Australian trade and investment liberalisation: analysis of the economic and distributional impacts on Victoria

Prepared for the Victorian Department of Economic Development, Jobs, Transport & Resources
Economic indicators Economic development International trade Foreign investment Economics Victoria

Over the past three decades, Australia has undertaken a series of microeconomic reforms designed to improve the efficiency of the Australian economy. Notable reforms have included floating the dollar, deregulation of financial markets, broadening of the tax base and corporatisation of government businesses.

An integral part of the reform agenda has been the sustained reduction of trade and investment barriers. Australia has reduced both formal and informal barriers to trade and investment through unilateral, bilateral and multilateral reform processes.

This report estimates how the trade and investment liberalisation undertaken by Australia over the 1986–2016 period has impacted the Victorian economy, as well as how the incidence of these reforms varies across different Victorian households.

Measuring the impact of trade and investment reform over such a long period is a challenging task. Given the technical difficulties involved, where a value is uncertain, a conservative estimate of the benefits of reform has been chosen. Moreover, this report only examines the benefits of reducing Australian trade and investment barriers, and excludes any benefits to Australia from liberalisation undertaken by Australia’s trading partners. As a result, the estimates reported in this paper can be considered a lower bound on the gains from trade and investment liberalisation over the 1986–2016 period.

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