A Succession of Negative Shocks
A Succession of Negative Shocks
This chapter examines how the First World War seriously disrupted the economy, and was to be but the first of a succession of adverse external influences on national prosperity lasting a quarter of a century. The breakdown of the international economic order beginning in the 1920s and culminating in the world depression of the 1930s posed major challenges to Australia. These external shocks emanated from the drastically changed international economic environment Australia faced in the three decades after 1914. Prosperity was also dependent on continued foreign investment to augment domestic savings and hence growth. The principal policy response to this sequence of negative shocks was to promote industrialization behind rising levels of protection and accompanied by more centralized and regulated modes of wage determination.
Keywords: First World War, national prosperity, international economic order, world depression, Australia, industrialization, foreign investment, domestic savings
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