The globalisation of the Australian passenger motor vehicle industry : lessons for other countries

Protectionism played a pivotal role in establishing and nurturing the growth of the Australian passenger motor vehicle industry over a large part of the 20th century. This constituted an integral element of an overall strategy aimed at stimulating manufacturing activity due to the extensive linkage effects that exist between these activities. However, in the long run, protectionism simultaneously led to an inefficient inward looking industry which could not compete against the relatively more efficient and hence export focused international passenger motor vehicle industry. This threatened not only the viability of motor vehicle production in Australia, but also other sectors of the economy, such as the components sector, that depended upon it. Consequently, the authorities reversed the stance of trade policy by engaging with trade liberalisation, which in combination with industry specific assistance measures, were to 'spearhead' efforts to improve international competitiveness. The central objective was not only to stimulate export growth, but critically also encourage the multinational parents of the Australian subsidiaries to use Australian as an export base and thereby underpin sustained export growth. This was largely successful, although numerous costs appeared in the process such as heightened vulnerability to the fluctuations of the international business cycle, a prolonged period of falling employment levels and a deterioration in the balance of trade in motor vehicles.