"Discuss the impact of microeconomic reform and structural change on the Australian economy".
Microeconomic policies refer to government policies designed to raise the economy's level of productivity and international competitiveness. At the microeconomic level of activity, firms, markets and government produce and distribute goods and services to the community. Microeconomic reform policies aim to improve the efficiency of production, distribution and exchange by strengthening market competition and use of the technology. They are supply side policies aimed at increasing the economy's long run aggregate supply curve or productive capacity. Microeconomic reform policies are necessary to address specific structural problems in markets such as a lack of competition or efficiency which cannot be addressed through macroeconomic policies and so require the application of selective policy measures (such as reform of the labour market) to raise productivity. .
Microeconomic policy focuses on the microeconomic level of economic activity by attempting to improve the allocation of resources (between individual firms and in markets) by rasing the technical, allocative and dynamic efficiency of the Australian economy's use of natural, capital and human resources. Higher levels of efficiency can be achieved through raising Australia's rates of total factor and labour productivity which lagged behind the OECD average in the 1980s. Overall, the efficiency gains from microeconomic policies should lead not only to rises in national income and living standards but also the economy's ability to absorb shocks transmitted from the global economy such as the fall in the terms of trade in 1986; the 1997 Asian crisis; and the US and global slowdowns over 2001-03. Productivity growth has been the major source of growth in GDP per capita in Australia in the last fourteen years. Australia's productivity growth in 1990s at 2.