Between market and state: the evolution of Australia's economic statecraft

Abstract

For nearly four decades, Australia's domestic and international economic policies were anchored by the promotion of open, transparent, and rules-based market exchange. This was considered the best way to increase both Australia's prosperity and its security, and that belief guided Canberra's approach to economic statecraft. However, emerging concerns about the vulnerabilities arising from economic interdependence, and the increasingly blurry line between economics and security amid great power rivalry between China and the United States, have placed Australian policy orthodoxy in a difficult position. In this paper, we investigate how these dynamics are shaping change and continuity in Australia's economic statecraft, and in doing so offer three contributions. First, to advance the emerging comparative economic statecraft research agenda, we propose a modified concept of economic statecraft that captures a wider range of activities undertaken by non-great powers and a distinction between state-based and market-based actions which allows for within- and cross-case comparisons. Second, empirically, we sketch the historical evolution of Australia's approach and examine three salient domains in which it has recently pursued new economic statecraft initiatives. Finally, in evaluating recent change and continuity, our third contribution is to identify new variables that may illuminate the conditions under which states adapt their prevailing approach to economic statecraft.