Editing Economy of Australia (section)

===Australia's balance of payments===
[[File:ABS-5302.0-BalancePaymentsInternationalInvestmentPositionAustralia-BalancePaymentsSummary-Original Quarter-CurrentAccount-A3533808F.svg|thumb|250px|Australia's current account (in $M) since 1959]]
[[File:ABS-5302.0-BalancePaymentsInternationalInvestmentPositionAustralia-SelectedInternationalAccountsRatios-SeasonallyAdjusted Quarter-CurrentAccountRatiosGdp-A3572038X.svg|thumb|250px|Australia's current account as a proportion of GDP since 1959]]

{{Main|Balance of payments of Australia}}

In trade terms, the Australian economy has had persistently large current account deficits (CADs) for more than 50 years.<ref name="downwonder">{{cite news|url=http://www.economist.com/node/8931798?story_id=8931798|title=The Australian economy: Downwonder The "lucky country" may not be so for too much longer|newspaper=The Economist|date=29 March 2007|access-date=11 June 2011}}</ref><ref>[http://www.exonimmigration.com/future-of-australian-economy/ ''"Future of Australian Economy"''] by Exon</ref> One of the factors that undermines [[balance of payments]] is Australia's export base, making it highly vulnerable to the volatility in the prices of commodity goods. In addition, due to a [[History of Australia|colonial heritage]] a lot of companies operating in Australia are foreign-owned and, as a result, Australia's net income outlay between it and the rest of the world is always negative; this results in persistent current account deficits even when there is a positive export.

Dependent upon commodities, the Australian government endeavoured to redevelop the Australian manufacturing sector. This initiative, also known as microeconomic reform, helped Australian manufacturing to grow from 10.1% in 1983–1984 to 17.8% in 2003–2004.<ref>Leading Edge, R: "Australia in the Global Economy", ''Tim Dixon and John O'Mahomy'', page 133.</ref>

There are other factors that have contributed to the extremely high current account deficit in Australia such as lack of international competitiveness.<ref>{{cite web|url=http://www.iadb.org/regions/re1/econ/caballero_cowan_kearns.pdf|title=Fear of Sudden Stops: Lessons from Australia and Chile|publisher=iadb.org|access-date=28 May 2012|archive-url=https://web.archive.org/web/20130518225438/http://www.iadb.org/regions/re1/econ/caballero_cowan_kearns.pdf|archive-date=18 May 2013|url-status=dead}}</ref>

However, as Australia's CAD is almost entirely generated by the private sector, as outlined in Professor John Pitchford's 'Consenting Adults Thesis' in the early 1990s, there is an argument that the CAD is not a significant issue. Historically, Australia has relied on overseas capital to fill the gap between domestic savings and investment, and many of these investment opportunities could not have been pursued if Australia did not have access to foreign savings. This suggests that Australia's apparently low savings level and CAD are not necessarily a significant problem. As long as the investment that is being funded by overseas capital inflow generates sufficient returns to pay for the servicing costs in the future, the increase in foreign liabilities can be viewed as sustainable in the longer term.<ref>Tim Dixon & James O'Mahoney, Australia in the Global Economy 2010, Leading Edge Education, Pearson Australia</ref>