Australians have reason to be optimists, that’s a fact
Our resident Stats Guy argues that Australians should be more optimistic about the state of our economy.
As a public speaker and demographic consultant, I speak to dozens of people in Australia every week about the state of the economy and the general mood in their industry.
There is quite a bit of pessimism around.
The prolonged skills shortage, the housing affordability crisis, and geopolitical concerns affecting the economy are the biggest issues.
Today we go back to the basics and explore where in the world you would want to position yourself, your business and your investments right now. Spoiler alert: You will be more optimistic about Australia after reading this column.
Let’s start with a full world map. This world map starts with 216 countries and territories. The question of how many countries (or continents for that matter) exist is terribly divisive and deserves a standalone column soon.
When you decide where to invest your money, time, energy, or career you ask a similar set of questions to eliminate more and more countries before arriving at a relatively small selection of nations that you would consider.
In practice, this is usually an unconscious process that we follow.
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Today we shall be a bit more structured about things.
To kick things off, we will want to invest in a country projected to see at least a bit of population growth. Declining nations have ageing populations, shrinking markets, and face serious structural challenges that can lead to political unrest as well (see my column about the German state of Thuringia). Let’s keep it simple and omit all countries with negative population growth.
We are left with the 158 countries that are projected to grow in the coming decade. We want our country to be relatively highly developed. We then eliminate all nations that have a lower developmental standard than Samoa (0.7 on the Human Development Index).
We are already down to 63 countries. A certain level of democratic freedom would be nice. Let’s pick nations that score at least a six on the Democracy Index. That means we want to live in a place that is more democratic than Bangladesh. Countries like Papua New Guinea and Sri Lanka rank just above six, whereas Australia, Canada, and Germany rank at around 8.7. The most democratic country in the world, Norway, scores an impressive 9.8 on the Democracy Index.
Our desire for at least a rudimentary democracy has shrunk our world down to 36 countries.
We are also after plain old economic prosperity. If an economy is too small, our opportunities are severely limited. How big is big enough? Hard to say. I think a country’s economy should be at least as big as the economy of the Gold Coast. Let’s delete all countries with a GDP smaller than $US30 billion from our map. Now, 27 countries still make the cut.
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We want to ensure that we get a fair share of the economic pie in our country of choice. GDP per capita is a good enough proxy for this quick estimate. We want to be richer than the average Panamanian and set our filter to $US20,000 per capita. This narrows our selection to 16 nations.
Do we want our country to be of a specific size? Similar to the size of the economy, a certain level of population size is needed to ensure that we find enough people that share our niche interests, that niche markets are sizeable enough, that we find a decent variety of cuisines and cultures.
We are staying on the conservative side and will only delete countries with a population below 1.4 million people – a country should at least be the size of Adelaide, right? This filter only deletes Luxembourg. If we wanted our country to be more populous than Sydney (5.5 million) we could’ve kicked out Norway, Ireland, and New Zealand too.
I decided against that move because our Kiwi friends are too often left off world maps and I wanted them to feel loved this one time.
After applying six simple filters, we arrive at 15 out of 216 nations that we would consider for now. I played around with different filter settings and other variables. Whatever I set these filters to, Australia ended up in the top 10 countries.
Looking at the remaining 15 countries, could we further filter out some countries? We might want to consider scenarios regarding climate change, global trade interruptions, or wars.
Considering the current conflict and geopolitical environment, moving to Israel isn’t for the fainthearted.
Many commentators expect a global increase in unmanaged population flows. As areas become inhabitable people are forced to move, as wars rage large populations are displaced, and as youth unemployment is high in the poorest nations young people cross borders in search of a better life.
The unmanaged population flows across the Mediterranean Sea over the past decade were likely be just the beginning of an ongoing trend. European nations will continue to deal with the aftermath.
New Zealand, Australia, Canada and the US are geographically isolated and can continue to manage their population flows – a rare privilege.
All European countries should be viewed in a broader EU-wide context. The region as a whole is ageing, faces migration challenges, has the potential for a Russian-induced wider conflict, suffers from rising energy costs and must urgently reinvent their business model.
When filtering countries by broad demographic and economic variables the Five Eyes nations (US, Canada, UK, Australia, NZ) always end up on top. These are also the nations that international migrants list as their preferred destinations.
While you might be concerned about our future prosperity in Australia, in an international comparison, we remain the place to be.
Demographer Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His podcast, Demographics Decoded, explores the world through the demographic lens. Follow Simon on Twitter (X), Facebook, LinkedIn for daily data insights in short format.
