This book is an introduction to Australia’s economic history in the twentieth century, taking as its main theme the integration of the Australian economy in the global economy. It focuses on Australian external trade (imports and exports of goods and services), the inflow and outflow of capital (foreign investment) and the influx of permanent settlers from abroad (immigration). Each of these flows across Australia’s borders formed – and continues to form – part of the nation’s international integration. Each can be viewed separately in time, but in reality they interact closely, and together have defined Australia’s relationship with the global economy. This relationship changed and developed in some ways, and remained constant in others, over the first century after Federation. Each of these international economic connections was the subject of public policy – both separately and as it interacted with others. Of course, international flows of trade, capital and people also impacted on the performance and development of the domestic economy, and ultimately on Australian living standards.

This chapter introduces the nature of these flows and the themes of the book. It begins by examining two fundamental features of the Australian economy in its international context: its size and openness. It then considers how integration with the international economy contributed to Australia’s economic growth, both through international demand for the products that Australian producers could export to the world and through the international supply of two factors of production: capital and labour. The third part of this chapter introduces the major contours in the history of public policies that shaped the international economic flows: tariff policy, wages policy and immigration policy. The chapter concludes with a brief discussion about the development of government management of the Australian economy, with particular emphasis on managing Australia’s balance of payments. Subsequent chapters and their themes are outlined at the end of this chapter.