Industrialization in the cities was the only alternative: Australia changed from the “emptiest” continent to one with highly urbanized coastal areas.

Industrialization Policies

The Australian government pursued a two-pronged policy that began in the 1930s—industrialization by technology import in the private sector and creation of scientific manpower in the public sector. Technology import was encouraged by very liberal policies. Foreign capital and skill were needed and welcomed; no constraints on the nature of the industry or export obligations were imposed. Because of the small and isolated market, protection by import quotas and, later, by substantial tariffs was necessary. The result was the rapid establishment of an apparently balanced and highly diversified structure of import replacement industries in the 1930s and after World War II. The government encouraged local production by multinationals, particularly in the more technology-intensive areas of that era—transport, chemicals, petrochemicals, and early electronics—since local knowledge in these fields was not available.

The second, longer-term prong of government policy related to the creation of indigenous science. The small, new industries had neither the scale nor the resources to carry out their own R&D, nor could they have competed in volume or quality with the vast R&D establishments of multinationals that could supply technology on a marginal cost basis. The government therefore created science through the only means it could use to attain minimum viable scale—by concentrating scientific manpower in the universities and, even more so, in a large, steadily growing government establishment, the CSIRO,5 and in the departments of agriculture and defense. This reflected the spirit of the time and the Oxbridge tradition that still dominated Australia—that science, left to itself, would automatically produce indigenous cutting-edge technology and industries. However, this process did not occur.

Essentially, two streams of science developed. The technology-intensive private sector became locked into the international network of the technology-generating companies, and government scientists were locked into the international publication race, largely in pure science. The smaller companies gained knowledge by diffusion and technical service from the larger organizations. The steel industry grew rapidly to become the dominant industry and established its own R&D. But the majority of the science-intensive industries were subsidiaries of multinationals, which provided an invaluable service to the country. Within two decades, from 1950 to 1970, they introduced modern manufacturing systems and became veritable universities of technology, marketing, and management.

This sequence of events was particularly true of the chemical industry, the one modern industry that was vertically integrated and had a sufficient



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