Manufacturing News

Manufacturing could grow the complexity of Australian exports

complexity

The Advanced Manufacturing Growth Centre (AMGC) has advocated for Australia’s potential to grow the complexity of its exports by co-investing in local manufacturing excellence, in the light of a new report. 

Recent data from Harvard Business School has revealed that Australia’s Economic Complexity Index (ECI) rating has slid to 91st, down eight positions in ten years, placing Australia in the bottom third in its ability to manufacture and export. 

The ECI brings Australia’s reliance on exporting low complexity items such as commodities into sharp focus, and highlights the opportunity to improve the complexity of items. This could be done by adding value to natural resources or making more complex items in areas of strength. 

The report states that “Australia is less complex than expected for its income level.” It goes on to say that “Australia has seen a troubling pattern of export growth, with the largest contribution to export growth coming from low and moderate complexity products, particularly Ores, slag and ash and ICT products.” 

AMGC managing director, Dr Jens Goennemann, said the latest ECI report is a damning reflection of Australia’s reliance on raw commodities trade – or luck. 

“If these ECI results were reflected in the elite sporting world, we would be mortified!” Goennemann said. 

“Why is it that we accept such a poor result in our global complexity ratings when it is directly tied to our future prosperity? At some point the ‘Lucky Country’ will run out of luck; now is the time for us to act and begin to increase the complexity of the things we manufacture and export.” 

Harvard’s report states that “Australia has not yet started the traditional process of structural transformation. A key source of economic growth, this process reallocates economic activity from low to high productivity sectors. It broadly moves activities out of agriculture into textiles, followed by electronics and/or machinery manufacturing.” 

Raising the nation’s manufacturing profile requires long-term policy and co-investment from the government as well as private sources. Multiple micro-investments matched dollar-for-dollar by industry participants incentivises Australia’s largely SME-based manufacturing companies to innovate and scale. 

Investment delivers the necessary means to up-skill the existing workforce, hire new employees, advance much-needed technology and deliver commercially successful, high-value products to domestic and international markets. 

To meet this national challenge, AMGC has successfully managed over $57 million in co-investments directly to Australia’s manufacturing industry and encouraged manufacturers to scale and export. AMGC’s targeted co-investments into 141 projects – all with a dedicated research partner to help resolve specific challenges and lift product complexity – are expected to generate 4,000 new, highly skilled, and well-paid roles and on completion will return $1.6 billion to the economy. 

To read Harvard’s ECI report, click here

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