Has Investment in Australia's Manufacturing Sector Become More Export Oriented?

A more competitive and export‐oriented manufacturing sector is an important objective of the Australian Labor Government's economic strategy. In furthering this objective levels of tariff protection have been lowered and foreign exchange markets deregulated. The strategy has been boosted by the competitive gain afforded by depreciation of the Australian dollar in 1985 and 1986. This article offers estimates of the size of Australian manufacturing investment in export‐creating capacity over the period 1980‐81 to 1987‐88. A breakdown of these estimates by individual industries is also provided. Our estimates indicate an improving trend since depreciation of the Australian dollar. However, this improvement has been from a low base. Moreover, the levels of investment in export‐creating capacity have yet to attain the levels prevailing in the early 1980s, and there are worrying signs that the improving trend stalled toward the end of the period. However, the breakdown of our estimates by industry groupings shows positive changes in the pattern of investment in export‐creating capacity. There has been a movement away from resource‐based manufactures and a larger share for elaborately transformed manufactures. This is a favourable shift in emphasis since such technologically sophisticated manufactures have been amongst the fastest growing world markets.