The Australian Treasury yesterday announced the winner of its inaugural essay competition, and the award went to University of Queensland Economics student Elizabeth Baldwin, who incidentally also won the RBA/Economic Society of Australia essay prize last year. The essay question was:

What do you believe will be most important for ensuring Australia’s future economic prosperity, and why?

As is now well known, productivity growth is the most important contributor to long-run improvements in living standards. So Ms Baldwin focused on factors influencing the productivity of firms in the economy, particularly how readily they adopt new technology and knowledge. Ms Baldwin’s well-researched essay stressed the importance of competitive markets and free trade in promoting the diffusion and adoption of new technology, which is critical to productivity growth. She also noted competition is important in eliminating what is called X-inefficiency, where firms shielded from competition get complacent and have a high degree of slack in their operations.  Incidentally, I would note this is why protectionist measures such as Buy Queensland are such poor policy.

Well done to Ms Baldwin for winning two prestigious national essay competitions (you can find her RBA prize winning essay at the RBA website). And well done to UQ Economics for continuing to encourage excellence in economic analysis and research.

The extraordinary Norma Redpath fountain in the forecourt of the Treasury Building, King Edward Terrace, Canberra