Adoption of Blockchain Technology in the Australian Grains Trade: An Assessment of Potential Economic Effects

Abstract

Recent analysis of Blockchain use has highlighted considerable potential productivity gains arising from lower transaction costs between buyers and sellers of goods. This has been shown by recent examples of Blockchain use in the Australian grains sector. In this paper, we have further developed and quantified this concept of productivity gain by undertaking several illustrative scenarios using a general equilibrium model of the global economy. Our analysis indicates that an assumed modest growth (five per cent) in productivity due to Blockchain use in the grains sector could raise output by eight per cent over the medium term. If this is accompanied by Blockchain use in the Australian finance sector, grains output could reach ten per cent. This reflects the effect of reduction in transaction costs due to the use of Blockchain technology as a “distributed ledger technology” in grain trading. Further, it is anticipated that the wider effects of Blockchain‐driven productivity enhancement of the Australian finance sector could contribute to approximately 2.5 per cent increase in GDP in the medium term, relative to what would otherwise be.