Z. Mamedyarov (firstname.lastname@example.org),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya St., Moscow, 117997, Russian Federation;
A. Polivach (email@example.com),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya St., Moscow, 117997, Russian Federation
Australia looks similar to Russia given its large territory, huge natural resources and deep involvement in the international trade of commodities. Despite its substantial dependence on commodity prices, Australia demonstrated uninterrupted economic growth during the last 26 years. This article analyses main causes of such a success. The free floating exchange rate regime, which was introduced 35 years ago, is usually mentioned by Australian sources first of all. They suggest that the ability of AUD to appreciate in time of commodities boom and to depreciate when it is bust provided an offsetting effect was vital for the Australian steady economic growth. However, the same sources often point out that the actual exchange rates of the AUD were rarely strictly consistent with the terms of trade. Given that, the authors argue that the floating exchange rate regime was not the sole factor with an automatic counter-cyclical effect for Australian economy. Significant and far-reaching changes in the monetary and fiscal policies were made in this country to ensure the desired results of the floating exchange rate regime. These changes (free capital movements, inflation targeting, committed reduction of budget deficits, prudent banking supervision etc.) have built confidence among non-resident investors in Australian economy. As a result, in times of falling commodity prices the Government of Australia had much less problems with finding extra resources to counter the GDP contraction. Another outcome was that non-residents became less inclined for quick flee from Australian assets. Finally, the local banks became more sustainable to conduct monetary and fiscal stimulus to the economy in times of crisis. The authors stress the significance of the innovation policy in securing steady development of Australia’s economy. Growing numbers of innovation-related policy measures and initiatives in Australia reflect its government commitment to diversify factors of economic growth. Country’s innovation policy anticipated role is to become a vital new counter-cyclical factor and its major objective is to build a flexible and creative economy of Australia, which is ready for new challenges in the period after the boom in commodity prices. Based on their findings the authors suggest what Australian experience to offset volatility of commodity prices can be of particular use in Russia. These are floating exchange rate regime, free cross-border capital movements, welcome to internationalisation of the local currency, expanding borrowing in the local currency in the off-shore markets, effective banking supervision, consistent and consecutive innovation and R&D policy.
Australia, economic development, exchange rate policy, commodities exports, dependence on international markets, innovation policy, research and development (R&D)
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