as precious metals and spices, and no case for permanent settlement because the american continent offered everything we could offer and was much closer. it was only a couple of coincidences that caused the british government to take the extraordinary decision to establish a settlement at a place only once visited, and at the other end of the earth. this isolation continued to disadvantage us economically despite our abundant resources and relatively small population. transport costs were enormous and delays immense. it took five months to reach england by sail, and even when steam replaced sail and modern ocean liners replaced steam, it still took about four weeks for the journey. air travel has shortened it to about 24 hours, but it took ages for us to forget our old attitudes. we were accustomed to an overseas trip, even a business trip, being a long drawn - out affair. we had occasions before air travel when australian prime ministers would spend more than a year at a time in london. going over old reserve bank records of the 1960s and 1970s, i noticed earlier governors going on business trips that lasted seven weeks. today a one - week business trip is a long one. modern transport and communications have enormously reduced the tyranny of distance, even if it has made our lives more hurried. the other factor that has reduced the tyranny of distance for us is the growth of asia. the atlantic ocean, with europe and america on each side, is no longer the undisputed centre of world economic activity. asia and the pacific rim, while not as rich as the atlantic, are clearly the area of fastest growth and largest population. this has presented enormous opportunities for australia and, by and large, we have been adaptable enough to seize the chances offered. but it still has not completely dispelled the tyranny of distance. for example, many international companies headquartered in the united states or europe still find it more convenient to put their asian headquarters in singapore, hong kong or tokyo because they are only one flight away from headquarters, whereas major australian cities are two flights away. we should also remember that australia ’ s capital cities are in its southern half, while the capitals of our big trading partners - tokyo, seoul and beijing - are in northern asia. it would be easier if we were talking about darwin and jakarta, but that is not where the real action is. ( b ) geography is destiny it is widely believed that geography determines whether a country will be rich or poor. this is because most of the world ’ s poor

? more controversial were the reductions in tariffs that have occurred over the past thirty years, but here again there are few voices that would wish to turn the clock back. or would we wish to go back to the immigration policy we had during the first half of the twentieth century? the list could go on and on. it is the nature of a first - rate democratic country that it will constantly be involved in economic reforms, or at least constant updating of its economic framework, and that the changes involved will generate political uncertainty and resistance. but that is the price of achieving and maintaining a first - rate set of institutions, and that is an essential condition for our continuing economic prosperity. bibiliography acemoglu, d., johnson, s. and robinson, j., “ reversal of fortune : geography and institutions in the making of the modern world income distribution ”, quarterly journal of economics, november 2002. auty, r., “ the political economy of resource - driven growth ”, european economic review, 45, 2001. baldwin, r. e., “ openness and growth : what ’ s the empirical relationship? ”, nber working paper 9578, 2003. blainey, g., the tyranny of distance, macmillan, revised edition 2001. dowrick, s., “ openness and growth ”, in international integration of the australian economy, reserve bank of australia, july 1994. dowrick ( 1994 ), baldwin ( 2003 ). gylfason, t., “ institutions and economic performance ”, cesifo dice report 2 / 2004. mauro, p., “ corruption and growth ”, quarterly journal of economics, vol. 110, no. 3, 1995. sachs, j. and warner, a., “ the curse of natural resources ”, european economic review, may 2001. sachs, j., “ institutions matter, but not for everything ”, finance and development, june 2003. stoeckel, a., minerals : our wealth down under, canberra, centre for international economics, 1994. wright, g. and czelusta, j., “ the myth of the resource curse ”, challenge, march / april 2004.