Australia is one of the great success stories of economic development. First settled as a British penal colony in 1788, by the mid-nineteenth century it ranked among the richest nations in the world. The conventional story of Australian development revolves around abundant natural resources and imported capital. The existing literature has typically argued that Australian capital imports were mainly portfolio investment, primarily from the UK. In this book, David Merrett and Simon Ville challenge this characterization. The authors, arguably the two most knowledgeable and experienced Australian business historians, convincingly argue that a substantial share of imported capital was supplied by active participants—multinational enterprises (MNEs). MNEs supplied not only capital, typically from the London exchange, but also other comparative advantages such as knowledge, technology, management skills, external economies of scale, better access to markets, or integrated supply chains.

The contribution of MNEs prior to the First World War for the Australian and worldwide economies has been notoriously difficult to characterize and measure, simply because original source materials are patchy and incomplete. Although there have been many case studies of individual MNEs, systematic evidence has been elusive. The authors advance the existing literature by compiling databases covering (1) 196 overseas companies incorporated by registration with the Board of Trade prior to 1860 and (2) 250 companies reported in The Australian Joint Stock Company Yearbook (1914). These databases provide the most comprehensive list to date of early multinationals in Australia. They also enable the authors to examine the national origins of MNEs in Australia, the industries in which they operated, and their longevity. However, the authors are very much aware that these data have limitations, including incomplete coverage (particularly of ephemeral companies), missing information (for example, paid-up capital and the number of workers for most companies), and imperfect categorization (e.g., both companies that failed and those that merely changed their name were categorized as missing from the second database). Because of these inherent limitations, the authors also examine surviving archival and other descriptive evidence for individual MNEs.

Chapters 4–6 use these source materials to examine the nature of multinational investment in Australia, examining longevity, source countries, comparative advantages, and differences across sectors. Perhaps not surprisingly, there was no one-size-fits-all model of foreign investment. British MNEs comprised the largest share of overseas firms, but towards the end of the period of the study, there was a growing presence of American and German firms. Mining along with banking, finance, and insurance comprised the largest share of MNEs, although multinationals were also present in manufacturing, shipping, communications, and the wool trade. The incomplete evidence suggests that MNEs were typically considerably larger than domestic firms and that some MNEs, particularly in banking and manufacturing, were among the largest firms in Australia at the time.

The experience of MNEs differed substantially across sectors. Most early mining multinationals were founded as free-standing companies in the UK shortly following gold strikes in Australia. Many had no prior experience, were short-lived, and never made a profit. Later mining firms that relied on deep-veined deposits were larger and, in at least some cases, profitable and longer-lived. By contrast, banking multinationals brought expertise and huge amounts of capital into Australia and were relatively stable and long-lived. Their relatively cautious approach to investment, necessitated by slow communications with head offices in the UK, meant that they were fundamentally sound and thus were less likely than Australian-domiciled banks to suspend operations during the 1893 panic. Manufacturing firms tended to operate in a similar manner to modern MNEs, typically being offshoots of existing American, British, or European firms. Typically, they set up operations in Australia, rather than importing their products, to avoid tariffs or exploit locational advantages. By operating as MNEs, these firms were able to exploit the economies of scale associated with much larger American and European markets and at the same time have local operations adapted to Australian market conditions. Although the pastoral sector tended to be operated by domestic firms, much of the supporting infrastructure such as auction houses and shipping companies were run by multinationals.

The overall message of chapters 7–9 is that the relationship between MNEs and Australia during this period was unambiguously positive. Australia never developed the sort of plantation economy that elsewhere led to exploitation by multinationals, and thus, there were limited downsides to foreign involvement. Conversely, the benefits of MNE’s in terms of importing capital, expertise, etc., were considerable. The manufacturing sector particularly appears to have benefited from the entry of MNEs, such as General Electric, British and American Tobacco Companies, Cadbury, Lever Brothers, Ford Motors, Singer Manufacturing, and Siemens Brothers, which developed new technologies and scale economies in their overseas operations and later set up production in Australia. Similarly, from the prospective of MNEs, Australia provided an excellent operating environment. Australia developed British-like commercial institutions from the time of European settlement and placed few restrictions on the operations of foreign companies until the First World War. Perhaps most importantly, Australia was wealthy and thus provided considerable product demand despite its small population.

I conclude by strongly recommending this book, which will be of considerable interest to both business and economic historians. It is well written and fills a large hole in the existing literature, addressing the under-researched area of the contribution of MNEs to Australian economic growth prior to 1914. The main questions addressed in this book will be of broader interest beyond an Australian audience, as there exists relatively little scholarship on the role of MNEs for all of the settler economies prior to the First World War.