ACROSS THE GREAT DIVIDE: THE ECONOMY OF THE INLAND CORRIDOR

Lionel Frost

No 14-07, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: In current debates about regional Australia, many observers point to a gap in incomes and access to services between Australia’s capital cities and the rest of the nation. Supporters of this view tend to see government intervention as necessary to reverse the declining fortunes of regions and encourage industries to relocate away from congested capital cities. An alternative view is that regional Australia has become differentiated, which suggests that more flexible government intervention, targeting regions that are capable of driving growth in local economies, is warranted. This paper considers the ways in which a historical perspective might shed light on this debate. An overview of the economic history of the Inland Corridor in the 19th and 20th centuries reveals complex patterns of conditions that varied across space and over time. A dense network of small towns, established when transport and manufacturing technologies were simple, provided a connection between primary producers and external markets. After World War I, technological and global forces weakened the traditional link between farm output and economic activity and left country towns vulnerable to decline. None of these trends is explained adequately by the ‘divide’ that contemporary observers perceived between politically powerful, parasitic capital cities and their resource-starved hinterlands. This suggests that it is more appropriate to see the regional Australia of today as an evolving system of conditions, with some regions diversifying and responding to new economic opportunities more effectively than others, rather than a sector that is in general decline.

Pages: 20 pages
Date: 2007
New Economics Papers: this item is included in nep-his and nep-ure
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