Australians’ prowess in two key areas – innovation and skills – continue to underpin the country’s strong investment track record, according the latest edition of the Why Australia Benchmark Report 2019.
Published in April, the report highlights Australia’s world-class scientific and academic institutions, the country’s strong commitment to research and development (R&D), and the resourcefulness of Australia’s highly educated, multicultural and multilingual workforce.
Australia hits Top 10 rankings in key areas
The 2019 Benchmark Report highlights how Australia is currently outcompeting peer economies in critical metrics of competitiveness. In global innovation rankings, for example, the report places Australia third in terms of human capital and research, and fourth for information and communication technologies.
Drawing data from multiple sources, the report illuminates some of the root causes of Australia’s success. For example, Australia ranks third in the Human Development Index compiled by the United Nations Development Programme in its Human Development Report 2018. This ranking measures a country’s human, physical and educational wellbeing based on years of schooling, life expectancy and income.
Australia also scores eighth in the world for workforce diversity, which includes gender, ethnicity, religion and sexual orientation, according to World Economic Forum rankings.
Scientific research is also a source of economic strength. With just 0.3 percent of the world’s population, Australia contributed over four percent of world research publications in 2017. Today, the country ranks tenth, globally, in terms of the overall quality and quantity of its scientific publications.
Tech spirit sparks innovation
Australia’s reputation for innovation is partly due to a first-rate technology sector. This technical innovation provides a continuous boost to Australia’s services-based industries and organisations. In just a few years, the country has established world-leading capabilities in block chain and quantum computing, for example.
Australia’s start-up ecosystem is robust and fast-growing across multiple sectors – especially in export markets where Australian companies are highly competitive. Local companies have developed strong competencies in agtech, edtech, and foodtech, as well as fintech and medtech.
Australia is also highly receptive to global collaboration. International organisations have numerous opportunities to collaborate with Australian research institutions. In global terms, it is relatively easy for overseas companies to invest in Australian solutions or incorporate them into existing products. Establishing joint ventures that take fresh ideas onto global markets is also relatively straightforward.
To identify Australia’s core strengths, the Benchmark Report publishes comparative rankings across multiple fields. Together, these rankings show how Australia’s powers of innovation compare to similar, developed economies, especially member countries of the Organisation for Economic Cooperation and Development (OECD).
For example, the UK’s Economist Intelligence Unit has ranked Australia as the economy ‘most prepared for technological change’, and the ‘most attractive place for tech companies to invest in the forecast period 2018–22’. The US-based Global Entrepreneurship and Development Institute ranked Australia fifth for global entrepreneurship.
Australia’s academic credentials are also standouts in global rankings. Approximately 43 percent of Australia’s workforce has a tertiary qualification. Australia is home to six of the world’s top 100 universities, according to one Asia-based academic ranking, placing the country immediately after the US and UK in the global academic pecking order.1
Academic prowess translates into research achievements. According to the CSIRO, Australia ranks in the top one percent of countries for hosting scientific research institutions in 14 out of 22 fields. In 19 of those fields, Australia’s scientific research publications averaged a relative impact of at least 20 percent above the global average.
Australia’s seven strongest categories of published research – multidisciplinary, space science, physics, computer science, clinical medicine, engineering and environment/ecology – reflect the country’s diverse research interests.2 Australia’s top global ranking for inbound student mobility also gives Australian businesses an in-built advantage in attracting young, global talent.
Academic prowess leads to commercial innovation
Key to Australia’s innovation strength is the ability to translate high academic performance into valuable research and commercial innovation.
The Benchmark Report reveals that Australia invests approximately US$21 billion on research and development (R&D) each year, calculated on a purchasing power-parity basis. The nation’s R&D expenditure places it among the world’s leading innovators, including the USA, Japan, France, Germany and South Korea.
Since 2000, Australia’s gross R&D expenditure has increased, on average, by around 6.8 percent per year. This is well in advance of the 4.8 percent average for OECD countries, as reported by the OECD itself.
Australia’s commercial sector leads the way. Business expenditure on R&D accounts for 52 percent of Australia’s total R&D expenditure. Expanding from A$5 billion in 2000–01 to approximately A$17 billion in 2015–16, Australia’s commercial sector has increased R&D spending by a truly impressive eight percent per year over a 15-year period.
The end result is Australia’s top entrepreneurship ranking in Asia. According to the 2018 Global Entrepreneurship Index, Australia’s entrepreneurship now ranks ahead of Hong Kong (13th globally), Taiwan (18th), South Korea (24th), Singapore (27th), Japan (28th), China (43rd), India (68th) and Indonesia (94th). Australia also makes it into the top five, globally.
Another vital source of strength is Australia’s diverse and highly-educated workforce. Today’s employees are well-qualified, multicultural and multilingual. Collectively, they have the smarts and skills to drive innovation and grow trade.
Today, almost nine out of ten of Australians work in the services sector, where qualifications requirements are common. Over 40 percent – or five million people – work in sectors where tertiary education is standard for many employees. These include: education and training; professional, scientific and technical services; financial and insurance services; health care and social assistance; public administration and safety; and information media and telecommunications.
The Benchmark Report points out that among developed economies, Australia has the third-highest number of researchers in the government and higher education sector per thousand workers.3 With 11.7 doctorate holders per thousand people in the working-age population4, the Australian workforce is also in possession of an unusually large number of graduate degrees.
Australia’s workforce is also highly diverse, and this appears to stimulate trade and transnational investment. Over 30 percent of Australia’s 12.6 million-strong employed persons were born overseas. Having risen from 23 percent in 2000, this foreign-born ratio is now the third highest among developed countries.
Today, almost 3.2 million (one in seven) Australians speak an Asian language. More than 900,000 Australians speak a Chinese language and 800,000 speak a South Asian language. In addition, approximately 1.4 million Australians speak a European language other than English.5 This means Australian businesses can access an exceptional breadth of language skills and cultural insights, endowing Australia with a competitive edge in global markets.6
1 Ibid, Chart: Top Ranking Academic Institutions, page 32
2 Why Australia, Benchmark Report 2019, Chart: Relative Impacts of Australian Scientific Publications by Research Field – 2013–17, page 31
3 Department of Industry, Innovation and Science, Australian Innovation System Report 2017, Chapter 6: Policy Considerations For Innovation-Led Growth, page 87. OECD+ includes all 35 member countries of the OECD, as well China, Taiwan and Singapore (where data is available)
4 Ibid, page 87
5 Ibid, Chart: a Multilingual Population, page 35
6 BMR 2019, Chart: Culturally Diverse Labour Force, page 33