AL:
My son (at uni in Canberra!) mentioned essentially the same theory recently. More specifically, let places do what they’re good at, don’t waste your own limited resources trying to replicate those who do it better, just stick to what you’re specifically best at. In our case that’s historically been sheep and mining - not the cleverest of exports. Our tech products were often very good but terribly marketed and not supported by the government or consumers.
What you are saying is exactly the Economics 101 theory but you miss the point and underline the problem.
As a colony of Britain we were cast in the role of sheep herders and miners by Britain - we send them raw materials, value add to them in Britain and then sell them back to us as textiles and British machinery. That is what colonialism is all about. Economics 101 is taught to support that theory - "we are good at sheep farming and mining" what you are missing is the next sentence. The full text these poor kids at ANU are taught is:
"We are good at sheep farming and mining
and nothing else".
The treasury view, which dominates the Government is that sustained manufacturing in Australia is an aberration, it ought not to be possible according to what is taught to your son because we have no economies of scale or competitive advantage. But it gets worse because the Canberra economists go one step further: "
If manufacturing is succeeding where it ought not to, then we must be subsidizing it in some way. It follows that we must find and remove the subsidies causing this aberration."
And that is just what they do. For example they destroyed trade training technical schools. They destroyed sensible depreciation tax rules and other tax measures that allowed manufacturing to compete with other industries like property development. They did ( and still do) heaps of things that deliberately make it unattractive to manufacture in Australia. They will continue to do it unless found and rooted out by the Albanese Government.
Competitive advantage is BS and economies of scale are no longer what they were
For example, Japan, a country with very limited car driving opportunities took on the American car industry and destroyed it. Where was Japans automotive industry "competitive advantage"??
Why don't we have a world beating solar energy industry?
Why not a competitive Aviation manufacturing sector?
The answer; Idiot economists in Canberra killing business by blabbering about competitive advantage and economies of scale!