "Macroeconomic Consequences of Terms of Trade Episodes, Past and Present," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 57(3), pages 291-315, November.
    11. Mardi Dungey & Renee Fry-McKibbin & Verity Linehan, 2014. "Chinese resource demand and the natural resource supplier," Applied Economics, Taylor & Francis Journals, vol. 46(2), pages 167-178, January.
    12. Mardi Dungey & Renee Fry‐Mckibbin & Vladimir Volkov, 2020. "Transmission of a Resource Boom: The Case of Australia," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(3), pages 503-525, June.
    13. Rod Tyers, 2014. "Asymmetry in Boom-Bust Shocks: Australian Performance with Oligopoly," Economics Discussion / Working Papers 14-23, The University of Western Australia, Department of Economics.
    14. repec:dau:papers:123456789/4066 is not listed on IDEAS
    15. Clements, Kenneth & Lan, Yihui & Roberts, John, 2008. "Exchange-rate economics for the resources sector," Resources Policy, Elsevier, vol. 33(2), pages 102-117, June.
    16. Macdonald, Ryan, 2007. "Not Dutch Disease, It's China Syndrome," Insights on the Canadian Economy 2007017e, Statistics Canada, Economic Analysis Division.
    17. Klaus Abberger & Wolfgang Nierhaus, 2018. "Terms of Trade und Trading Gain in Deutschland und der Schweiz: – Ein Ländervergleich," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(06), pages 38-42, March.
    18. Swift, Robyn, 2004. "Exchange rate changes and endogenous terms of trade effects in a small open economy," Journal of Macroeconomics, Elsevier, vol. 26(4), pages 737-745, December.
    19. Qiang, Ye, 1999. "How different is mining from mineral processing? A general equilibrium analysis of new resources projects in Western Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(3), pages 1-26, September.
    20. Wolfgang Nierhaus, 2019. "Realwert des Bruttoinlandsprodukts und Terms of Trade: Methodik und Ergebnisse für das Jahr 2018," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(04), pages 44-52, February.
    21. Nam Foo & Ruhul Salim, 2022. "The evolution of mining employment during the resource boom and bust cycle in Australia," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 35(2), pages 309-324, June.

    More about this item

    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ajarec:v:56:y:2012:i:2:p:171-200. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.