by advances in engineering. Thus, technology was frequently spread through new mining equipment developed in the United States, the United Kingdom, and the Federal Republic of Germany. Using advanced technology developed by Exxon, Shell, and British Petroleum, Australian joint ventures with these and other multinationals drilled some of the world’s deepest wells in the stormy seas off Australia’s northwest coast and in the Bass Strait. Mineral discoveries have made Australia energy rich. Australia is virtually self-sufficient in oil (but not for long—only 50 percent by 1996 to 1997). Australia supplies Japan with vast and increasing quantities of liquefied natural gas, holds 19 percent of the world’s uranium resources, and has dramatically increased its production of black coal to become the world’s largest exporter and fifth-largest producer of coal (from 30 million tons in 1960 to 163 million tons in 1986). In preparation for a decline in oil resources, a joint Japanese-Australian venture in Victoria has built a $300-million brown coal liquefaction pilot plant. However, apart from supplies for domestic use, only a small proportion of Australia’s ore is upgraded in Australia and traded with added value in refined form.
Australia is also richly endowed with agricultural resources, although in a form differing from that in most rural economies. Her wealth resides in her vast areas of land. Much of this land, however, is harsh and relatively infertile. These conditions greatly stimulated the application of local and international technology and science. Mechanization of agriculture and the use of fertilizer and pest control were absolutely vital for productivity. Australian farmers, supported by a large government technical service, became highly adept and flexible in their use of agricultural technology. International developments in machinery and chemicals were adapted rapidly. The Commonwealth Scientific and Industrial Research Organization (CSIRO) made many valuable contributions, such as the extermination of the rabbit and cactus plagues, the discovery of the importance of trace metals, and many incremental contributions, including optimal use of the biological control and growth agents that the multinational companies developed overseas and in Australia.
The dual wealth in mineral and agricultural resources made Australia an early island of Western prosperity in the Pacific. Prosperity and the scarcity of labor, particularly in periods of mining booms, at times catapulted Australian wages to levels well above those in Europe and in the process deprived Australia of the comparative advantage of competitive labor. This, combined with the disadvantages of a small market and long transport lines, operated against the growth of export-oriented manufacturing industries. Australia thus stood in contrast with other areas of the Pacific, where cheap labor was the basis of export and, hence, scale benefits. After World War II, Australia’s policies were dominated by the need to populate her vast territory. Although agriculture was prosperous, it could not employ vast numbers of workers.