IT DREW little comment, but the centrepiece of Julia Gillard's white paper on the Asian century was her target of raising Australia's standard of living - income per person - from the 13th highest in the world into the top 10 by 2025.

Perhaps the reason this grand objective excited so little interest is that, for we Australians, there's nothing new about being in the materialist winners' circle. As Ian McLean, an economic historian at the University of Adelaide, reminds us in a new book, Why Australia Prospered, we joined that company from about 1820, and between 1860 and 1890 we were the richest country of all.

Few countries have been so successful for so long, he says. McLean reminds us one country has experienced long-term relative decline after having achieved membership of the rich nations' club in the early 20th century: Argentina. Even New Zealand, which tagged along near us for most of the journey, has been falling further behind since the 1970s.

So, in the first major economic history of Australia for 40 years, McLean sets out to explain why we became rich so soon and how we've managed to stay that way for the best part of 200 years.

The story we have in the back of our minds explains it in a phrase: we're the Lucky Country. The Europeans who settled in this vast land had the good fortune to arrive at a place well suited to farming and teeming with valuable minerals. For more than 200 years we've been living off that great luck.

We became a major world producer and exporter of wool as early as the 1820s, and it stayed our principal export earner until the 1950s, save for the 1850s and 1860s when it was supplanted by gold. We remain a significant producer of gold to this day.

At the start of the wool boom in 1820, Australia's European population was just 30,000. By the time gold was discovered in 1851, it was up to 430,000. Thanks to the gold rush, in just 10 years it reached 1.2 million. Most of those people stayed, and by the start of the serious depression of the 1890s, it was 3.2 million.

The story of our lucky natural endowment continued with the discovery of mineral deposits in the 1960s, right up to the Asia-driven resources boom of the past decade.

But McLean disputes the notion our unending prosperity can be explained simply in terms of our lucky strikes. For one thing, the study of many countries has led modern economists to the conclusion that possession of some valuable resource deposit is almost always a curse rather than a blessing.

It tends to lead to squabbling over who gets the proceeds, corruption, complacency, underdevelopment and stagnation. By contrast, resource-bereft countries such as Singapore or Taiwan seem to have succeeded precisely because they knew they had nothing going for them beside their own efforts.

Clearly, Australia is an exception to the ''resource curse'' rule. But then we have our erstwhile southern hemisphere twin, Argentina, as a reminder you do have to play your cards right.

Our long prosperity defies another conventional wisdom: colonies get exploited by their colonising power. McLean finds no evidence of significant exploitation by the British. On the contrary. Unlike some Asian colonies, our economy had to be built from scratch. Who built the foundations and paid for them? The British taxpayer. We benefited from our convict origins. The Brits were expecting it to cost them, and the 160,000 convicts they sent us were selected for their suitability for hard work.

A big part of the reason we got rich so quickly was that a high proportion of the population was in the workforce. Then there was the advantage of being part of the British Empire trading bloc and the privileged access it gave us to Britain's market.

Self-government came early and bloodlessly in the 1850s.

But McLean gives much of the credit to the quality of our economic and political institutions - legal system, property rights, control of corruption, political arrangements and social norms - most of them inherited from the Brits.

The test of our institutions is their flexibility, their ability to adapt in response to changing circumstances and needs. As evidence of flexibility, McLean cites the ending of transportation of convicts, a solution to the monopolisation of grazing land by squatters and the pull-back from using indentured islander labour on sugar plantations.

Much more recently, you can point to all the economic reforms we undertook in the 1980s and '90s to open our economy to a globalising world. And to our skilful response to the global financial crisis - just the latest of many economic shocks the world has thrown at us.

We Australians don't have tickets on ourselves as great managers of our economic fortunes, but a look back at the record - and at comparable countries - says we've had a lot more going for us than just luck.

Ross Gittins is a senior columnist.