A PwC report and associated press release claiming that Australia could “fall from the G20″ has triggered a round of media (e.g. here and here) questioning Australia’s role in the world.
There’s nothing new in the report to worry about. Under the PwC model, Australia drops out of the top 20 countries by GDP on PPP terms (down to 29th), but is still in the top 20 at market exchange rates in 2050. If you’re worried about international clout, the latter is more important. Plus, GDP per person stays high – it’s only because of the development of nations with large populations that the relative rankings change. Australia is, after all, not even in the top 50 countries by population.
Then there is the reality of what “dropping out the G20″ looks like. South Africa remains a member of the G20 despite ranking around 30th in GDP. And there are actually more than 20 countries involved as the European Union is one of the 20.
And why should we even care about G20 membership? Or who believes these sorts of projections anyhow?
But let’s suppose you want to make your nation great and maintain relative rankings in economic clout. How should you go about doing it?
In my last post, I pointed out that having educated intelligent populations is the key ingredient to a nation being “great”. And the PwC response reflects that to an extent, stating that we need to invest “in highly skilled workers and become the knowledge nation”.
However, I don’t expect any miracles (or possibly even change) from national pushes such as that. I have nothing against desires to increase STEM education or have the education system teach skills that might actually be useful, but the evidence that there is benefit from pushes such as this is scant.
What goes unsaid is the most effective approach to increasing economic clout – increasing population. As other large countries develop and close the gap on a per capita basis, increases in population are the simplest way to maintain the global ranking. If Australia could increase its population to 25 per cent above projected 2050 levels, it could be climbing the rankings.
As I mentioned in my last post, the composition of that population is important, so this is not a pure numbers game. But given the mass of educated and intelligent people from around the world who would like to come to countries like Australia, increasing population while maintaining (or even increasing) the human capital of the population is achievable.
So, that points us to the lever of immigration policy. Where do we start?
For one, Australia has a skilled migration program that forms the majority of its immigration intake, although numbers are controlled through measures such as “occupation ceilings”. Why we don’t allow everyone who meets a certain benchmark to enter astounds me. We could simply set some education and occupation benchmarks, and all who meet them can come.
Further, Australia has a few hundred thousand foreign students in our university system at any point. We could easily introduce a program where those who graduate with certain degrees or levels of achievement gain the right to stay. Another source of highly educated, intelligent people.
But what of those talented people who may not have had the same opportunities as those in developed countries? One option would be to introduce a series of IQ tests or some other similar standard. Everyone who meets that level can migrate and benefit from the Australian education system. This could provide a potential avenue to increase the humanitarian intake.
With that flood of educated, intelligent people, a country would gain the scale necessary to be among the largest global economies, while also maintaining a population base conducive to high levels of development.
This option, however, has time-limited availability. In another 20 to 30 years, many of the sources of potential immigrants will be highly developed themselves, so the queues to enter places like Australia could be much shorter. But for the moment, if you are worried about Australia (or any developed country) sliding into irrelevance, there is an easy, accessible solution waiting to be exploited.