Published daily by the Lowy Institute

A lesser Australia

If left unchecked, a decline in Australia’s influence will continue quite rapidly over the coming decade.

City2Surf running event, Sydney (Photo: shotmeshotyou/Flickr)
City2Surf running event, Sydney (Photo: shotmeshotyou/Flickr)

Power is the most important facet of international relations. Notwithstanding this centrality, measuring power is a fraught business.

Conventional aggregate measures, such as population, GDP, defence spending, and military capabilities, are the most common proxies. Recently, however, scholars have attempted to add less material facets of power to the conversation. Joseph Nye’s notion of soft power – the ability to attract people to do what you want them to, rather than coerce them – is perhaps the most noted example.

Much of the conversation about Asia’s return to prominence on the global stage focuses on these big measures. The region’s share of global wealth, the number of people in its emerging middle class, and its rapidly growing defence budgets are commonly cited figures. Asia is important to the world because it represents a bigger slice of the aggregate global power pie.

But these indicators are rather blunt. China may be the world’s largest economy on purchasing power parity (PPP) measures, but on per capita terms it remains ranked between 70th and 80th internationally. More importantly, the big measures don’t grapple with power’s most important attribute, its relational qualities.

The Lowy Institute’s Asia Power Index recognises this problem and is an excellent multidimensional tool that engages with the complex reality of power in contemporary Asia. While the Index confirms the basic fact that China and the US are by far the most powerful countries in the region, which we already knew, its interest lies in showing the qualities of that power, and the way lesser countries are positioned.

At first glance, the Index also confirms something Australian politicians and policymakers have long known, that the country has an international weight greater than one might expect for a nation of 24 million people. “Punching above our weight” may be the lazy visual, but the way Australia has deployed its wealth and uses networks to leverage influence means there is more than a little truth to the heft of the country’s international boxing glove.

But the Index illustrates another less well-recognised truth: that Australia’s influence in Asia and the world is in decline. If left unchecked, this decline will continue quite rapidly over the coming decade.

The Index ranks Australia sixth in the region. By 2030, its ranking will have slipped relative to other regional powers on some important measures, particularly in the economic realm.* And it is not the first time this point has been made on a prominent stage. An impossible-to-miss visual representation in the 2017 Foreign Policy White Paper shows China, the US, and even Indonesia continuing to balloon in economic size, while Australia barely moves.

Australia faces a long-term structural problem. Since European settlement, the world has been shaped by the great economic divergence. That two-centuries period has allowed a small number of societies with technological advantages to break the link between scale and power. Up until that point, power and influence were directly correlated to a country’s territorial and demographic size, essentially because productivity around the world was roughly the same.

Two centuries on, the globalisation of technological sophistication and normative changes mean that once again global productivity is being slowly homogenised. The hard link between scale and power is reasserting itself.

It is this tectonic trend which presents a profound challenge for Australia, a country which until now has been extremely fortunate. Asia is home to more than half of humanity, and is going to be home to world power over the coming decades.

But it is also going to be the place where increasing power leads to increased contests over territory and influence, as well as rules and authority. 

In the past, Australia has been fortunate to be on the right side of the great divergence, and also to share close affinities to the countries that set the rules of the international game. Now Australia faces the hard choice between simply shrinking in relevance or taking steps to offset its declining place in the regional order.

To strengthen its position, Australia will need to spend a considerably higher share of its national wealth on extending its influence abroad. That means not only a bigger defence force and larger international policy machinery, including more embassies, consulates, and foreign service officers, but also a more internationalised bureaucratic capacity.

All of this, however, will only be made possible by two changes much harder to imagine; a vastly larger population and more shrewd and far-sighted political leadership.

The Asia Power Index is a welcome addition to the debate about international policy. But it also serves as a stark reminder that Australia is on a downward international slide.

The challenge for the country is to recognise this and make positive choices in response. Complacency has been a worryingly prevalent national attribute in recent years.


* This sentence has been amended on the economic measure following an error made in production. 

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