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Available for comment: John Edwards
In a new Lowy Institute Paper, entitled Overhaul: How Australia can adapt to a changing world economy (Opens in new window), former Reserve Bank board member Dr John Edwards (Opens in new window) argues that three global forces will reshape the world economy over the next 25 years: the competition between the United States and China, the evolution of the rules-based economic order, and the rise of artificial intelligence.
“All three have altered, or will alter, the world economy in new ways,” writes Dr Edwards. “All require an overhaul of Australian economic statecraft to guide the nation through big changes in how the world works.”
Dr Edwards says that China and the United States will likely remain the world’s two dominant economies over the next 25 years, together accounting for about 40 per cent of global output.
“For Australia, which has a security relationship with the United States and an economic relationship with China, their vigorous competition and intermittent antagonism is mostly a source of anxiety,” Dr Edwards writes.
“Yet for Australia, US–China competition is a gift. Far better to have two superpowers in balance than one hegemonic power.”
The Paper also analyses predictions about the impact of artificial intelligence on the global economy, particularly potential productivity gains.
Dr Edwards argues Australia needs to plan for a wide range of outcomes from the AI boom, rather than bet on any single forecast.
Dr Edwards says, on current projections, Australia is on track to remain a top-15 global economy, slipping only slightly from the world’s 12th biggest economy today to 13th by 2050.
But he argues success will depend on Australia taking greater responsibility for maintaining the rules-based global trading system and preparing its services and manufacturing sectors for whatever form AI disruption takes.
“Australia will not do well in a world where the two superpowers are antagonistic,” he writes. “The simple premise of its economic statecraft must be to do what it can to help avoid that outcome.”
Overhaul: How Australia can adapt to a changing world economy is published by Penguin Random House Australia. It is available in bookstores and online (Opens in new window) now.
ABOUT THE AUTHOR
John Edwards is a Nonresident Fellow at the Lowy Institute, Adjunct Professor at the John Curtin Institute of Public Policy at Curtin University, and the author of six nonfiction books. He has been a member of the board of the Reserve Bank of Australia and Chief Economist for HSBC Bank in Australia and New Zealand. He was also a senior economic adviser to Treasurer and then Prime Minister Paul Keating.
ABOUT THE LOWY INSTITUTE PAPERS
The Lowy Institute Papers (Opens in new window) are the Lowy Institute’s flagship publications. They are peer-reviewed essays and research papers on key international issues affecting Australia and the world. Recent Lowy Institute Papers include Inflection Point: Biden, Trump, and the Future World Order by Thomas Wright, and The Myth of the Asian Century by Bilahari Kausikan.
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Andrew Griffits
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Available for comment
John Edwards
Nonresident Fellow
John Edwards is a Nonresident Fellow at the Lowy Institute and an Adjunct Professor with the John Curtin Institute of Public Policy at Curtin University.