Unlocking Northern Australia's potential: The role of economic complexity in regional growth

Australia’s relatively simple economy poses significant challenges for its future competitiveness, resilience, and sustainability, especially in Northern Australia. To address these challenges, the North needs systems-level approaches that helps develop new economic know-how, build global networks, and create attractive new places for people to live. Failure to do so means we could miss the next boom.

Northern Australia holds immense potential for economic development and sustainable population growth. However, it has not yet seized the opportunity to diversify the economy and build larger and more sustainable communities.

Growth in the North can be achieved by developing unique comparative advantages and specializations that help ensure these regions thrive even during periods of change and disruption. These approaches will help drive the development of resilient and competitive economies.

Increasing economic complexity, which measures the know-how embedded in an economy, is critical to creating this growth. According to Harvard University’s Economic Complexity Index, Australia has seen a significant decline with its ranking plummeting from 55th in 1995 to 102nd in 2022. The effects of this downward trend mean the country’s ability to diversify into new products and industries is limited, resulting in a less resilient economy and fewer growth opportunities. These conditions are even more challenging in the North given its smaller population base, which can lead to lower levels of economic complexity.

Act now to seize the next boom 

The next generation of major projects in Northern Australia will not be bound by the location of minerals or liquid natural gas. Instead, many are likely to be focused on large scale renewables and green hydrogen production. While the North is well placed to host such projects, there are other global regions that are also competitively placed to draw this significant investment.

 

 

Thinking globally but acting locally is critical to developing the North

Achieving sustainable economic development in Northern Australia requires a sustained, coordinated, and targeted effort from diverse stakeholders. To address these challenges, Hatch has developed a systems-based response cemented in three pillars for growth to guide economic development:

Focusing on developing local economies that produce higher-value goods and services will help create local jobs, attract investment, foster innovation, and build resilient communities. Significant initiatives at federal, state, and local levels—such as infrastructure development, skills training, entrepreneurship support, and First Nations enterprises—are designed to drive such economic development. To maximize their impact, it’s crucial to understand the local know-how they interact with, identify potential roadblocks, and leverage opportunities through both top-down and bottom-up approaches.

 

 

Bottom-up: growing your existing know-how

The Mid West Development Commission’s Mid West Advanced Manufacturing Preliminary Study aims to help local manufacturers seize new opportunities by using advanced manufacturing techniques. This involves engaging deeply with the industry to understand their capabilities, future demand, and how existing know-how can pivot to meet new market requirements. This will help government target its support to develop new skills and capabilities in the Mid West manufacturing sector and take advantage of the range of major projects slated for the region.  

Top-down: importing know-how to your region

In contrast, the Government of Western Australia’s rail car manufacturing project in the Pilbara region seeks to transform the city of Karratha into a rail manufacturing and innovation hub. This strategy involves importing know-how through partnerships with companies like Gemco and CORE, supported by state government funding, to develop the necessary expertise and infrastructure. 

What’s next? 

When we presented this approach at the Developing Northern Australia conference, the feedback from industry and government stakeholders was overwhelmingly positive. They recognized the need for a systems-wide approach to economic growth and diversification. Hatch is proud to champion local strategy and impact with global expertise, acting as a benevolent third party that bridges corporate, government, infrastructure, and community stakeholders to drive transformation.  

We can make the complex seem simple. Let us help.